They have just done it again, the international financial system and its operators have just kicked the can down the road once more: Instead of cutting off the gangrenous tissue (expelling Greece), which has been poisoning the whole body (Eurozone and global financial system), they decided to attempt once more to (appear to) try to cure the disease. They know gangrene cannot be cured, but they still did it.
If by the time Ponoka News comes out on Wednesday morning the Greek parliament doesn’t reject the deal their double-tongued prime minister cooked with Eurozone leaders, the people of Greece will have been burdened with an additional 80 billion Euros of debt, increasing their debt total to 400 billion Euros, almost three times the size of their economy. And this is being done with the approval of the International Monetary Fund, which just about a week ago said Greece would not be able to fulfill its current obligations without some debt restructuring, including some debt forgiveness.
The terms of the surrender of the Greek government to the European leaders is probably comparable to some of the conditions imposed by the Allies to Nazi Germany after the Second World War as what appears to have happened is that Greece has actually given away some of its sovereignty to Eurozone leadership.
This is just another sign that global financial system is refusing to admit that the current path is unsustainable.
As you may have heard, less than a month ago, Puerto Rico, a US territory, practically announced bankruptcy. After the City of Detroit, Puerto Rico is the second US jurisdiction to announce they are not able to pay their debts.
In the meantime, in China, last few weeks saw an almost freefall in two major stock exchanges which could only be stopped by the orders of the government preventing major stakeholders from selling their shares in an effort to stop the decline. (This very much looks like trying to make a diesel-engine car run on gas by a government decree, but that is another discussion.)
Although these symptoms emerge in different parts of the body, that is various regions of the world, they all point to the same disease, which is stealthily eating away the healthy tissues of the body. The name of the disease is indebtedness.
The stock exchanges in Shanghai and Shenzhen, which saw the declines, can only maintain their current high levels due to the huge internal debt the Chinese economy is carrying. Puerto Rico has got used to issuing bonds for so long that a proper supply-demand based economy cannot function on the island. Greece has been so graciously treated to generous loans by French and German banks that the people of the country have almost forgotten that they were also responsible for paying those cheap credits back.
And central banks around the world keep creating more debt by creating more money out of the blue by buying government and private company bonds, that is, debt.
To quote legendary commodity investor Jim Rogers, “this is going to end badly.”
Creating more money (read debt) is a desperate effort by global central bankers to try to patch an ever growing hole at the bottom of the global financial system. The problem is that the material they are using to try to patch up the hole is degenerating the healthy material it is attached to. So while on the hand the hole is getting bigger, the healthy material that can keep the patch functional is weakening on the other.
So sometime in the not so distant future, we will see the hole devouring the system itself. When it happens it will look nothing like the 2008 meltdown, it is probably going to dwarf even the 1929 Great Depression. We all need to be prepared….