Revolt of the Tax Slaves

From Der Speigel:

The people who could ultimately give Greece the coup de grace are not the kind to throw stones or Molotov cocktails, and they have yet to torch any cars. Instead, they are people like 60-year-old beverage distributor Angelos Belitsakos, people who might soon turn into a real problem for the economically unstable country. Feeling cornered, he and other private business owners want to go on the offensive. But instead fighting with weapons, they are using something much more dangerous. They are fighting with money.

Belitsakos is a short, slim and alert man who lives in the middle-class Athenian suburb of Holargos. He is also the physical and spiritual leader of a movement of businesspeople in Greece that is recruiting new members with growing speed. While Greece’s government is desperately trying to combat its ballooning budget deficit by raising taxes and imposing new fees, people like Belitsakos are putting their faith in passive resistance.

The group’s slogan is as simple as it is stoic: “We Won’t Pay.”…

Greece, like all socialist countries is, of course, over run by moochers.  People who, by one means or another, get all or most of their income via government funding.  Whether its by special tax breaks, government employment or direct welfare payments, a huge number of people (and perhaps a majority, once you total it all up) in Europe either don’t work at all, or don’t work much, or don’t work at anything which creates wealth…but they still manage to live pretty well.  And, meanwhile, it is people like Mr. Belitsakos who have been paying for it all.  And now that Greece’s socialist fantasy has come economically crashing down, the government wants people like Mr. Belitsakos to pony up even more.  And a revolt is brewing.

Do keep in mind that those people you remember rioting from time to time in Greece (and Britain and Spain…and soon to spread elsewhere in Europe) were not hard working, middle class people…they were the moochers who are ticked off that even a small amount of their welfare is being cut.  Around the world a revolution is brewing…those who are hard working, play by the rules and try to do the right thing are starting to wake up and shake off those who have lived off them for nigh on a century.  There won’t be much room for either a George Soros to manipulate governments to make billions, nor for the welfare bum who runs riot when his stipend is cut.

While there is no way for us to shake off our moral responsibility to those who cannot work through no fault of their own, we must all admit that this moral obligation has been much abused.  A gigantic amount of money is siphoned away from the productive in the name of helping the less fortunate, but we know where a large amount (possibly a majority) of it goes:  to over paid bureaucrats, crony-capitalists and people who could darn well work, but choose not to.  The moochers have, by this point, driven us in to bankruptcy…and their only real answer is to demand more from us…and to take it by taxing it, or by devaluing the currency, which steals the wealth we’ve already created.

You know that things are changing when even in socialist Europe, something akin to the TEA Party emerges.  This will be quite an interesting decade, I’m thinking.

HAT TIPDan Mitchell


Germany Wants 50% Default for Greece

From Zero Hedge:

…the debt rollover plan has imploded and means that the entire Greek bailout has collapsed as some had expected. And now that it is clear that contagion is threatening to sweep through the core, it is back to Germany to prevent the gangrene, no longer contagion, from advancing beyond the PIIGS. However, in order to prevent a full out revolution, Germany’s economic elite has said it would agree to an EFSF expansion and hence installation of European firewall, but at a price: a “controlled” default by Greece and 50% haircuts for private bondholders (as German banks have long since offloaded their Greek bonds).

This means that “Lehman” is indeed here: just like back in 2008 Paulson et al thought they could contain the adverse effects of a Lehman bankruptcy, while the financial system ground to a halt 4 days later when money market funds broke the buck, so now Greece is somehow expected to remain in the eurozone even as it files bankruptcy…

The bottom line appears to be that the Europeans need to come up with $2 trillion to keep their financial system afloat – that is, to keep the bad news confined to the PIIGS (Portugal, Ireland, Italy, Greece and Spain) and keep it out of France. What Germany seems to want – and it is reasonable – is an end to the Greek problem.  That if this is going to happen, it happens once and for all.  The Greek bondholders lose 50%, Greece gets bailed out…and hopefully Greece manages to get its finances in order sufficiently to service the rest of their debt.

The trouble is whether or not bailing out Greece – even with a 50% “haircut” for bondholders – will really do the trick.  Greece is pretty small potatoes as far as the Eurzone economy goes.  Looming gigantically larger are Spain and Italy.  As far as I can determine, both of those nations are already fundamentally bankrupt and cannot rely upon the private economy to service their debt as their bonds come due.  The only entity out there with the willingness to heavily purchase Spanish and Italian bonds would be the European Central Bank, or whatever financial bail out structure the Europeans come up with.  And where does the money come for that? From the Germans who will have already bailed out Greece and have no spare money left?  From the European Central Bank printing up a bucket of money?  Where?

