Greece, Spain, Italy: Time’s Up

Time Is Up

Time for this one again…


According to the latest economic forecasts from the International Monetary Fund (IMF), released on Tuesday, Greece will miss the five-year debt reduction target that underpins the country’s 130 billion euro bailout.

The IMF forecast that Greek public debt will rise to 171 percent of gross domestic product (GDP) this year and 182 percent in 2013.

The IMF has also warned the Eurogroup of finance ministers who met in Luxembourg on Monday that Greece’s debt would need restructuring and that it will be almost impossible to reduce the country’s debt levels to a target of 120 per cent of economic output by 2020.

But the private holders were already restructured.

The remaining debt is held by the ECB and other institutions — including national banks.

“Restructuring” those bonds will trash their balance sheets, which in turn will force the ECB to either monetize the paper (in which case the cost of living will rise and so will unemployment and deficits) or the ECB will blow up.

The ECB and other officials put this noose around their own necks, and now the hangman is standing on the platform with his hand on the lever.

As personal incomes fall by 25 percent and youth unemployment increases to 55 percent, Doukas told CNBC, Greece faces its biggest hurdles yet and needed to pass reforms requested by the troika lenders (the IMF, ECB and European Commission).

“We are at the bottom of the pile…We need to balance our budget, reform our banking system…there are a lot of reforms that need to be taken…the more we delay, the more things get dragged on.”

The more you delay the worse the adjustment is that you have to accept.

This is coming here folks.  To the United States.  The off-balance sheet obligations of the Federal Government are anywhere between $60 and $180 trillion, depending on who’s numbers you trust.  This cannot be paid as it is at least four times the size of the entire economy.

We’re playing the same game they are.

The entire move in the markets since the spring of 2009 has been false, predicated on lies and frauds.  These frauds, unfortunately, are not just about deferring recognition of reality — each day they continue makes the problem much harder to address as the pile-up in the government’s debt numbers and forward obligations grows larger.

Enjoy what you think is a “good” stock market, for that illusion will be seen through soon enough.

PS: Get Out.

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