The Banker’s New Greek Strategy: Starve them into Compliance

[JohnGaltfla]

The Banker’s New Greek Strategy: Starve them into Compliance


by John Galt
June 3, 2012 11:15 ET

The news from Athens continues to bleak over the past few weeks. A 90 year old mother and her 60 year old son jumped to their deaths off on apartment building (See Ekarthimeini article here). A 62 year old pensioner hung himself off of a tree on the outskirts of Nikaia (See Athens News article here). Migrants are being attacked and are desperate to leave the country. Pharmacists are now refusing the government benefits card and demanding cash only for life saving drugs because they fear not being paid in Euros by the Greek bureaucracy, as payments are already many months behind in reimbursements. Sadly, soup lines are the longest since the end of World War II as the middle class has fallen into dire straits of poverty, forcing dumpster diving by parents and children around the nation.

Even with all of this hardship, the banksters of Brussels and Berlin have noted the anger and frustration of the Greek electorate and fear a victory by the anti-austerity forces but attempting to force the gyro (they’re out of turnips) to bleed is a field of expertise that the financial industry is unfortunately well known for. The bankers have elected to engage in a new strategy and it will create a humanitarian crisis unseen on the Continent since the siege of Sarajevo and the misery of the Soviet occupation: Starve the Greeks into voting for compliance with austerity.

The lines of credit for many importers in Greece has already been greatly reduced if not outright terminated by many European companies due to the crisis. One must remember that Greece imports 40% of its total food supply and with this reduction in credit, that is a major blow to the government and its ability to ensure sufficient food supplies for the people. However, a more dire blow was struck this week when several major insurers declined to cover shipments of goods into Greece in case their is a default on payment. This has had the effect of extinguishing credit available to many Greek importers and the concerns are obvious.

On Friday June 1st, the news was exacerbated when the Wall Street Journal reported that the insurance company Atradius, one of the three largest credit insurers worldwide, would cease underwriting policies for export credits to Greece (See: Atradius Won’t Insure New Greek Export Credits, WSJ, June 1, 2012). When taken in combination with the actions by two other insurers, the largest being Euler Hermes along with Coface and the stunning headline and story from the Greek newspaper Protothema begins to make sense:

Danger of goods being out of stock in Greece


(Click on the title above to read the article in full)

This excerpt from the article tells the tale of woe about to hit the Hellenic Republic:

The danger of goods missing from supermarket shelves is now a reality, epsecially after the informal “embargo” that big insurance houses of primary goods have imposed upon Greece.

The beginning was marked by Euler Hermes SA (ELE) the biggest insurance house for primary goods in the world, which will not cover imports to our country.

It is an act that reminds us of rats evacuating the ship before it sinks since the company has French interests and links with the German company Allianz.

At the same time, rumours say that Allianz as an insurance company will try to get out since our country is now considered a lost cause.

There will be more products out of stock since the Austrian company OeKB Versicherung has announced that they won’t be covering exports from Greece, whilst Coface SA announced they will only do business with healthy Greek companies.

The bottom line is that only those Greek importers with extraordinarily strong balance sheets or with cash on hand to make purchases will be covered by some of Europe’s largest credit default insurers. To make matters worse, if the Greek people decide to support the so-called fringe parties and elect pro-sovereignty, pro-growth policies over further submission to misery under the Troika’s iron boot, then the ability of the nation to feed all of the nation’s citizens is thrown into doubt. With the threat of famine overhanging the upcoming vote, do not be shocked if those parties which are trailing in the current polls make extravagant hollow promises about bread and jobs for all but while staying within the Eurozone structure.

This new tactic, which from a business sense is logical, will further restrict credit to a nation which is essentially bankrupt, into submitting to the will of the bankers or face starvation. By imposing a credit rationing program on imports to Greece, the agony of the middle and lower classes will continue to expand and thus the inherent instability of the nation as a whole. Many might view the insurers as acting outside of this reach of the financiers of Brussels and Berlin but the world does not function in such a vacuum, and that belief is naive at best, overdosed with hopium and delusion at worse. The stories about further financial restrictions being placed on the importation of goods into Greece is nothing more than using food as a weapon, to starve the Greek voting population into submission to guarantee the bankers get their money back.

