This is the final call for holders of Greek debt. I am tempted to wake my folks up and tell them but I'm sure we have one more day. I won't hold out for much longer though. I am happy now to call the Greek default, which will at the very least have been structured by the end of this year; probably much earlier. I am already thinking of folding LOLGreece (or passing it on to willing readers) and writing a nice little book instead.
Here's why:
A few days ago the call went up for a thorough investigation of why Greece came to be so indebted. It was signed by numerous notable economists and should not be dimissed as a pinko liberal pamphlet about freeing Palestine and ending hunger. Sh*t just got real.
Here is what I believe. The sole purpose of the debt audit people are demanding for Greece is to come up with an estimate of the debt Greeks should not have to pay back by estimating what share of Greek debt is down to graft, corruption, fraud etc. This is meant to be our bargaining chip in the great default haggling match and whoever came up with it is a genius. If it's Yorgo I'll offer him all of my bum hair for a transplant.
You see as I've explained before, Greece can't concede even the possibility of default until t-1s, when we're actually just about to default. We do however need to be able to signal to interested parties that it's haircut time so they can gather round the negotiating table and work out a deal that they can survive, capital-wise. We also need to still be able to control the timing of this process so as to ensure that reforms are well underway, our current account is balanced and our politics is stable. That way, when we're cast off into the cold, dark void that is unbankability, we can survive the 6-9 months it will take for some brave lenders to take a punt on our debt.
The Audit is our signal. It distinguishes between sophisticated lenders and retail investors as well as our own pension funds, as many will dimiss it as a call for justice; it isn't. We can tamper with procedures to slow it down or speed it up at will, depending on how reforms go. Then at the crucial moment we strike. We cannot be stopped (since it's not a government initiative) and no one will be paying attention until it's too late.
Keynesians and people naturally inclined to the default agenda (unlike myself) have of course instantly caught on to the Audit's use as a default mechanism.So have many populists on the Radical Left at home.
They are all silent, however, on what the day after our default will look like and thus fostering unrealistic expectations.
MAKE NO MISTAKE. The majority of the Greek people would expect the entire package of Memorandum measures to be rolled back in the aftermath of a default. There will be days of partying in the streets until the realisation hits that we're virtually out of cash. The defaultniks will become disappointed, then murderously angy; their pimps, the Naomi Kleins and Krugmans of this world, will call for temporary assistance and other such rubbish terms. More importantly, in the aftermath of a default austerity will redouble, to ensure that Greece can run a balanced budget. With spirits already running high, this could trigger unprecedented levels of civil unrest.
Sleep tight. Unless you are an ambitious man with a fierce admiration for Hugo Chavez, in which case you should start preparing for a shot at Government.
UPDATE: Still not convinced? Then read up on our latest efforts to set up a stall for 'diaspora bonds' in the States. I hope they come knocking on my door too here in London. I promise to buy and promote diaspora bonds if Greece's creditors first take a minimum 30% haircut.
Here's why:
A few days ago the call went up for a thorough investigation of why Greece came to be so indebted. It was signed by numerous notable economists and should not be dimissed as a pinko liberal pamphlet about freeing Palestine and ending hunger. Sh*t just got real.
Here is what I believe. The sole purpose of the debt audit people are demanding for Greece is to come up with an estimate of the debt Greeks should not have to pay back by estimating what share of Greek debt is down to graft, corruption, fraud etc. This is meant to be our bargaining chip in the great default haggling match and whoever came up with it is a genius. If it's Yorgo I'll offer him all of my bum hair for a transplant.
You see as I've explained before, Greece can't concede even the possibility of default until t-1s, when we're actually just about to default. We do however need to be able to signal to interested parties that it's haircut time so they can gather round the negotiating table and work out a deal that they can survive, capital-wise. We also need to still be able to control the timing of this process so as to ensure that reforms are well underway, our current account is balanced and our politics is stable. That way, when we're cast off into the cold, dark void that is unbankability, we can survive the 6-9 months it will take for some brave lenders to take a punt on our debt.
The Audit is our signal. It distinguishes between sophisticated lenders and retail investors as well as our own pension funds, as many will dimiss it as a call for justice; it isn't. We can tamper with procedures to slow it down or speed it up at will, depending on how reforms go. Then at the crucial moment we strike. We cannot be stopped (since it's not a government initiative) and no one will be paying attention until it's too late.
Keynesians and people naturally inclined to the default agenda (unlike myself) have of course instantly caught on to the Audit's use as a default mechanism.So have many populists on the Radical Left at home.
They are all silent, however, on what the day after our default will look like and thus fostering unrealistic expectations.
MAKE NO MISTAKE. The majority of the Greek people would expect the entire package of Memorandum measures to be rolled back in the aftermath of a default. There will be days of partying in the streets until the realisation hits that we're virtually out of cash. The defaultniks will become disappointed, then murderously angy; their pimps, the Naomi Kleins and Krugmans of this world, will call for temporary assistance and other such rubbish terms. More importantly, in the aftermath of a default austerity will redouble, to ensure that Greece can run a balanced budget. With spirits already running high, this could trigger unprecedented levels of civil unrest.
Sleep tight. Unless you are an ambitious man with a fierce admiration for Hugo Chavez, in which case you should start preparing for a shot at Government.
UPDATE: Still not convinced? Then read up on our latest efforts to set up a stall for 'diaspora bonds' in the States. I hope they come knocking on my door too here in London. I promise to buy and promote diaspora bonds if Greece's creditors first take a minimum 30% haircut.