It is the lack of real money – someone out there with trillions not already committed to some other enterprise – which makes me figure all these efforts to avert collapse are meaningless in an economic sense.  In a political sense, they may help the Ruling Class (European and American) ride out the political storm now through 2013.  The cost will be enormous, but such things never disturb people who are rich, in charge and determined to stay that way.


Watching the Euro Crisis

Mish notes that Greek 1 year bonds have hit 108% – meanwhile, over in Italy (from Bloomberg):

Italian bond yields surged at an auction today and Greek Prime Minister George Papandreou failed to reassure investors that his country can avert default as the euro region’s debt crisis worsened.

Italy sold 12-month bills today to yield 4.153 percent, up from 2.959 percent a month ago as demand fell…

I seem to remember Greek 1 year bonds being something like 4 or 5% a year ago…this is an economic model starting to unravel.  And it is kind of hard to keep a lid on it when you read stories from Europe of plans for an “orderly default” for Greece.

Could be a very wild, financial ride this week…

UPDATE:  Greek 1 year bonds reach 139%.

Meanwhile, Over in Europe

From Ekathimerini:

The government is facing the possibility of not being able to pay wages and salaries in October if its international creditors do not approve the pending 8-billion-euro sixth installment immediately.

The country’s foreign lenders have made disbursement conditional on the government’s adoption of new measures that will target the collection of at least 1.7 billion euros. Without the sixth tranche, the public purse will be 1.5 billion euros short on October 17.

The prospect of a freeze in payments appeared even more serious on Thursday, after Greek commercial banks failed to cover the sum of 300 million euros of supplementary, noncompetitive bids for Tuesday’s auction of T-bills, providing only 155 million. The shortfall is interpreted as a clear message by banks to the government that they are unwilling to fund future issues of T-bills…

Greek one year bonds are approaching 100% as the financial world fully expects a Greek default some time in the next 12 months – which means that Money is figuring there is nothing the European Union can do to avoid default.  Money is right – there isn’t anything.  Oh, they could maybe put it off for a while, but they can’t stop it.  Greece owes too much money and no elective government of Greece would ever have popular support for bankrupting the people of Greece so that banksters can be bailed out (a dictatorship could do it…and one does wonder if the Euroweenies are considering that?).

And once Greece does default, look out!  The financial world will be in for a crash like no one has ever seen before.


UPDATE:  More on the Eurocalypse.

IMF Official Expects Greek Default

Over at Noonan for Nevada I note that Greek one year bonds have rocketed to an amazing 72%, now comes this Zero Hedge:

While the US was panicking over a double zero jobs report, things in Europe just fell off a cliff. As both the WSJ and Reuters report, it seems that the second Greek bailout, following repeated and consistent disappointments by Greece which has resolutely refused to comply with the terms of its fiscal austerity program, has just collapsed.And with the US closed on Monday: long a counterbalance to European risk pessimism, this week (especially with the news fro the latest FHFA onslaught against global banks) may just be the one that “it” all comes to a head. But back to Europe, and more specifically Greece, which it now appears is doomed. “I expect a hard default definitely before March, maybe this year, and it could come with this program review,” said a senior IMF economist who is keeping close tabs on the situation. “The chances for a second program are slim.” …

And remember, Italy and Spain are also on the financial chopping block – it has just been the belief of the Eurozone leaders that if they can save Greece, they can save the entire Eurozone.  Maybe that was true, but what has become clear by now is that Greece cannot be saved…the financial requirements to be placed upon the people of Greece are not politically possible for an elected Greek government to impose (additionally, in my view, even if the Greek people willingly embraced the austerity measures it would not be enough…Greece – like Spain, Italy and so many other nations – owes more than it can ever repay).  So, default.

Some rumors have had it that all the Eurozone leaders were ever trying to do was find a safe place to crash land the Greek economy…knowing all along that default was necessary, they just wanted it to happen in the least damaging manner possible.  I don’t hold to that view – Greek default being inevitable, the sooner it happens, the better.  The longer you keep trying to bail out Greece the more debt is involved and thus the bigger the hit when the default happens.  I think the Ruling Class of Europe really thought they could manage this…the Masters of the Universe never imagined that there wasn’t some way to borrow, print and steal their way out of the jam, as they have done so many times in the past.

But now they are rather stuck…no one in Europe wants to get further on the hook for Greece.  Default must happen, and keeping things afloat even for another full year won’t make it any better for those who continue to extend Greece credit.  Maybe there are one or two more rabbits for the European Central Bank to pull out of the hat, but I don’t think so.  Get ready for an interesting financial time.