Unfortunately for the short-sighted and historically ignorant bankers, this too shall fail. As every time they have tried to impose their will on nations who are at the end of their rope, it ends in one and only one fatal conclusion:

Revolution, collapse, and WAR.

[Marthanoir]

Before the summer is out you will see EU troops on the streets of Greece, they will not be allowed to leave the Euro,

[Kathy in FL]

Isn't this just one more of the natural consequences? If your credit is bad no one wants to do business with you. Forcing someone to do business with someone they don't want to is bad for ALL parties on both sides of the balance sheet.

[JohnGaltfla]

Isn't this just one more of the natural consequences? If your credit is bad no one wants to do business with you. Forcing someone to do business with someone they don't want to is bad for ALL parties on both sides of the balance sheet.

Greek has been a CCC- or worse for credit ratings, especially some importers dependent on subsidies from the Greek government since 2009. The reason they are turning the heat up now is because the anti-Eurozone anti-austerity parties are leading in the polls. Starvation or the threat thereof usually leads to either submission or revolution...

[Dredge]

Isn't this just one more of the natural consequences? If your credit is bad no one wants to do business with you. Forcing someone to do business with someone they don't want to is bad for ALL parties on both sides of the balance sheet.

Lets see if you have the same attitude when your family is starving, your 401k has been confiscated by the goverment,your pension seized and your money worthless all just to put money back into the bankers pockets to cover the trillions the bankers lost in derivitives . I not a gambler but I would bet on how your going to feel

[Hacker]

John, thanks for a great piece and a great post.

Remember. The bankers are holding Greece hostage over paper money debts that the bankers conjured from thin air.

Of course, the Greeks also bought into this scheme, believing it gave them a path to prosperity. Instead, it is their path to ruin!

[TerryK]

Right you are.
Befoe Greece joined the EU and went to the Euro, they were a moderately poor country. They frequently defaulted on their loans and the world wouldn't lend them that much so they were not able to get in the deep trouble they are now in.
Greece used to be a poor country, but people were not starving and killing themselves. They didn't retire at 50 but they weren't homeless and living out of dumpsters either.
Now they want to blame the people who loaned them the money. Why is it always those evil bankers and never the stupid idiots who borrow and spend until they are so deep in a hole that they can never get out.
It's just like addicts blaming their pusher. The citizens of Greece became addicted to easy life with a high standard of living they didn't earn.
It's gonna hurt to finally face reality.

[Jonas Parker]

It's just like addicts blaming their pusher. The POLITICIANS of Greece became addicted to easy life with a high standard of living they didn't earn.
It's gonna hurt to finally face reality.

There, I fixed it for you...

[TerryK]

Lets see if you have the same attitude when your family is starving, your 401k has been confiscated by the goverment,your pension seized and your money worthless all just to put money back into the bankers pockets to cover the trillions the bankers lost in derivitives . I not a gambler but I would bet on how your going to feel

Greece is not in trouble because of derivitives. They are in trouble because their country borrowed too much, in order to try and raise the standard of living to the rest of Europe. They borrowed too much to allow the people to retire when they were 50 years old at close to 100% pay. They borrowed to much to try and make a 21st century infrastucture, when they are at the heart of it, just barely a 19th century country and economy.
I have been to Greece several times, pre EU and before the Drachma went away. They were and still basically are a poor country, but not starving. Wanting to live a lifestyle they didn't earn is what got them in trouble.

[TerryK]

There, I fixed it for you...

You are quite wrong.
The politicians in Greece always led a good life. Actually it was frequently a military dictatorship and the local politicians usually enjoyed their tolerance and pleasure.
It is the people that wanted to live like they were Germany. It was the people that got the sense of entitlement, the belief that they were entitled to retire at 50, the belief that minimum wage should be equal to the average of the rest of Europe. All this in a backwards non industrialized economy. It was the people own stupid fault.
The politicians merely caved to their wish and they got the government they wanted.

