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Protestor's graffiti in Greece.
(Translation: "Vote for Ali Baba, he only has 40 thieves."
"In the directors
'opinion, there are reasonable
grounds to believe that
the Company will be able to pay its debts as and when they become
due and payable."
Directors of corporations big
and small are obliged to make such statements,
as shown above, in the accounts of the corporation, otherwise
they could well be personally
responsible for any further debts incurred by their corporation
by continuing to trade when the entity is in fact insolvent.
The funny thing is that
politicians are not required
to make any such statement and are never personally responsible for the mess they leave behind despite the catastrophic consequences to their nation, their citizens and the future. They simply walk
away with their full pensions and entitlements
regardless of how the nation fared.
The truth is that virtually
no politician could sign such a statement
because they are fully aware of the precarious nature of their nation's finances as well as
the world's economic
system.
Greece is currently
in the eye of the storm that is brewing
in Europe and clearly would
have defaulted in 2010 had it not received
any assistance. It is now even clearer
that its Prime Minister does not have reasonable grounds to believe that Greece will
be able to pay its debts as and when they become
due and payable without the provision of further loans by Europe and the
IMF.
Then again, it's not just Greece but also Spain, Italy, Portugal Ireland and finally
the USA amongst many others who are propping themselves up with fictional expectations, fictional money, fictional statistics and fictional calculations. It's not just the accrued debt of these nations along with their
current fiscal deficits that is daunting.
It is also the insurmountable size of their unfunded pension and medical
obligations.
The Europeans will no doubt not allow Greece to default in the legal sense as they would not be able to stem the tide of cascading defaults occurring across Europe. But I repeat, there is no package that will save
any nation against the eventual tsunami of unfunded liabilities. There will be great relief when Greece signs
the new deal which in reality is
just a reprieve from execution. The markets will rise and the fools in Europe will rejoice.
However, until such times as politicians are obliged to sign on the dotted line, making themselves personally responsible for any worsening fiscal situation, we
are condemned to spiral towards
the economic drain.
Until they are obliged to mortgage their homes, their businesses
and the retirement accounts as a sign of good faith and unless they commit their own sons and daughters and grandchildren to
the battlefields of this
world, there will be no changes.
Until certain members of congress are subject to the same rules and penalties for insider trading as the rest of the population, they will continue to outperform the
professional fund
managers.
Until government stops harassing girl scouts selling
cookies on the front lawn of their
home and instead rounds up those
bankers that raped the system with arrogant callousness, there can be no faith
in justice.
So while they try to prop
up Greece, Portugal and Ireland, and whilst the USA can continue to print, it seems
that everything will be OK. But it won't. Even
a fool with a broken calculator can see that
the figures do not add up.
And so what is the bottom
line? Well the day
arrives when the expectations of citizens far outweigh the means and the savings of government to make good on prior promises. This is what unfunded liabilities really are and at that point war will decide
who gets what....because the printing press can no longer
delude and denude the
populace.
Greece and the others are already in default because they cannot make
good on their unfunded liabilities. Legally it may not have happened, but in practical terms the outcome is set in concrete.
Do you have gold and silver?
Here is one "clever" man's response:
"I've never been that fond of gold
and also it's too heavy. You could fit $25 million of rubies
in your shoe with your foot in it and actually walk around and not feel uncomfortable because there's that kind of concentrated value."
Jeffrey Gundlach
CEO & Co-Founder of DoubleLine
Capital
How many of you have entrusted your fiat fiascos to such men?
That is what I would call a death wish. In fact Mr Gundlach might be surprised to know that $25 million in gold weighs
the same as $25 million in
$50 notes and takes up less
space.
Dear readers, all nations
have in effect defaulted
on their future obligations (if not their current ones) and for those of you that understand
this point, you are given the precious opportunity of preparing yourselves for the eventual reckoning that will take place once the general populace wakes up with an empty stomach and an angry
disposition.
The smarter and better managed economies of Europe will steer clear of getting mixed up with the
basket cases of Europe. If they don't
(and it looks that way) they will
in the fullness of time of time understand
what is meant when they
say, "sleep with camels and you will wake
up with fleas."
If Greeks think that the worst part of austerity is over, then they will be
sadly disappointed by the
new measures the government
will put into effect shortly and the new
package she will be offered by her European partners. Tax free thresholds for pensioners, salary and wage earners and self employed
people will be reduced, value added taxes will be further
increased as will the cost of fuel and heating oil. On top of that, property valuations will be adjusted
upwards despite the fall in property values and that in turn will lead to other tax increases. That's right, last years European straight jacket will seem like a mink
coat once the new screws
are turned.
The Europeans have already indicated that they want
to run tax collections
and the sale (fire sale) of public property. Who knows, the people might accept such an arrangement if
the Europeans promise and deliver
on the prosecution of those
politicians who literally sucked the country
dry with secret commissions and cosy deals over the
last 30 years.
In fairness to the current socialist government in Greece, it must be said
that many of the changes they have tried to make are necessary, but the number of changes being pushed, the time frame allotted
as well as the general world
economic climate made a successful outcome highly unlikely from the outset and simply antagonised the populace
and accentuated the downturn.
Right now, any European holding Euros as a
major portion of their wealth
is worse off than the man who has bet on the slowest horse in the
race. Slow horses eventually
cross the line. What is
not so clear is whether the Euro will get over the line or whether it will
be dead on arrival by the time this crisis resolves itself.
So which will it be?
Unfunded liabilities denominated in fiat or fully funded assets such as gold and silver?
Peter
Souleles
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