Tag Archives: Greek Referendum

Greeks are about to learn the virtues of Bitcoin

6/28/2015 Portland, Oregon – Pop in your mints…

It appears that the Greek government is once again on the brink of an inevitable default on its Euro denominated debt.  This time, however, Greece’s Prime Minister Alexis Tsipras appears determined to take it over the edge, calling for a referendum on the whether or not the Greek people should continue to abide by its creditors’ bailout terms and extend their own misery or to give the proverbial middle finger to their oppressors in the north.

Monetary oppression

Greece, Where the Euro pays tourist prices
Greece, Where the Euro pays tourist prices

We use the term oppressors, for the current state of affairs has been held in place to ensure that Germany maintains a death grip on the Eurozone.  Greece stopped benefiting from being a member of the Eurozone the moment it accepted the yoke of a common currency.  Sure, it was a nice run for the entire Eurozone when times were good, but when times got tough circa 2008 the Euro handlers at the ECB cut rates too slowly, citing a tired “stable currency” bias, and generally struggled to maintain liquidity, which is pretty much “job 1” when one is running a currency regime.

Maybe the Treaty of Lisbon wasn’t such a good idea after all.

What happened next was a catastrophe that is only possible in a Central Banking/Tax Farm disconnect that the Eurozone’s half baked approach to unity has left as the norm.  You see, fellow taxpayer, in the United States of America, we have one Central Bank which runs the tax collection mechanism for the government.  This means that, with localized exceptions, the tax farm’s tactics and the Central Bank’s liquidity functions can work in an awkward harmony.  For those of us who pay Cesar annually via the IRS, this means that in a demented sense we share society’s burdens across 50 states.  To those of us in Oregon, it matters not that the State of California cannot pay its obligations (unless, of course, one is a creditor of the State of California).  It is taken as a given that the Federal Government will bail them out and the Federal Reserve will provide the cash (indirectly) to the Feds in order to do so.  Then, and this is where the magic happens, we all pay for California’s misdeeds via Federal taxes and inflation.

This same scenario was possible in Europe until January 1, 1999 (a day that lives in infamy) and had played out throughout much of modern history.

Not so today.  For today, in Europe, when the government of Greece hits hard times and cannot pay its bills, it has to beg its rich neighbors to the north for Euros, and accept whatever conditions they impose.  What is funny is that neither Greece nor its northern benefactors can actively emit currency in sufficient quantities to ensure their new contract can be paid.

What does it mean?

Which brings us back to the upcoming referendum.  While in our mind it is still even money that there will be a further modification of the Greek bailout and that the Eurozone will carry on as it has for 16 years now, there exists the strong possibility that Greece will “opt out” of the inconvenient currency part of the European Union.  What does it mean?  Beyond getting comfortable with Drachma exchange rates again, nobody knows, nobody has ever opted out of the currency after opting in (Denmark and the UK never got in).

The Greek people have decided that it means they are in big trouble, and they have been lining up at ATMs in order to get their hands on as many Euros as possible before the lights go out.  For Mr. Tsipras, this in turn means he must declare a banking holiday and capital controls, which is a time tested recipe for causing any remaining economic activity to screech to a halt as anyone with a brain and more than a few Euros to their name starts working 24/7 on ways to keep their assets off the government’s confiscation radar.

Bitcoins: What they are and how to use them
Bitcoins: What they are and how to use them

However, as in Cyprus, smart Greeks with a working data connection have a medium at their disposal that may ensure that their assets stay well away from their government: Bitcoin.

The mini-spike in Bitcoin indicates that the Cyprus scenario is playing out again.  If anyone recalls that event, it took the Bitcoin from relative obscurity to trading at around $1,100 before the mania wore off.  Will it happen again?

It is anybody’s guess, but here are some statistics that may help guide your own educated ponderings:

Population of Cyprus: 1.14M, pre banking holiday bitcoin price: $49 (March 2013), post banking holiday Bitcoin spike: $1,124 (October 2013)

Population of Greece: 10.82M, pre banking holiday bitcoin price: $249 (June 2015) , post banking holiday Bitcoin spike:  ???? (January 2016????)

We’ll let you do the math on the hypothetical situation we have planted, but the dynamics of what is occurring in Greece, from a monetary standpoint, are extremely similar to the Cyprus scenario.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 28, 2015

Copper Price per Lb: $2.61
Oil Price per Barrel:  $58.74

Corn Price per Bushel:  $3.85
10 Yr US Treasury Bond:  2.48%
Bitcoin price in US:  $249.46
FED Target Rate:  0.13%
Gold Price Per Ounce:  $1,174

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  5.5%
Inflation Rate (CPI):   0.4%
Dow Jones Industrial Average:  17,947
M1 Monetary Base:  $2,929,400,000,000

M2 Monetary Base:  $11,970,200,000,000

Greece, Inc., Anarchy in action!