Stupid should hurt, really stupid should really hurt.
Look at the list of political parties in Greece. Not a conservative party in the over 100 political parties. They all have socialist and communist in their names.

[tanstaafl]

From what I understood of the OP article, no one is restricting delivery of anything into Greece. Any company or person that wants to ship to Greece can still freely do so. They just won't be able to insure it against the distinct possibility that the receiver won't be able to pay. In essence, without that insurance and in the current financial crisis environment, shipments risk being charity rather than business.

So shouldn't at least some of the blame be directed at the companies and/or people who refuse to volunteer their own products and time as charity? If not, then the anger at the insurers is really just populism looking for a convenient target.

[JohnGaltfla]

From what I understood of the OP article, no one is restricting delivery of anything into Greece. Any company or person that wants to ship to Greece can still freely do so. They just won't be able to insure it against the distinct possibility that the receiver won't be able to pay. In essence, without that insurance and in the current financial crisis environment, shipments risk being charity rather than business.

So shouldn't at least some of the blame be directed at the companies and/or people who refuse to volunteer their own products and time as charity? If not, then the anger at the insurers is really just populism looking for a convenient target.

2+2 still equals 4 in my world.

Why would the insurers decide just about two weeks before the most crucial election in Greek history to stop insuring trade credit to a nation which has had horrid credit and track record for payments for the last 3 year? Basic analysis, no rocket science needed, seems to indicate that the bankers who own these companies wish to apply pressure on the Greek people to VOTE for "their party" which just happens to be the one which rejects national sovereignty. Sort of like voting for a D or R here but with food being used as extortion to achieve their goals.

[Kathy in FL]

Greek has been a CCC- or worse for credit ratings, especially some importers dependent on subsidies from the Greek government since 2009. The reason they are turning the heat up now is because the anti-Eurozone anti-austerity parties are leading in the polls. Starvation or the threat thereof usually leads to either submission or revolution...

In other words, the same thing that most people do ... if you don't play ball by our rules then you can't play in our league.

Yeah, I get that. I'm not saying that there isn't some people taking advantage of the situation but it is pretty par for the course. I wouldn't go so far as to say they are being starved into submission. How I see it is that they practiced a certain kind of economic behavior and now they are pretty much reaping the rewards. Sucks, but you can't live off of other people's money forever.

We are in the same boat here in the US.

[mzkitty]

The Bank That Ate The World.

[Dredge]

Greece is not in trouble because of derivitives. They are in trouble because their country borrowed too much, in order to try and raise the standard of living to the rest of Europe. They borrowed too much to allow the people to retire when they were 50 years old at close to 100% pay. They borrowed to much to try and make a 21st century infrastucture, when they are at the heart of it, just barely a 19th century country and economy.
I have been to Greece several times, pre EU and before the Drachma went away. They were and still basically are a poor country, but not starving. Wanting to live a lifestyle they didn't earn is what got them in trouble.

The money they borrowed was spent on derivitives that was supposed to finance the government spending . That is what went wrong. The bankers lent them money they made out of thin air and now want everything in Greece including the slave labor of the Greek people. The Greek politians did this because they were paid bribes by the bankers to do so. If the Greek people are smart they will continue to tell the bankers to f=off .Those who worship money and are using it to try and take global control of the planet need to die

[Kathy in FL]

Lets see if you have the same attitude when your family is starving, your 401k has been confiscated by the goverment,your pension seized and your money worthless all just to put money back into the bankers pockets to cover the trillions the bankers lost in derivitives . I not a gambler but I would bet on how your going to feel

We've made it so that if our 401k is confiscated it won't mean a hill of beans to us. We stopped contributing to it a long time ago. It is still there as perhaps a pretty package that we might get one of these days but we aren't counting on it. We've never planned on pensions or social security for the same reasons.

My family won't starve if they use the skills that we are teaching them unless God sends a weather disaster. Between gardening and foraging they'll eat ... they may not eat alot, but they won't starve to death.

