Greece has run out of OPM

This Greece thing is really scary. The thing is, the average person doesn't get it. The news media can't or won't explain it. They can't/won't because there would be more uproar if people knew how all this worked and how dangerously it is all balanced.

First, Greece. In USD their income has fallen from about $26,000 per capita in 2010 to $22,000 three years later. Meanwhile their current account deficit is $83 per head per month. Lets put this in human terms. Say you are leaving college and have a mountain of debt but it was managed. You get a job paying $26,000 per year. But you like to live well and borrow $1,000 per year to live it up. Next year your boss cuts your pay to $25K but you borrow the same $1,000. Following year pay goes to $23,500 then $22,000 the year after that. Business is really, really bad. You still borrow $1K in each of these two years to go out and eat, drink, and live it up.

At this point the underwriter at the bank goes to his manager and says, "we need to look at this guy's credit. He has declining income but keeps borrowing." Manager agrees and says, "hey, we want to keep doing business with you, but you are headed for disaster. If you want to roll this debt again you have to eat out two times less a week and quit going to the friday night party."

You then tell the bank manager, "up yours, try and collect! I'm living my own life!" You go to dinner as usual but when you slide your Visa card the waiter calls his manager and he says, "sir, we have a problem..........."



Now, what most people will say is, "the USA lives like this!" We do, but the difference is we can print money at will. The world is stupid enough to take it. Greece can't do this. The EU Bank actually expects them to pay it back.

So what happens now? It is inevitable that Greece will follow Cyprus and wipe out the bank savings of a majority of depositors. BTW: The USA does the same thing but we call it "inflation." This is a band-aid. Greece is now the person who had their car repossessed and now must shop the BHPH lot and have to take the car the salesman says they can take.

They may have to pay for imports in counter-trade. There will be shortages of all kinds of basic goods. They will be prey to larger nations looking to exploit the situation. Greece is a NATO member and strategically located. Don't think Putin would not stiff his people to get some advantage. Or China might muscle in.

It seems Greece is a place where it is easy not to work and there are too many government employees. One quote I saw from a college grad was that "the schools do not teach you to be a good person, they teach you to be a good communist."

Hard to say where it goes, but there will be much pain.

I totally agree AZD the average person has no idea how destabalizing to Europe and the rest of the world the Greek situation is. Everyone in the USA should take notes this could be your future. No one is speaking of Russia or ISIS but Greece is in the middle of that region. I expect if not revolution at least armed conflicts coming from this.

Quote: kenarman

I totally agree AZD the average person has no idea how destabalizing to Europe and the rest of the world the Greek situation is. Everyone in the USA should take notes this could be your future. No one is speaking of Russia or ISIS but Greece is in the middle of that region. I expect if not revolution at least armed conflicts coming from this.

It is the future of the USA to be sure. But it will feel different. When it hits here, the Fed will keep the presses running. As I alluded to, we will not lose our savings, it will be inflated away. If you put away $1,000 in 1964, the last year before money starting being really destabilized, you have the buying power of $131 today. It is this money printing, not "corporate greed" that is why families need 2 incomes now.

Yet the world still takes our USD. When they stop, American society collapses. End of story.

With the numbers of billionaires growing in
Russia and China and other places, I have to
wonder what that wealth is made up of. I
know a guy who's a millionaire and he's
always cash poor and in debt. All his wealth is
in rental properties.

This is scary. What should we be doing to make sure we don't end up like Greece? Should we all start trying to live more frugal, but then doesn't that hurt the economy and make things worse because we are not buying as much or supporting service industries enough? Everyone keeps talking about the interest rates, do they need to raise them?

Quote: FrGamble

This is scary. What should we be doing to make sure we don't end up like Greece? Should we all start trying to live more frugal, but then doesn't that hurt the economy and make things worse because we are not buying as much or supporting service industries enough? Everyone keeps talking about the interest rates, do they need to raise them?

Very good question. It is multifaceted. Collectively we need to quit spending so much at the government level. This will never happen. History shows that when a peoples start voting themselves goodies from the treasury they will never stop. In a few years we will hear how Obamacare is "not enough." A new program will be proposed. Hillary Clinton will possibly revive her call for every child to be gien $5,000 at birth. We will eventually have to fight ISIS. Politicians who call for sanity will be called "mean spirited." And we will spend more, more, and more. It happens to every country eventually.

So, what can we do? Well, it has to be done as individuals. First, get your own financial house in the best possible order. Eliminate debt. If possible, get an income producing asset, for example I own a duplex. Next, get skills. Hard skills. The USA is getting to be a nation of people with no skills. People can recite all kinds of history or work photoshop but can't change the oil on their car. When things collapse, skills will be what matters. Money may be so short we have to barter. Along with skills, start to provide at least some of your own food. Think "victory garden." In urban areas to think you will provide even half of your food needs is not realistic. But every little bit helps.

If you work with any "Yutes" in your parish, get them learning skills. Young people will be hardest hit as they have fewest skills and are least likely to own a house or have means to support themselves.

As well the Greek situation we have the Chinese stock market falling 29% in the last 3 weeks with no bottom in sight. We certainly are in for interesting times. Hang onto your hats everyone.

Why is it always one extreme or the other.
Things will not 'collapse'. They didn't in
the Depression and they won't now. If
it gets bad, people will have to do with
less toys. They will learn to cook for
themselves again. They will live in the
same house for 20 years, buy new clothes
only when they need them. Things will
go on if you can't buy a new iphone
every year or one of the hundred other
things you can live without. The corn
and beef and wheat and pigs will still
grow. Have faith.

http://www.zerohedge.com/news/2015-07-04/greek-bluff-all-its-glory-presenting-grexit-falling-dominoes#comments

"That's right: by not monetizing European debt on its books, the ECB has effectively left Germany holding the bag to the entire European bailout via the blank check SPV. The cost if things go wrong: a third of the country economic output, and the worst case scenario: a depression the likes of which Germany has not seen since the 1920-30s. Oh, and if France gets downgraded, Germany's pro rata share of funding the EFSF jumps to a mindboggling €1.385 trillion, or 56% of German GDP!"

The Greek banks have already started "bail ins" as did Cyprus. Canada, the US, and New Zealand that I can rattle off have already passed bail in laws quietly while the masses were looking elsewhere. Due to the political and worldwide fallout from the security's frauds by the tbtf banks in 08, the new method will be confiscating depositors funds before government bailouts, when banks have NSF. It's the law.

Bernie Sanders [pres. candidate] suggested the US loan Greece money which would do a passthrough and only help the creditors without helping the Greek people at all, did so because he didn't want Russia/China to seduce Greece by helping them out of this mess. Russia has already offered billions. Europe/Nato is in panick mode as they don't want Russia to get the warm water ports, Meditteranean islands and a new route for Russian gas to Europe bypassing the Ukraine.

This is the continuation of the "great game" and world power politics at it's finest. In the chart above, Germany and France have the greatest exposure to Greece's non payment. The losses will be shouldered by taxpayers.

The only thing backing up 600 trillion in derivatives is, using loans as collateral. If some creditor along the chain doesn't pay, the next one can't either.

Either the federal reserve will have to bail Greece out [whether we are told or not] or Europe bails them out, or Russia/China, this can't play out like what appears on all the mainstream media.

This interconnectedness is going to bite everybody.

Reminds me of the city in Alabama that
voted a few years ago to cut pensions
and city services to stay solvent, just
like Greece did. Hell no, they said. We
deserve 80% of what we made working,
in retirement.

3 months later they were cut off entirely,
and remain cut off today. Socialism at
it's best.