11/1/2011 Portland, Oregon – Pop in your mints…

You can’t make this stuff up.  In case you are unaware, today, Greek Prime Minister George Papandreou made a surprise call for a referendum on the most next round of bailout funding that its big Euro brothers, Germany and France, spent so much time and political capital to arrange.  From Reuters:

The Greek government faced possible collapse on Tuesday as ruling party lawmakers demanded Prime Minister George Papandreou resign for throwing the nation’s euro membership into jeopardy with a shock call for a referendum.

Caught unawares by his high-stakes gamble, the leaders of France and Germany summoned Papandreou to crisis talks in Cannes on Wednesday to push for a quick implementation of Greece’s new bailout deal ahead of a summit of the G20 major world economies.

Apparently, it was a surprise even to those in Athens, the article continues:

Papandreou did not even inform Finance Minister Evangelos Venizelos he was going to announce the referendum on the latest EU aid deal, a government official told Reuters.

“They must be crazy… this is no way to run a country,” said a senior executive of one of Greece’s biggest firms, speaking on condition of anonymity.

Yes, Anarchy is now trumping the nation state.  Let us examine the phenomenon which is currently playing out in Greece, for it is highly likely to play out in nearly every Western Democracy before Anarchy comes in to give its people a bear hug.

Allow us to present this development in terms of Greece as a Corporation to make clear the absurdity of the present situation. 

Greece Inc., the security and welfare agency, is one of the oldest in the Western world.  It is currently running an unbelievable operating deficit and is awaiting 8 Billion Euros payable in mid November under a financing deal that its largest creditors have essentially negotiated for it.

George Papandreou Jr - CEO Greece, Inc.
George Papandreou Jr - CEO Greece, Inc.

Mr. Papandreou, the CEO of Greece, Inc., along with Greece Inc.’s creditors, has been negotiating a new, complex financial deal which will allow the bankrupt corporation to continue to fund its security and welfare activities, albeit at reduced levels.  Without this deal, Greece, Inc. will run out of cash in January 2012.

Mr. Papandreou has been slashing the preferred dividends (welfare payments) and salaries of the Greece, Inc.’s shareholders and employees in order to comply with the terms of the current financing deal.

Looking ahead to January 2012, Greece Inc.’s lenders have “negotiated” yet another deal for it to be able to fund its operations past the corporation’s next D-Day.  Naturally, the deal includes a lot more “shared pain” in the form of further reductions to employee salaries and preferred dividends.  Naturally, this comes as unwelcome news to the employees and shareholders.

Sensing that he is losing control of the company, Mr. Papandreou suddenly feels the need to get “buy in” for the new deal from all affected parties.  Today, without consulting its creditors, Mr. Papandreou announced that he is presenting the complex financial deal for the formal approval of his enterprise’s (Greece) captive shareholders.

To make matters more interesting, he is scheduling the approval vote (aka the referendum) to occur at about the same time that Greece, Inc. is scheduled to run out of cash in January of 2012.  This may be the ultimate in financial brinksmanship.

Naturally, the potential funders (Germany, France, China, etal) are taken aback at the sudden “need” to gain shareholder approval.  This is something that is, while perfectly legal, completely unexpected and has introduced yet one more variable in what is already a complex deal.

Naturally, the introduction of this new variable has sparked anyone who is currently owed money by Greece, Inc. at a future date now trying to sell Greek bonds for whatever they can get for them, virtually eliminating the market for Greek debt and, in the process, making the creditors who are ready to sign the new deal with Greece, Inc. look extremely foolish. 

Beyond foolish, it naturally calls into question the motives, decision making ability, and ultimately the creditworthiness of said creditors Germany, Inc., France, Inc., and China, Inc. and their banking subsidiaries.

Crony Capitalism, there is nothing natural about it.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 1, 2011

Copper Price per Lb: $3.51
Oil Price per Barrel:  $91.50

Corn Price per Bushel:  $6.54  
10 Yr US Treasury Bond:  2.00%


Gold Price Per Ounce:  $1,720 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.3%
Dow Jones Industrial Average:  11,658  

M1 Monetary Base:  $2,071,500,000,000 RED ALERT!!!
M2 Monetary Base:  $9,607,200,000,000 YIKES UP $1 Trillion in one year!!!!!!!