ANYONE that puts their faith in money is going to take a header real fast and real hard. First off, nothing on this planet belongs to us ... it all belongs to God. We are merely steward of what He allows to be placed in our hands. His reasons for why that amount is what it is are not always fathomable. When people get done whining about what they don't have or what they want and can rest in the understanding that they always have what God decides for them to have they'll find a lot more contentment in life.

I don't bet with God's money or His Grace. We do what we feel led to do. And the best thing about being frugal is that it gives you more opportunity to be charitable.

So no, I don't worry about the kinds of issues you raise. I stopped worrying about it a long time ago and the "pay out" has been very very nice. And if we lose it tomorrow I know we'll still be where God's plan puts us and there will be enough left to steward as God wants us to. It isn't a gamble ... it's a way of life.

[Berean]

Was is Greece or Spain that I read they are having trouble bringing in fuel because they are behind on their bills?

[Kathy in FL]

Was is Greece or Spain that I read they are having trouble bringing in fuel because they are behind on their bills?

Greece. I think they get their oil from Turkey who is fed up with not getting paid. Greece has reached the end of their ability to say "put it on our tab."

[JohnGaltfla]

Was is Greece or Spain that I read they are having trouble bringing in fuel because they are behind on their bills?

Greece. The IMF just gave their power companies €300 million to keep the lights on. However the food crisis is getting worse and the pharmacies will not accept government health care payment plans, cash only.

[Kathy in FL]

Greece. The IMF just gave their power companies €300 million to keep the lights on. However the food crisis is getting worse and the pharmacies will not accept government health care payment plans, cash only.

Which should be a preview to folks in these parts to make sure you keep enough of the ready on hand because the shiny stuff may not work regardless of whether it is plastic or metal.

If you can, keep a 3+ month supply of meds on hand. We are trying to get my parents bumped up to six months but over regulation is making it very, very difficult to meet this goal. Not impossible, but much harder than it used to be. This includes OTCs folks because you have no idea what might get regulated at the drop of a hat. I can see all Tussins getting regulated now due to the Trayvon Martin use of Lean/Drank/or whatever you want to call it. And this stupid "bath salts" thing might make it more difficult to get OTCs in general since there are too many people who apparently don't have the commonsense of a rock.

[tanstaafl]

2+2 still equals 4 in my world.

Why would the insurers decide just about two weeks before the most crucial election in Greek history to stop insuring trade credit to a nation which has had horrid credit and track record for payments for the last 3 year? Basic analysis, no rocket science needed, seems to indicate that the bankers who own these companies wish to apply pressure on the Greek people to VOTE for "their party" which just happens to be the one which rejects national sovereignty. Sort of like voting for a D or R here but with food being used as extortion to achieve their goals.

2 + 2 equals 4 in my world, too. So do 1 + 1 + 1 + 1, 3 + 1, 1 * 4, 16 / 4, and every other possible mathematical variation. But speculation, no matter how good it sounds, is still not the same as fact. The timing is interesting and certainly potentially damning, but unless there's a smoking gun then ascribing intent is at best just informed speculation.

Note also that I did not say ALL the blame should be given to companies and/or people who refuse to ship to Greece without insurance -- I said "at least some." My objection was mainly in choosing the convenient target, maybe because a lot of people are more likely to perceive big businesses have big pockets that should be able to take big financial hits (at least in comparison with Joe and Jane Public, or whatever the equivalent expression is for Greeks).

Anyone who wants to make their own arrangements for payment from the Greeks (say, in the form of barter) are apparently still free to do so, although I don't actually know what the EU rules are on that sort of thing. Based on other EU-mandated activity, for all I know it's strictly prohibited and EU companies MUST strictly choose a single transaction option from Column A. Sort of like how you can get a driver's license in the US but by law MUST, no matter how good your driving record is, use an officially blessed private insurance company or cough up money directly to the state (ignoring for the moment the fact that laws don't necessarily work for people that operate outside the law to begin with).

[Berean]

Greece. I think they get their oil from Turkey who is fed up with not getting paid. Greece has reached the end of their ability to say "put it on our tab."

