The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Greece Runs Out of Other People’s Money

Posted on | June 27, 2015 | 115 Comments

The Eurozone’s problem child throws a tantrum:

Two senior Greek retail bank executives said as many as 500 of the country’s more than 7,000 ATMs had run out of cash as of Saturday morning, and that some lenders may not be able to open on Monday unless there was an emergency liquidity injection from the Bank of Greece. An official with Greece’s Capital Markets Commission, the markets’ regulator, also warned that the Athens Stock Exchange may be unable to operate on Monday without a cash injection into the banking system. A Greek central bank spokesman said it was making efforts to supply money.
The European Central Bank’s governing council was expected to hold a conference call on Sunday to review the banks’ liquidity condition, said a Greek official, who asked not to be named in line with policy. The Frankfurt-based central bank said in a twitter post that it’s closely monitoring developments and would review the situation “in due course.” . . .
Euro-area finance ministers rejected Greece’s request for a one-month extension of its aid program, which expires Tuesday, shutting down any last chance for a financial stopgap until the referendum is held.
After withdrawing more than 30 billion euros as the anti-austerity Coalition of the Radical Left, or Syriza, took power, depositors are now reacting to the latest twist in the five-month standoff with European leaders and creditors.

(Via Memeorandum. More at Legal Insurrection.)

In addition to Margaret Thatcher’s famous maxim about socialists eventually running out of other people’s money, there is also Stein’s Law. This was coined by Herb Stein, chairman of the Council of Economic Advisers during Richard Nixon’s presidency: “If something cannot go on forever, it will stop.” And the problem of the Eurozone’s weaker nations expecting bailouts from their rich neighbors obviously cannot go on forever. So what happens when it stops? We don’t know.

Portugal, Spain, Italy and Ireland — the other fiscal weak sisters in the Eurozone — may manage to avoid default, and the richer EU nations may be able to stabilize the overall regional economy. If so, the Greek problem is just a Greek problem. On the other hand, who knows?

Greece’s European partners shut the door on extending a credit lifeline to Athens, leaving it facing a default that could push it out of the euro after the leftist government rejected tough lender demands and put their bailout deal to a referendum.
Finance ministers of the other 18 countries sharing the euro met for the first time without Greece and flatly rejected its pleas to extend an expiring bailout until after the referendum on July 5 and setting the stage for Athens to default on a crucial IMF payment on Tuesday.
The 18 pledged to do whatever it takes to stabilize the common currency area and said they were in much better shape to do so than at the height of the euro zone crisis a few years ago. In a formal statement, they also implicitly urged Greece to impose capital controls to stabilize its banking system.

We’ve spent seven years in a slow, weak recovery from the crash of 2008, and it might be that the Greek crisis will trigger a worldwide recession. Riots, famine, hyperinflation — anything is possible.

“Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes! The dead rising from the grave! Human sacrifice!
Dogs and cats living together! Mass hysteria!”

OK, probably not that bad. But you never know . . .



115 Responses to “Greece Runs Out of Other People’s Money”

  1. Quartermaster
    June 27th, 2015 @ 7:39 pm

    Libtards never learn. If they did, they would quickly cease to be libtards. They never got beyond toddler stage where they throw a hissy fit if they don’t get what they want.

  2. Daniel Freeman
    June 27th, 2015 @ 7:54 pm

    That reminds me, I highly recommend Vox Day’s blog. Living in Italy now, he’s been following the Greek situation closely. He came to my attention as the head of the Rabid Puppies, but he also has a solid understanding of economics, in addition to being (among other things) a Christian libertarian and an unrelenting cultural warrior.

  3. Evi L. Bloggerlady
    June 27th, 2015 @ 7:58 pm
  4. Adobe_Walls
    June 27th, 2015 @ 8:26 pm

    Long way to go for a salad.

  5. Adobe_Walls
    June 27th, 2015 @ 8:34 pm

    I’m really tired of the mock suspense. Greece simply could not, not arrive at this point. Absent another great financial shock the other PIIGS may be able to stumble about on this side of total collapse for decades. Hell, Italy’s been lurching from crises to crises for a century. Greece would have been much better off defaulting five years ago.

  6. JeffWeimer
    June 27th, 2015 @ 8:58 pm

    I remember when Bear Stearns went under, and everyone thought it was just an isolated thing. 9 months later, it seemed as if the sky was falling.

  7. Adobe_Walls
    June 27th, 2015 @ 9:54 pm

    The difference is that everyone knew this had to happen five years before the fact. The delay of the inevitable may help the Eurozone but does very little for Greece.

