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To Greece: Give Them The Finger

 May 09, 2012 01:46 PM

(By Karl Denninger) Greek leaders have apparently put forward the following:

Alexis Tsipras of Greece's Syriza party squared off with political leaders before talks on forming a coalition, handing them an ultimatum to renounce support for the European Union-led rescue if they want to enter government.

Tsipras said he expected Antonis Samaras of New Democracy and Evangelos Venizelos, the former finance minister who leads the Pasok party, to send a letter to the EU revoking their written pledges to implement austerity measures by the time he meets them today to discuss a government alliance. Samaras and Venizelos rejected the request. Samaras said he was being asked"to put my signature to the destruction of Greece."

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"He interprets, with unbelievable arrogance, the election result as a mandate to drag the country into chaos," Samaras said late yesterday in televised remarks. "I hope Mr Tsipras will have come to his senses by the time we meet." Tsipras is due to meet with political leaders from about 5 p.m. in Athens.

As opposed to what?  Slavery?

Is it not better to die on one's feet than live on one's knees?  You have to wonder where the line is at times like this, and it clearly does exist.  I'm not the one to judge where the line is for the Greeks, but it certainly isn't a foregone conclusion that elections don't matter or that future governments are bound by the decisions of the former.

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"Nobody in the club of euro countries should be led out the door," Michael Meister, the deputy caucus leader of Chancellor Angela Merkel's Christian Democratic Union, said in the Berlin parliament today. "We show solidarity with Greece and other countries. But solidarity needs a basis. This basis consists of necessary structural reforms in the area of fiscal policy."

Really?  So when are you going to start?

Specifically, when will the people who geared up into knowing and active frauds be held to account?  That includes your banks over there in Germany, incidentally, along with manufacturing concerns who were and are pumping out products that the receiving nations cannot afford. 

You cheered this on when it was all hidden under the rug and took the money.  Now you want to keep it.  Greece proposes that they will not go along with that.  I don't blame them, frankly.

I'd be more sympathetic to the German position if their banks were forced to eat every nickel of the credit expansion that they shoved down everyone's throat and were operating in a completely transparent fashion with "One Dollar of Capital."  But they're not and won't; instead they are applying to the government to use its monopoly on force to demand that Greece protect their bad investments.

The correct answer from Greece is this:

Incidentally it appears the Troika is making noises about threatening not to release the next scheduled tranche of funds.  That's fine; they don't have to. 

And the Greeks can have a bonfire with the so-called "renegotiated" bonds and mark them at zero, instantly detonating everyone who "bought" them and then repo'd them a dozen times or more back into the ECB or somewhere else.

That's exactly what Greece should do -- force a "One Dollar of Capital" standard up the back side of the European banking system on their terms by declaring all of their outstanding bonds to be worth nothing.

At 50:1 gearing that ought to leave more than a couple of smoking holes in Germany, France and elsewhere where banks used to stand.

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