If Greece Defaults, What Happens to Portugal and Ireland—and Spain?

[loveandgratitude]

So it looks like Greece is about to go down the toilet.

http://4.bp.blogspot.com/-AQ_vLAQUwX4/Tf-EDG-yR1I/AAAAAAAAAww/e-JxWx3OFAY/s1600/greek_flag_toilet_paper.jpg


But it’s looking like France, Germany, Holland and the UK are all balking at the reality of having to save the Greek’s hide once again. Boris Johnson, the flamboyant Mayor of London, openly called for Greece to exit the euro in an op-ed in the Telegraph. Several of the participants in the negotiations are asking for Greece to make deeper austerity cuts first, before getting more bailout money—

—and of course, the Greeks won’t do that: Their population won’t stand for any more austerity measures, as they believe (correctly) that the reason Greece is in the hole it’s in is because rich people shirk their obligation to pay taxes. Also, the Greek people are getting handouts left and right from their government—paid for with deficits and debt.

So no European bailout, no money for Greece to continue funding its government.

So like I said, Greece is about to go down the toilet.

So now that we can, we have to step back, look up, and figure out what’s coming up next on the horizon, once Greece defaults.

The answer is obvious: Portugal, Ireland and Spain are coming up—and coming up fast.

Specifically, Portuguese and Irish debt: As of this writing, the 10-year Greek bond is yielding a staggering 17.34%. But the Irish 10-year bond? Safe as houses, you ask?

No! Irish 10-year debt is yielding 11.54% , while the Portuguese 10-year is at 11.15%.

So regardless of whether or not the Greek situation is somehow fixed and smoothed over with more money—“stabilized”, in that wonderfully bloodless turn of phrase—Ireland and Portugal are soon enough going to be needing another bailout of their own.

Just like Greece, Portugal and Ireland are spending way more than they’re bringing in via taxation. The reasons for this are different, but the result is the same: They both need boatloads of cash. So they have to go out and borrow this cash, in order to pay for their government.

In other words, Portugal and Ireland need relatively cheap debt.

However, what happens if there is an outright Greek default?

Obvious: No one would want to lend money to Ireland and Portugal. Irish and Portuguese debt yields would shoot the moon—easily reaching Greek levels, if not superceding them. (Remember: Debt yields are the inverse of debt price. The lower the price of a bond goes, the higher the yield.)

The reason this would happen is because the debt markets would all be running for cover after a Greek default—rushing to a safe haven, or at least not rushing to buy the “P” and the “I” part of the PIIGS’s debt, after the “G” defaulted.

So if Greece goes down the tubes, Ireland and Portugal would almost immediately need a bailout: They would not be able to borrow on the open markets the money they need in order to continue funding their governments.

That is, if Greece defaults, the Irish and the Portuguese would suddenly find themselves without the money to fund elementary schools, ambulances, sewer systems, power grids, etc.

So! What is the European leadership doing?

Dithering! They are not approving a Greek bailout—and they are not giving a clear signal that Greece will be booted out of the eurozone, but Ireland and Portugal will be protected. In other words, the European finance ministers who are supposed to “stabilize the markets” are creating the conditions of uncertainty in the markets—

—which only hurts Ireland and Portugal.

Now, why is defending (financially speaking) Ireland and Portugla essential?

In a word, Spain.

Spanish 10-year debt is yielding 5.6%—nowhere near as bad as Greece, or Ireland or Portugal, and just a shade over German 10-year of 3.5% or so.

However: Spain is just as bankrupt as Ireland or Portugal or Greece, with a massive 20% unemployment and—unbelievably—a 50% youth-unemployment rate. Why do you think all those Spanish kids are protesting at the Puerta del Sol: They got no place else to go!

And if that massive unemployment wasn’t bad enough, the Spanish banking sector is teetering like Humpty Dumpty before his Great Fall—scratch that: Teetering like a drunk Humpty Dumpty sitting high up on his wall.

So what’s obvious is, if Greece goes, Ireland and Portugal are sure to follow—and if they go, then Spain is next—

—and Spain can’t be saved.

It’s as simple as that. Spain is too big—roughly half the size of Germany. If Spain goes, it will drag down all of the European continent with it—that is, bank failures (on both sides of the pond), a crash of the eurozone as a currency, massive unemployment, a European economy that would grind to a halt—

—basically, the worst parts of the Great Depression.

So you see why Greece matters?

The European leadership have got to quite dicking around! They have got to make up their minds once and for all: Either save Greece, or let it die.

But this prolonged agony—even if at the end of it they save Greece—helps no one, and hurts everyone.

