GreeceFire On Line 1 Sir!

GreeceFire On Line 1 Sir!

Posted by Karl Denninger

See, I told you so…..

March 18 (Bloomberg) — Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package.

Papandreou said he may turn to the International Monetary Fund to overcome its debt crisis unless leaders agree to set up a lending facility at a summit March 25-26.

How about this?

Your nation made the mess, now clean it up!

“It’s an opportunity to make a decision next week at the summit,” Papandreou told reporters in Brussels today. “This is an opportunity we should not miss. When you have that instrument in place, that could be enough to tell the markets hands off, no speculation, let this country do what it’s doing.”

What’s wrong with speculation when you give people reason to speculate?  More to the point, is it speculation if you get caught lying on your financials and taking intentional actions designed to cover up your true debt position?

I’d call that an educated guess, and it’s very different than “speculation.”

Greece pinned its hopes on the Brussels summit as German officials voiced qualms about an EU-led rescue, potentially backtracking on a commitment hammered out by finance ministers just three days ago. Greek bonds and the euro fell.

There was no commitment.  There was an attempt to jawbone – that is, lie – by politicians who find it easy to lie.

The market, however, calls all bets. It always has and always will.  If Greece learned anything from our little market collapse in 2008 it should have been this – remember, Hank (I’m gonna roll the tanks!) Paulson tried this very same game – repeatedly.  It didn’t work – not with Bear Stearns, not with Fannie, not with Freddie, and not with Lehman. 

It didn’t take long for the market to decide that he was full of the dark side and press the bet, and as soon as that happened we found out that the “Bazooka” was really nothing more than a fancy form of bankruptcy. 


If Greece doesn’t like the consequences of getting caught cooking the books, one solution would be to stop doing that and come clean with the people – even if it results in your government being sacked.

The “reaction” in Greece to reality poking its head in the tent is instructive, and something that all developed nations that have decided to go down this sort of road with lying about fiscal and banking matters (cough-United States-cough-Britain-cough-Spain-cough-Germany-cough-Portugal-cough-take-your-pick) should pay attention to. 

I wonder if it has sunk into the consciousness of Obama and Geithner, along with Congress, that having “replaced” 10% of consumer final demand in the economy in a ridiculous (and doomed) attempt to prevent bad debt from being defaulted, not to mention the lies told about our actual fiscal situation (holding retirement “promises” off book anyone?), we (along with a bunch of other nations that have done the same) are headed down the same road that Greece is.