So this is what happens when the rest of the world says "Your US dollar is worthless". Something to think about if you still wonder if "IT" could happen here.

[TerryK]

The money they borrowed was spent on derivitives that was supposed to finance the government spending . That is what went wrong. The bankers lent them money they made out of thin air and now want everything in Greece including the slave labor of the Greek people. The Greek politians did this because they were paid bribes by the bankers to do so. If the Greek people are smart they will continue to tell the bankers to f=off .Those who worship money and are using it to try and take global control of the planet need to die

They didn't spend the money they borrowed on derivatives. Jeesh, it is really very simple. They spent it paying for things they couldnt afford. The same thing is happening to them as would happen to you or I if we somehow had unlimited credit and kept spending money we didn't have and couldn't pay back.

As far as your statement about bankers lending money they made out of thin air, don't you know that that is the way every bank or country creates money.
Before the EU, countries were able to inflate their own currency by printing more of it , but they paid a price of inflation as their currency became worth less and less.
Now they are members of the EU and using the Euro and they can't do that on their own anymore.

You need to understand that derivatives are a seperate issue and problem altogether.

[Kathy in FL]

So this is what happens when the rest of the world says "Your US dollar is worthless". Something to think about if you still wonder if "IT" could happen here.

Yeah, pretty much. So we need to get out of debt now starting with personal debt but the principle applies at all levels and in all areas. Commonsense says not to buy things you can't afford. Using a credit card or running a "tab" doesn't mean you can afford it.

[Donald Shimoda]

Howdy, Folks!


Looks like Greece may become the new hotspot for a special sort of tourism.

In all seriousness, it does make one wonder - is Greece gonna become the next Mexico or Thailand as far as a vacation spot is concerned for cost conscious consumers?

Think about it - beaches, hotels, and cheap labor all add up to a vacation destination for Middle to Upper-Middle Class America(and Europe and Asia as well).

[Dux]

2+2 still equals 4 in my world.

Why would the insurers decide just about two weeks before the most crucial election in Greek history to stop insuring trade credit to a nation which has had horrid credit and track record for payments for the last 3 year? Basic analysis, no rocket science needed, seems to indicate that the bankers who own these companies wish to apply pressure on the Greek people to VOTE for "their party" which just happens to be the one which rejects national sovereignty. Sort of like voting for a D or R here but with food being used as extortion to achieve their goals.

Chicken and egg. Could be that they are trying to affect the vote; also could be that they are trying to predict the results.

[Rastech]

Before the summer is out you will see EU troops on the streets of Greece, they will not be allowed to leave the Euro,

There'll be a lot of dead troops, that's for sure.

[Dredge]

They didn't spend the money they borrowed on derivatives. Jeesh, it is really very simple. They spent it paying for things they couldnt afford. The same thing is happening to them as would happen to you or I if we somehow had unlimited credit and kept spending money we didn't have and couldn't pay back.

As far as your statement about bankers lending money they made out of thin air, don't you know that that is the way every bank or country creates money.
Before the EU, countries were able to inflate their own currency by printing more of it , but they paid a price of inflation as their currency became worth less and less.
Now they are members of the EU and using the Euro and they can't do that on their own anymore.

You need to understand that derivatives are a seperate issue and problem altogether.

Early in the Greek meltdown there was a video on the Greek telivision news that explained the financial package that Goldman Sachs sold them . The Greek government paid Goldman Sachs a lot of money to offset their debt inside of a year that derivitive package whent under and begaan the whole Greek meltdown. You need to understand what how Goldman Sachs precipitated thewhole event.

[undead]

"Many might view the insurers as acting outside of this reach of the financiers of Brussels and Berlin but the world does not function in such a vacuum, and that belief is naive at best, overdosed with hopium and delusion at worse. The stories about further financial restrictions being placed on the importation of goods into Greece is nothing more than using food as a weapon, to starve the Greek voting population into submission to guarantee the bankers get their money back."


oh bull

these are for NEW loans - only a moron would lend to Greece at this point