I don't know. I can't tell. At first it looked like Greece was on the cusp of accepting the EU's hammered-out proposal which included banks taking a 50% haircut on Greek bonds among other concessions. Then, Greek Prime Minister George Papandreou announced he would put the proposal to a referendum vote in Greece. I thought that was pretty neat, considering the anger, frustration and total lack of a voice the average Greek has in eurozone decisions.
There's been a whole lot of big decisions made on behalf of Greek citizens over the past couple years, and many of them occurred without consent or consideration to how those citizens might feel about it. So, putting the EU proposal up for a vote seemed almost quaintly and strangely democratic. And then... Papandreou reversed course. The EU proposal will not be up for a
Four sentences are enough to explain it. I would like to refer to Hyman Minsky. Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt by the non-government sector. He identified three types of borrowers that contribute to the accumulation of insolvent debt: hedge borrowers, speculative borrowers, and Ponzi borrowers. The "hedge borrower" can make debt payments (covering interest and principal) from current cash flows from investments. For the "speculative borrower", the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The "Ponzi borrower" borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments.
Greece shows that governments that do not longer have access to the printing press, behave in the same way as private borrowers. Greece was running a Ponzi finance scheme as defined by Minsky for over 10 years.
Whatever they decide now, they cannot escape the consequences. Once you have sold your soul the only choice is between the devil and Satan. I am sure that Greece will choose the devil. Devil is derived from the old German word "Tiufal", which has a Gothic / Latin origin. The Gothic / Latin word "Diabolus" was in turn derived from the Greek word "Diábolos".
The devil is coming back home.
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