Preston Clive
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Preston Clive in Preston Clive - THE IRRITATED AMERICAN, Wielding The Digital Hatchet,

N E I N ! ! ! ! ! !

During the German 1920's devalued currency burned longer than the firewood the same currency would buy. (PIC: dollardaze.org)

BY PRESTON CLIVE

Well, the moment of climax in the fantastically dismal Greek drama in the round playing out before our eyes has arrived. It is finally here. The response to the Greek finagling, wiggling around and playing off of the people and the press, playing as many sides as possible against the cent(ral bank).

That answer was a flat, disinterested No.

No--even when Greece caved and asked for an extension of the Bailout Programme... language the zone was waiting for. This is likely payback for the namecalling, and use of the word Nazi when describing the Germans. The Germans now think the offer to play ball is nothing but a trick, and a "Trojan Horse."

Greece had assured us yesterday that they would indeed stop the squirming and fighting, and would formally submit a request for a loan extension. The problem, which we all knew, was that they were independently taking the position all on their own that the larger "programme" within which any loan extension would fit--and has historically fit along with austerity measures of tough medicine towards recovery--was dead and gone. 

Apparently the Greeks thought that the Germans and their eurozone creditors were bluffing, that they feared the withdrawal of Greece from the euro with all of the corresponding repercussions much more than they feared an adjustment or total elimination of the austerity measures built into the program. They saw that this wasn't the case, and blinked today. Or gave the appearance of blinking, and "agreed" to a continuation in theory to austerity.

Apparently the Greeks just got their answer: the Germans don't trust the Greeks. If the eurozone ministers are answering as one, and there has been very little sign of disunity among the Euro Finance Ministers engaged in the ongoing talks with the Tsipiras team, then one can confidently anticipate a unison roar of No's and Nein's spewing forth from them.

It's looking more and more like heels have dug in just to deep on all sides for there to be positive movement towards mutual trust and resolution. In the interim, while the Greeks run out of money towards the end of the month,  the ECB upped the limit of emergency liquidity assistance a mere 3Bn eur by raising the limit on ELA to 68.3 billion euros (77.9 billion US dollars) from 65 billion euros. Horse feathers.

The repercussions of a Greek exit are calamitous; frayed nerves rushed all week towards this calamity via the contagion of public pride and a sense of having nothing left to lose. Now at the last minute after playing an extremely irritating and insulting game of chicken, the Greeks want to convince the world they have made an about face. The truth is they all know full well there is an enormous amount at stake--the Greeks will have a future cranking out new drachma at an alarming pitch, with capital controls exerted so that those few left on the employment rolls will not need to be paid with wheelbarrows full of worthless paper. If you think this is science fiction and pure humorous exaggeration, see post war German depression in the 1920's following the Versailles Treaty reparations which wrought havoc on the local economy--itself sagging in a larger economic global murk. Employers got to the point to where they had to rush massive piles of money to their employees--a loaf of bread cost over 420 billion marks--before the inflation worsened and the amount became exponentially worthless. If you want proof of all of this, search out images of the 5 Billion Mark postage stamp.

On the eurozone side a Grexit would cost those who are snarling loudest--Germany--dearly. Want to talk creditor side repercussions? Let's talk Target2 Greek liabilities which would unspool with a Greek withdrawal from the euro, to the tune of 49 Billion euro's worth .

I sincerely hope that the fear of the reality that seems to be now--truly and for real--staring Europeans in the face will scare the major players into some form of pride-swallowing and get them on cool, calm, regrouped mission of Aversion. Aversion of a euro landslide.

The European forests can't withstand the damage wrought on them by the paper demand a Grexit would require. Cranking out all of that worthless New Drachma will deprive future generations of really really nice summertime shade.