  8. Art Deco
    June 27th, 2015 @ 10:00 pm

    he also has a solid understanding of economics,

    Don’t know about that. He was promoting Austrian inspired disaster scenarios five years ago. Didn’t pan out.

  9. Art Deco
    June 27th, 2015 @ 10:04 pm

    Greece is a contextually small economy and it’s experience of the last 7 years has been notably different from that of the other PIIGS, who have faced much milder economic implosions and among whom only Spain has a labor market in such disastrous condition. All parties have had ample time to price in a default re the value of Greek debt.

  10. Art Deco
    June 27th, 2015 @ 10:10 pm

    I do not remember it that way. I seem to recall figures as disparate as Megan McArdle, Paul Krugman, and Nouriel Roubini either quite purturbed or saying toldyaso.

  11. M. Thompson
    June 27th, 2015 @ 10:17 pm

    And this is how it ends.

  12. JeffWeimer
    June 27th, 2015 @ 10:35 pm

    Everyone still has no idea what this means going forward. I get a feeling that everyone hopes, like Bear Stearns, this will be isolated to Greece.

  13. Eastwood Ravine
    June 27th, 2015 @ 11:23 pm

    Coming soon to a bank in America near you. Welcome to the future normal. Be afraid, be very afraid.

  14. Eastwood Ravine
    June 27th, 2015 @ 11:30 pm

    Of course they have the small minds of a toddler. They engage in magical thinking. If they believed in the reality of economics, they wouldn’t be Libtards!

    Tomato, to-mah-to.

    P.S. My pet dog knows economics better than Libtards. He knows he has to do something of skill to get a treat.

  15. Evi L. Bloggerlady
    June 27th, 2015 @ 11:46 pm

    True, but it’s good to see the Parthenon before ISIS gets there. The beaches are fine and the ouzo is still flowing…at least for now.

  16. DeadMessenger
    June 28th, 2015 @ 1:02 am

    Revelation speaks of the tribulation period, which is a time of worldwide judgment, not just judgment of specific geographies (which we can expect for the things this country has done, e.g., see picture of “Pride” Whitehouse in previous article).

    According to evangelicals and fundamentalists (of which I am one), first comes the Rapture. Then comes the Seal judgments.

    The first seal is the unveiling of The Antichrist. He establishes/confirms a peace treaty, which is why he rides out carrying only a bow and no arrows. The second seal is WW3, in which many people die.

    The third seal is worldwide economic devastation, which could be expected after a truly worldwide war. The fourth seal is famine and pestilance, which kills 25% of the earth’s inhabitants.

    The fifth seal is the prayers of the saints, asking for God’s vengeance. Then come massive earthquakes in the sixth seal, resulting in immense tectonic shifts. Could be a polar shift, or could be meteors/asteroid pieces. I personally think it’s going to be a comet breaking up and the pieces striking the earth.

    Anyway, I bring this up because evidently the Tribulation judgments are worldwide, something we haven’t seen before. And what good is the prophecy if this is a thing that can happen on its own, and then later the same things happen due to God’s wrath? No, the worldwide tribulation will be a one-time occurrence. What’s more, the seal judgments are only the start, and then things go downhill from there.

    So in terms of what we see happening now, however vile, we need to ask ourselves whether the outcome will be worldwide. Would Greece’s default cause worldwide economic upheaval? I’m not an economist, but I’m going to say no, because we haven’t seen the seen Antichrist, we haven’t seen WW3, and we haven’t seen the Rapture.

    On the other hand, what would happen if the dollar crashes and burns, and the US economy with it? Would that have worldwide implications? Again, I’m not an economist, but I would tend to think so. But correct me if I’m wrong. (Daniel F?)

    My point is, we could see various judgments and hardships in this country, but I think the big bueno is going to happen after the Rapture and the revealing of Antichrist. The Bible itself tells us this will happen at a time we least expect it. Anybody who isn’t right with God needs to get that way, because you don’t want to miss the Rapture train, which is your only ride out of here before the carnage of God’s wrath.

  17. richard mcenroe
    June 28th, 2015 @ 1:41 am

    Obama’s deal with the Iranians sounds fairly Antichristian, disarming America, he arrives with an empty bow.

    And then of course WW3.

  18. Daniel Freeman
    June 28th, 2015 @ 3:29 am

    On the other hand, what would happen if the dollar crashes and burns, and the US economy with it? Would that have worldwide implications? Again, I’m not an economist, but I would tend to think so. But correct me if I’m wrong.

