Greece Just Blew Up the Empire’s Death Star of Debt

The Greek Elites and kleptocrats are terrified of the discipline that leaving the euro will impose, but the general public should welcome the transition to an economy and society that has been freed from the shackles of Imperial debt and the kleptocracy that has bled the nation dry.

Although the financial media is blathering about negotiations and gamesmanship, the truth is Greece just blew up the Empire’s Death Star of debt. There’s nothing left to negotiate except the official admission that the Imperial Death Star of debt, the most fearsome threat in the galaxy, has been blown to smithereens.

There are three fundamental points that need to be emphasized, mostly because they’ve been lost in handwringing, fearmongering and the ceaseless chatter of propaganda shills.

1. Impaired debt and defaults result from imprudent underwriting and lender incompetence/greed. Since when did it become accepted policy to reward imprudent lending, incompetence and greed?

Classical Capitalism is very clear on what should happen to lenders who ignored risk management; they get destroyed. As imprudently issued loans default, the losses pile up and the lender become insolvent. At that point, Capitalism kicks in and the management is fired, the stock goes to zero, the lender’s assets are auctioned off and the creditors are issued whatever remains after wages, taxes, accounts payable, etc. are paid.

There’s nothing complicated about it: Capitalism requires the discipline of losses being taken by those responsible, the firing of incompetents and the destruction of imprudent lenders.

Yet somehow the dominant narrative has reversed this essential core of Capitalism into blaming the borrower for the losses.

Look, if someone offers to loan me a billion dollars with no collateral and no assessment of the risks that I might not be able to pay the interest or principal, then who’s the fool? The idiot who wants to give me $1 billion without any risk assessment, or the borrower who takes the “free money” being offered?

Yes, no one should borrow money that they can’t pay back, blah blah blah, but theprimary fiduciary responsibility is on the lender to not offer loans to marginal borrowers and those at high risk of defaulting on their debts.

Yet the official line on debt is “the lenders are blameless, the borrowers are at fault and should pay.” The borrowers were imprudent to take on debt they couldn’t service, but it is the lenders who made the bad loans who are ultimately are at fault and who should suck all the losses.

Let’s set aside the propaganda for a moment and get real: anyone with the slightest knowledge of Greek finances and the power structure of the Greek economy/society knew it was insanely risky to loan Greece billions of euros. No one can deny this, yet somehow the lenders deserve to be paid for their avarice, stupidity, incompetence and total disregard for the standards of prudent lending? No, they deserve to be destroyed–closed down and their assets auctioned off.

2. Greece will not be wiped out by leaving the euro currency–it will be freed to rebuilt itself with prudent fiscal management and policies that reward investment and penalize risky borrowing, speculation and corruption.

Here’s the thing about Greece issuing its own fiat currency–it will force fiscal discipline in a way that the euro did not and could not. This is why the Greek Status Quo is quivering with fear–the gravy train of irresponsibility enabled by the euro is ending, and they are terrified of living within their means and having to face the discipline that the market will impose on the Greek fiat currency.

If there’s one thing Greece needs more than anything, it’s the discipline and the rewards of the market. Any nation that issues its own fiat currency has a choice: it can exercise fiscal prudence and enforce policies that reward entrepreneurism, prudent lending, savings, wise investments, fair taxation, etc., or it can try to prop up its bloated, corrupt kleptocracy by printing rivers of fiat money.

If it chooses the Dark Side and prints money in excess, it will soon drive the value of that currency to near-zero. The kleptocracy that hoped to benefit from money-printing is impoverished or forced to move their capital elsewhere.

In other words, Greece returning to being responsible for its own currency is a good thing. The new currency will be valued cheaply relative to other currencies at first, and this is also a good thing, as imports will be unaffordable for all but the wealthy (kiss BMW sales in Greece good-bye) and everything produced in Greece becomes a bargain globally.

This will attract capital seeking places where it can make a profit and is treated fairly, and it will enable Greece to rebuild its export sector and boost its substantial tourist trade.

The promise that marginal borrowers would be transformed into sterling-credit borrowers by adopting the euro was always a fantasy–and a painfully visible fantasy at that. Anyone with their eyes even partially open could see that the vast differences in productivity, credit, risk and culture between the eurozone nations made the euro unworkable from the start.

It was equally visible that the eurozone’s inept policies and loose lending standards would obscure these fundamental differences until the damage would be too great to hide–which is exactly what transpired.

3. The hundreds of billions of euros in so-called bailouts did not help Greece–all they did was bail out imprudent lenders and Euroland Elites. Virtually none of these vast sums helped the Greek nation or its people; what little did stay in Greece flowed to the kleptocrats that continued to rule Greece.

The harsh reality of misrule and corruption was recently spelled out in Misrule of the Few: How the Oligarchs Ruined Greece:

“Greece has failed to address (rising wealth/income inequality) because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families — an oligarchy in all but name — has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held.”

Greece just blew up the Death Star of debt, and now the threat has been lifted from other debtor nations suffering from the yoke of Imperial misrule. The Greek Elites and kleptocrats are terrified of the discipline that leaving the euro will impose, but the general public should welcome the transition to an economy and society that has been freed from the shackles of Imperial debt and the kleptocracy that has bled the nation dry.


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  • Voice of Reason

    You could say this about just about any Western currency:

    ”Let’s set aside the propaganda for a moment and get real: anyone with the slightest knowledge of Greek finances and the power structure of the Greek economy/society knew it was insanely risky to loan Greece billions of euros.”