And it brings Ireland and Portugal—and Spain—that much closer to the edge.

http://gonzalolira.blogspot.com/2011/06/if-greece-defaults-what-happens-to.html

[loveandgratitude]

Greek Film Shows Way Out of Debt Bind

"Debtocracy" a 75-minute documentary made for $15K has inflamed popular resistance in Greece by casting the debt crisis in a new light.

Seen on the Internet by over a million Greeks, the film convincingly argues that the debt is a neo-liberal ("Economic Hitman") scam and there are strong precedents for repudiating it.


http://www.youtube.com/watch?v=qKpxPo-lInk

The brainchild of Costas Lapavitsas, an economist and professor at the School of Oriental and African Studies in London, the film introduces the concept of "odious debt" which was used in 2003 by the United States to renounce Saddam Hussein's $120 B debt to Russia and France.

Defined by Russian economist Alexander Sacks in the 1920's, "odious debt" is incurred by a despotic power, "not for the needs or in the interest of the State, but to strengthen its despotic regime, to repress the population that fights against it, etc., this debt is odious for the population of all the State."

He went on. "This debt is not an obligation for the nation; it is a regime's debt." Sack called it "a personal debt of the power that has incurred it." When this power falls, that debt "consequently . . . falls with the fall of this power."

Sack also considered a debt odious when, "the loans incurred by members of the government or by persons or groups associated with the government to serve interests manifestly personal - interests that are unrelated to the interests of the State." A bribe is an example of a manifestly personal interest.

Now, in order for a debt to be deemed "odious," Sack said that the lender must also be aware that the loan is "contrary to the interests of the nation."

In this case, Professor Sack said, "the creditors have committed a hostile act" against the people. They can't therefore expect that a nation freed from a despotic power will assume the 'odious' debts, which he called "personal debts of that power."


As we shall see, these criteria apply to Greece. But first the film looks at:


EQUADOR

The Illuminati banker - IMF method of absorbing the world's wealth is well documented. They bribe corrupt regimes to incur huge debts for costly boondoggles built by companies owned by the same bankers. Then the bankers make their targets repay these "loans" (created out of thin air) by accepting severe "austerity" programs and privatizing national enterprises and resources.

At first we thought this predatory behavior was reserved for the Third World, but now it's clear Europe and America are also in their cross-hairs.

Rafael Correa, the President of Equador didn't think the majority of his government's income should be to used to service the national debt. He ordered an "audit committee" to investigate how this debt was incurred and discovered that 70% of it was due to the corruption of prior regimes.

He renounced that debt. Equador's bonds fell to 20 cents on the dollar. His government secretly bought it back and saved seven billion dollars in interest.

Interestingly many civil servants at the Ministry of Finance refused to cooperate with the audit committee. This emphasizes that there is always a class which is in cahoots with the bankers and profits at the expense of the people.


GREECE

The banker-owned mass media has put out the story that Greece's problems are due to bloated bureaucracy and a crippled tax system. But "Debtocracy" documents a pattern of wasteful boondoggles from which the bankers and the ruling class benefited.

These include bribes and kickbacks from the German conglomerate Siemens to build the Athens subway system and a $1.1 B boondoggle for "security" at the 2004 Athens Olympic games.

But the most costly expenditure has been billions for unnecessary weaponry -- aircraft and submarines -- bought from European manufacturers owned by the same bankers.


CONCLUSION

It's clear that the Illuminati bankers intend to use debt to enslave and impoverish us. They will use the specter of financial mayhem to extort the money from us.

Like Greece, our governments will have a choice. Either default on the debt or default on the people. Our puppet politicians have been defaulting on us for a long time. We need to use the concept of "odious debt" to ensure they stop now.

The bankers' credit scam cannot go on for ever. Eventually the social contract will break down as is happening in Greece. This is why the bankers are creating a New World Order police state, under the pretext of a war on terror.

http://www.henrymakow.com/greekfilmmakescase.html

[Cidersomerset]

It makes me sick ,especially since we know the bulk of all countries interest Debts are false! just money printed out of thin air...... Its about time governments around the world re=nig on the interest of debts only concentrating on the actual debt....

Getting extended payback periods and forcing 'Bangsters' to cut there own costs and proffits in responce......Capitilism/Fascism has got out of control , just as communism became unstainable for social reasons , The rich/elite commies were just as bad as the filthy rich corpoporate elite.....The only revolution possible is a consciousness paradyme change.......Theres no way the elite will let this happen , but maybe they will be left behind by events , If we keep communicating we will gradually come up with a solution for humanities future ....By now slavery should have been abolished.......What the problem is 99% of us don't realise we are all economic slaves , and its time for us to break the chains..

Not neccessary by force , but just by waking more and more of us will bring this about......Steve