    You’re not wrong. Central banks of other countries, all over the world, hold much of their reserves in USD. Our national debt is priced in our own currency, and at a very low interest rate (meaning bought close to face value). Many commodity futures are priced in USD, most famously oil (therefore the petrodollar). A collapse in value of the USD could literally cause global banking insolvency overnight. Everyone’s savings (which are effectively IOUs) would disappear, and loss of confidence in fiat currency would put us back on barter and precious metals, which are much less efficient and would result in a global economic haircut that would look more like a beheading.

  19. Daniel Freeman
    June 28th, 2015 @ 3:54 am

    Fair enough. I wasn’t aware of him then, and I have noticed his tendency to favor Austrian analysis. I think the interesting question to me would be what he learned from that.

  20. DeadMessenger
    June 28th, 2015 @ 4:06 am

    Thanks for the info. Very helpful.

    You know the seal judgment speaks of people earning just enough money to feed themselves for one day, and no more. It speaks of working to buy one of two grains: wheat – that’s to feed yourself, or a very small family for a day, or barley, which in John the Revelator’s day at least, was considered animal food, so it was cheaper. It also mentions oil (used for making bread) and wine (used for cooking and water purification), and that these things would become luxuries. Seems like it will be very hard times all over the world.

    And at some point following this would come earthquakes so massive that mountains and islands worldwide would be moved from their place.

    Then things start going downhill from there.

    Glad I’m not going to be here. Sure hope you won’t either. Hope to see you on the other side.

  21. Jim R
    June 28th, 2015 @ 5:11 am

    Contrarian musing:

    The eurozone bureaucrats are not worried about the financial reprecussions of a Greek default so much as they are the political reprecussions of people seeing that (A) this is their fault and (B) the Greeks surviving just fine without them.

    “Gentlemen! Our phony-baloney jobs are at stake! HARRUMPH! HARRUMPH!”

  22. DYSPEPSIA GENERATION » Blog Archive » Greece Runs Out of Other People’s Money
    June 28th, 2015 @ 5:43 am

    […] The Other McCain tells you the truth that you aren’t getting from Voices of the Crust. […]

  23. robertstacymccain
    June 28th, 2015 @ 5:59 am

    Permit me to say that I’m not a huge fan of fiat currency and central banking, but when you start saying things like that on a blog, you risk being overrun by crackpot conspiracy theorists who are obsessed with Jews and such things. It’s like imperialism. Certainly I would be in favor of a less ambitious U.S. foreign policy. I don’t believe we can democratize the world, and I’m not even sure global democracy would be a good thing even if we could do it. But this puts me in line with people who are fanatics about such things, and next thing you know, I’d be surrounded by people ranting against “globalization” and shouting “America First!” I like to think of myself as a pragmatic and realistic person and, although I spend a lot of time writing about kooks, I don’t want to be someone who writes for kooks. So unless I’m willing to go all Alex Jones/Infowars, I must be careful about the kind of ideas I endorse.

    We need a mainstream movement, which is why I keep saying the answer to our problems is:

    1. Move to Texas.
    2. Secede.

    Crazy? Yes. Possible? Of course!

    Politics is the art of the possible, you know.

  24. William_Teach
    June 28th, 2015 @ 6:53 am

    It’s a good thing America doesn’t have $18 trillion in debt and anywhere from $70 trillion to $180 trillion in unfunded liabilities or something. We might be in trouble.

  25. Quartermaster
    June 28th, 2015 @ 7:17 am

    How big is the paper you mentioned in another thread? If it’s not to big, I’ll get you my email addy so you can send it to me. I’d be interested in seeing it.

  26. Quartermaster
    June 28th, 2015 @ 7:21 am

    No one expected the crash of 1929 or the called loans of Credit Anstalt (I think that was the name of the Austrian Bank) either. Economists have bee very poor prognosticators and events have determined things in ways that no one understood before hand. The difference now is we know what’s happening now is unsustainable, and people that know better are crossing their fingers hoping that’s wrong and since they want the party to go on, they don’t try to do a thing about it and unwind it on our terms rather than the universe’s.

    Willful stupidity has never been a virtue.

  27. MicahGunn
    June 28th, 2015 @ 7:50 am

    What’s truly amazing is that the whole of Greece only has 7000 ATMs.

    London probably has double that.

  28. Jim R
    June 28th, 2015 @ 8:25 am

    Not sure I follow your drift.

  29. Eric Ashley
    June 28th, 2015 @ 8:34 am

    I’m going for Jubilee.

