WASHINGTON, June 27, 2015 – In “shocking” news that is no shock to the Maven, “talks fell apart between the Greek government and its creditors, and European officials said Athens’ bailout program will expire on Tuesday,” according to news just posted on CNBC.
The cause of this latest bit of Greek-Euro mayhem was obvious: Greek Prime Minister Alexis Tsipras, a die-hard Communist, cynically and unilaterally attempted to kick the economic can down the road again by scheduling an early July referendum on…well on exactly what remains uncertain.
In a statement currently being blasted out into the Twitterverse, former Greek Prime Minister George Papandreou characterized Tsipras’ “referendum” ploy with startling clarity for a politician:
“Tsipras exploits the ultimate weapon of democracy as a tactical ploy, undermining its political essence…. Τhis tactical use of a referendum is irresponsible, and undermines the concept of direct democracy and ownership of the program by the Greek people.”
Greece cannot pay what it owes to the International Monetary Fund—1.5 billion euros—on June 30 without another bailout loan. Without achieving an agreement by that date, Greece can’t get that loan. The Tsipras referendum ploy is another way to stall for more time and weaken the Eurozone’s resolve. It’s also proof that Tsipras never took the June 30 deadline seriously anyway.
Communists like Tsipras never negotiate seriously. Instead, they posture as heroes of the people for popular consumption while ignoring “the people” and their welfare in everything they do. (Remind you of anyone?)
Tsipras was and is all about giving the single digit to the capitalists, in this case, daring the Eurozone to come out against a “democratic referendum.” It’s great street theater but has now likely hardened the Eurozone against the Greek government.
As a result, the Eurozone assistance program to the Greek government is now virtually certain to terminate as the clock strokes 12 a.m. July 1 in Brussels, likely precipitating the long-dreaded but seemingly inevitable “Grexit,” or Greek Exit from the euro and back into a drachma that’s worth—what?
It remains to be seen whether there will be a Monday run on Greek banks—a run they cannot withstand without more European assistance—assistance that’s now likely not to be forthcoming.
Although they claim to have no plans to impose capital controls on bank-held citizen savings, it’s almost a certainty that Tsipras and his Communist ministers have been preparing to impose them all along in order to head off this potential, self-made catastrophe. Greek citizens seem to have suspected such a move, as evidenced by the steady, heavy withdrawals they’ve been making from Greek banks for well over a week.
According to several news reports, people have been queuing up at ATM machines this weekend to withdraw cash, given that banks are closed over the weekend. One news report says the Bank of Greece “was making ‘huge efforts’” to ensure their ATM machines remained stocked.
Even as all this chaos swirls about, Reuters reports that a majority of Greek citizens “favor accepting a bailout deal with international lenders, according to an opinion poll conducted before Prime Minister Alexis Tsipras announced a surprise referendum on the issue.”
In other words, Tsipras already knew about public sentiment − seen to be roughly 57 percent in favor of cutting a new deal with the Eurozone − but chose instead to ignore this virtual referendum in favor of his current grandstanding ploy.
As we’ve indicated many times in this column, Greece is the canary in the coalmine for the U.S., which is currently run by a similar but subtler Marxist gang. It remains to be seen whether either the average Greek or U.S. citizen will eventually have the guts to throw out governments that represent no one but themselves and their wealthy friends and supporters.
As for the stock and bond markets, at least in the U.S., we’ll just have to wait to see whether the ongoing spring fire sale has already gotten out in front of a potential Eurozone catastrophe or if the worst is yet to come. Sunday evening stock market futures numbers should give us a better idea.
Could the worm turn? Of course. But how much longer will European bankers and politicians allow themselves to be played before they, themselves, lose the confidence of their own citizens? We’ll see in about 72 hours.