    The West, Germany apparently excepted, has been paying its way in the world with debt ever since
    globalization and the Washington consensus kicked in. The whole Western political establishment likes this because it is much easier to borrow than tax. The United States, and in particular its “Congressional military industrial (and now financial) complex” likes this arrangement because Wall Street can remain the world’s chief purveyor of debt and its military the chief “muscle man for Big
    Business, for Wall Street and the bankers”.

    Smith appears to have a blind almost religious faith in the redemptive powers of free markets. If there ever was such a thing as ‘free markets’, in the age of mature Industrial Capitalism it is doubtful if they could exist anywhere but on the fringes of the economy. One thing economists got right was ‘economies of scale’. Greece will be able to “rebuild its export sector” only to the extent that sector doesn’t compete with say factory olive farms in the U.S. or starving workers in the ‘developing world’.

    People like George Soros make a good living insuring the “Empire’s Death Star of Debt” survives and prospers. Don’t expect either the U.S. or the United States of Europe version to go quietly into the night. There is, however, something to be said for EVERYBODY, freed from the odious debt imposed by the Lords of Finance, starting over and dividing up the rewards of needed, genuinely productive economic activity. (Those of us who might be left out in the cold by that first criteria can be employed studying the machine that sustains us and the myths and lies being used to destroy it and enslave
    us.)

    See http://www.nakedcapitalism.com/2015/02/the-ecb-ready-to-put-a-choke-chain-on-syriza.html for a good discussion of Greece and where to from here.

  • Brabantian

    Sad how quickly people get duped by ‘fake opposition’ frauds pumped by mainstream media … Just look at the new Greek Syriza government. Leader Alexis Tspiras is tied to George Soros funding, was warmly welcomed in USA in 2013 at IMF& CIA-Brookings stink think tank, is invited to upcoming Bilderberg 2015 in Austria. His finance minister Yanis Varoufakis, alleged ‘radical’, was well-wired inside USA, advised Papandreou last decade, is expert on ‘game theory’, i.e., bluffing & lying to obtain objectives. Seems with Greece it’s all just a show, Kabuki theatre. Any EU – Greece ‘conflict’ or ‘crisis’ should be seen as pre-scripted and under orders so big oligarch players can profit! …

    3 things that forever rain down on us:
    (1) False flags big & small in an ‘Operation Gladio’ world, whereas most big ‘terrorist’ incidents are gov-sponsored … Just look at how quickly the official ‘Charlie Hebdo’ story is unravelling
    (2) Media control & lies, overseen by CIA-Google & CIA-Wikipedia, then MSM plus psyop gate-keeping fake ‘alternative news’ & websites, such as the Rothschilds’ UK Guardian and Glenn Greenwald with their ‘Edward Snowden’ fraud
    (3) Ever-new fake ‘controlled opposition’ parties, governments & politicians, along with fake ‘dissidents’ & ‘radicals’, such as the Dick Cheney – Zbig Brzezinski pal, CIA agent Snowden

    Yet progressives are lapping up these stories handed to them by CIA-tied media … and then embarrassed by being duped, reluctant to face clear facts, e.g.:
    Russia gov FSB SVR report, Snowden Greenwald are CIA frauds
    http://homment.com/3K3xdsYD7a
    EU police report – ‘CIA Wikipedia Fraud, and 20 Major Techniques of Wikipedia Deception’
    http://homment.com/FB3PjBQ2DF

  • Santiago

    Too bad left to the yankees be progressive. You like Paul Krugman ominous claim that Greece will become a country of waiters and taxi drivers, a Cuba in the 50’s. The biggest mistake you can make is to get the Greek euro, unless they intend not pay anything should, which I doubt. If they have to restructure all its debt (ask haircut of 50% or more), labor laws that protect workers, encourage consumption, etc .. An own currency would generate them immediate inflation and consequently greater inequality and poverty, the rich would save in foreign currency and investors few currencies to generate tourism lead. tells you a Peronist and Kirchnerist from Argentina.
    Regards

  • jadan

    Who was responsible for creating the unpayable Greek debt? The elite investor class of financial crooks, which is stateless, a global elite of economic hitmen.The management of fiscal affairs in Greece was no more a product of a national referendum than it is here. The Greek people are not lazy work-averse parasites. That describes the creditor class. There was no democracy in Greece, just as there is none here.

    Why was the debt, created by financial sector parasites unpayable? The usury cost was too high. Debt is generally 40% or more interest/usury. Strip that cost and the debt could have been managed more than likely without onerous cuts to the national budget, so-called austerity. The “miracle of compound interest” by means of which the investor class thrives like a vampire sucking blood, is the universal tax imposed on the masses by the global masters/investors/creditors/landlords/aristocrats in our neo-feudal world. In other words, the debt supposedly owed by the Greeks to their masters is not owed at all in any moral sense. Capitalism is not moral. It is not like Hammurabi’s code or the ten commandments. The “market” is not an arbiter of anything because it is controlled by the wealthy that use it to enslave the mass of people.

    Smith’s analysis, as usual, is the conventional wisdom that ignores the problem it purports to solve. A return to uncorrupted capitalism in a free market is pure fantasy. Capitalism IS usury, a game in which the weak are perpetually exploited by the elite. The Dark Star of debt has not been blown up at all, Smith, unless the nature of capitalism/usury is addressed and changed.

  • IdPnSD

    You wrote – the borrower who takes the “free money” being offered?
    Yes, money is really free. Then you do not need it to run any economy. Any type of currency will always create the same old problem. Why do you need money? Work free and get everything free. As simple as that. Think carefully, you will be able to run this same economy without any money and still give any lifestyle that anyone wants.