08:51 – With it likely that Greece will crash out of the euro in the coming weeks, it seems that they’re already printing up massive stocks of new drachma notes in denominations up to 10,000 new drachma.
If and when that happens, you can bet that Greece will set the initial exchange rate at parity, effectively defaulting on their euro-denominated debts because that new drachma will very quickly lose a huge percentage of its nominal value. Those who currently hold $300+ billion in Greek debt will find that 90% of that value has evaporated.
I’m surprised that the Greek government hasn’t (yet) instituted capital controls. Capital outflows from Greece are already huge and are accelerating. In January alone, they amounted to about €1,000 for every man, woman, and child in Greece. This from a very poor country, where most people don’t have two euros to rub together. Everyone who is able to do so is getting his euros out of Greece, knowing that they’ll soon be replaced 1:1 with worthless new drachmas.
The eurozone believes it has the mechanisms in place to isolate Greece and prevent the contagion from spreading. They don’t. They’re prepared to stick fingers in a leaking dike, but they’ll find themselves facing a tsunami that will overwhelm their defenses. The rest of the PIGS will follow Greece, leaving all of southern Europe reverting to native currencies. Eventually, even France will be forced to follow. As Thatcher and others pointed out at the time, the euro always was a bad idea, a currency without a country. We’ll be watching it break up over the coming months and years.
The “New Drachma” images, like the one above, date from 2011 and were done by an artist, not the government. Many of the sources for these “stories” are from gold sellers, not the financial press. In fact, according to the WSJ, the current bailout was extended a few months due to progress in talks with the new Greek government and there has been a net inflow of about 800 Euros million to Greek banks. So the capital flight has slowed/stopped.
That said, I don’t think the new government can keep all their promises and may well collapse.
Should be quite interesting to watch, and listen to on the shortwave stations. I still suspect some kind of major financial upheaval sometime this summuh.
30 here now, with some sun and blue skies and very windy; could hit 40 by Wednesday.
Fetched Princess from Montreal this morning for her combination vay-cay/reading week down here at MIL’s place. No sign of any law enforcement or border security anywhere near the many miles I drove through between O Kanada and Murka. And I was in Quebec, NY and VT, both sides. One lonely African guy at the rural crossing going up into Quebec; took a quick look at my Enhanced license and waved me through. I coulda had all kinds of chit in the car and on me, and this has been true each and every time I’ve gone up and come back over years now.
I coulda had all kinds of chit in the car and on me
You must have an honest face. Or maybe you were sitting upside down with your head in the seat driving with your legs.
Ah, I just saw the image in an on-line article and assumed it was official. Not that it really matters. If the Greeks have any sense, they already have a new currency ready to roll. They’d be idiots not to, and the Greeks are not idiots.
“You must have an honest face.”
Sorta like Aryan Jesus with green eyes instead of blue, red hair instead of blonde, and wearing g-g-g-etc Grandpa Ben Franklin’s bifocals. Bifocal sunglasses, that is. African-Canadian Border guard could barely speak English but my omniscient and omnipotent air of being seemed to comfort him somewhat. I gave him my blessing and departed for Sodom and Gomorrah posthaste.
“They’d be idiots not to, and the Greeks are not idiots.”
You may get a different perspective on that from Taki, who is as Greek as they come and who grew up during some pretty bad times there. He notes they seem to want an endless free ride, like so many in this country, and often despairs that they have any common sense at all.
http://www.spectator.co.uk/life/high-life/9432112/takis-recipe-for-the-survival-of-the-greek-nation/
I still suspect some kind of major financial upheaval sometime this summuh.
In Greece or the USA?
More recent Taki, in another venue:
http://takimag.com/article/say_it_in_style_taki/print#axzz3TB7veSMy
“In Greece or the USA?”
I’m thinking worldwide, but mostly Europe and the U.S. Maybe I’m just having some jitters in my creaky senility and advanced decrepitude.
I don’t see it being Apocalypse but still kinda nasty and shocking to a lotta peeps when it goes down.
The only financial problem in the USA that I see coming is a possible drop in the USA crude oil (WTI) price to 25 $/BBL. At that point, a lot of bets will be collected on Wall Street and many will go bankrupt.
Another dog story, woof woof:
Humans paired up with dogs as early as 40,000 BC, it is claimed, giving us such an advantage in hunting that it prompted the wipeout of our Neanderthal rivals.
I’m going to take the contrarian position on Neanderthals. It wasn’t H. sapiens‘s dog-augmented superiority that won out, it was the Neanderthals’ superiority that led to their extinction. The Neanderthals invented convenience food 40,000 years before we did, and it led to them becoming fat, lazy, unhealthy, and generally unfit — in an evolutionary sense. It’s no wonder they died off.
Last I read, fairly recently, there were six different versions of humans at one time or another on the planet. But looking around in the current time, it still looks like that to me. I’ve seen that Neanderthal fella a few times, and les Quebecois also look kinda different, usually a lot shorter, a shade of black hair not found in nature, and the weirdest friggin’ clothes fashions ever. Then there are the humans across the street here; looking a lot like Cro Magnon.
And lets just get down to brass tacks here and be honest: aren’t women a different humanoid species altogether???
Given the hole that the Greek nation was put in by its politicians back when they joined into the Euro zone and elevated their currency’s value through creative accounting, a switch back to will do the following:
The Drachma will immediately undergo heavy inflation, because the Greek state is as bankrupt as an entity can be, and can only save itself by printing money
Since all government services are paid in the national currency, they will quickly lose their value (pensions, social benefits, etc)
The Euro will remain the only viable currency, prices for foreign nationals will drop, making Greece more attractive, especially for tourists (right now, trips to Greece cost almost double as much as comparable trips to Turkey)
Had the Drachma not been heavily overvalued in the time immediately before the introduction of the Euro, Greece would have been much more competitive and would have attracted investors (like the Czech Republic, or the Baltic States)
It’s been more than 3 years since the dissolution of the Euro was predicted as imminent in these very pages, and yet, it is still there….
I’m not saying it won’t all come apart, I think it will, but I’m astounded by the ability of the PTB to keep it limping along. Absolutely nothing has happened at the pace that a normal person would expect.
I imagine that it will continue in this vein, right up until it doesn’t, and then the change will be abrupt and shockingly disruptive. I’ve given up on predicting WHEN, so I’m getting ready for it to be anytime.
nick
It should have collapsed in 2011 or 2012, if the authorities had had the sense to let it do so. A collapse back then would have been catastrophic for the European economy, hell for the world economy. But the EU and the ECB have since been taking steps to fend off the collapse, not caring that everything they’re doing can only put off the collapse and make it worse when it does eventually happen. It’s like giving soldiers amphetamines so they can stay awake. That works for a while, but you don’t get something for nothing. They’ll eventually collapse, and when they do it’ll be very, very bad. And the longer they’ve been taking it the worse it’s going to be.
Agreed. And we had had the same kind of hard choices to make here and haven’t done so, so when we have our crash, it will that much worse.
But of course, I’ve come to think that’s the plan, at least in some sectors, regardless of how we can attribute this kind of thing to stupidity and ignorance.
Coming near the end of Lou Rockwell’s book “Against the State,” I am increasingly supported in my belief that we currently live in a corporate fascist oligarchy, with nearly zero resemblance to what should have been, over 200 years ago. If it walks like a duck, quacks like a duck…
He also says that elections here are a total farce, and like I’ve said, only serve to validate the machinations of our rulers.