    We are all in debt, corporately, even if not personally, up in debt to our eyeballs.

    Much of those who caused the debt were Boomers, so if they get hurt, well, its kinda sorta fair.

    At this point, its totally massive economic growth, totally massive cuts in gov’t size, or hyperinflation, or national dissolvement, or Jubilee. Jubilee being the least painful, and quickest surgery.

  30. Adobe_Walls
    June 28th, 2015 @ 9:12 am

    They’ve had five years and more to ponder this out. If this leads to a systemic disaster that means a systemic disaster was already backed into the cake. Greece is insignificant, it isn’t as if they were selling tulips or something important.

  31. Adobe_Walls
    June 28th, 2015 @ 9:18 am

    When the next crash comes bailins will be the solution. 401ks will be replaced with treasury bonds.

  32. Art Deco
    June 28th, 2015 @ 9:21 am

    The whole country has a population of 10.7 million (i.e. like the sum of Oregon and Washington state) and nearly 30% thereof live in greater Athens. At its best, it was a second tier affluent country with standards of living roughly similar to the U.S. forty years ago.

  33. McGehee
    June 28th, 2015 @ 9:24 am

    If only there were any reason to believe the rest of the West were willing to learn from such a dearly bought lesson.

  34. OrangeEnt
    June 28th, 2015 @ 9:24 am

    I see all the trouble going on in Greece, but on the lighter side, if the woman at the Greek parliament atm looks as good from the front, she should have no problem getting help from any guys there….

  35. Art Deco
    June 28th, 2015 @ 9:26 am

    Actually debt service ratios and financial obligation ratios in the U.S. are near 35 year lows. These ratios are derived from the sum of interest charges, principal retirements, and rental payments, so they are influenced by low interest rates but not determined by them. The ratio of outstanding stock of residential mortgage debt to personal income flows is abnormally high, though it has been slowly whittled away the last seven years and has returned to where it was in 2002. It was already hypertrophied in 2002, though. Since it increased steadily from 1949 to 2000 and then began spiking, it’s not certain what the equilibrium value of this metric might be.

  36. Adobe_Walls
    June 28th, 2015 @ 9:31 am

    When ever the oil producers decide (when not if at this rate) that the ”petrodollar” is a threat to their financial future, they’ll drop the USD like a hot rock. Once oil is no longer priced in dollars there is no reason for anything else to be and no reason to hold dollars in reserve. Once that happen it’s game over for the buck and treasuries. Both will become what they have always actually been, bad IOUs from a has been gambler.

  37. Art Deco
    June 28th, 2015 @ 9:32 am

    I don’t believe we can democratize the world,

    Electoral institutions are the norm outside China, Central Asia, the Near East, North Africa, and Equatorial Africa. The low hanging fruit’s been picked. See Stanley Kurtz on the anthropological factors which make electoral institutions an unusually chancy proposition in Arab countries.

  38. Adobe_Walls
    June 28th, 2015 @ 9:40 am

    The problem with your theory, as I see it, is that Greece will not do ”just fine” under any circumstances. They will revert to their default status, the good and the bad.

  39. Evi L. Bloggerlady
    June 28th, 2015 @ 9:40 am

    its greek to me

  40. Adobe_Walls
    June 28th, 2015 @ 9:43 am

    Thank God for that.

  41. Adobe_Walls
    June 28th, 2015 @ 9:46 am

    I doubt an equilibrium value is possible or even knowable.

  42. Matt_SE
    June 28th, 2015 @ 9:47 am

    In the hands of leftists, Jubilee will turn into Carnival.

  43. Adobe_Walls
    June 28th, 2015 @ 9:47 am

    Noticed that did you?

  44. Matt_SE
    June 28th, 2015 @ 9:48 am

    That will come as great comfort when the government announces it must cut SS benefits.

  45. Matt_SE
    June 28th, 2015 @ 9:52 am

    Don’t you worry about that. The EU DESPERATELY wants the PIIGS not to follow Greece, so they’ll make sure that the Grexit IS AS PAINFUL AS POSSIBLE, as a warning to the others.

    Note: I don’t mean the EU wants to be seen as a villain but that when you exit, the market exacts a high price.

  46. Matt_SE
    June 28th, 2015 @ 9:56 am

    Gosh yes! I see this tinfoil hat shit on Zerohedge all the time.
    Everything is a “conspiracy”, especially in international finance. It’s as if these economists/financiers had never heard of the invisible hand before.

  47. Matt_SE
    June 28th, 2015 @ 10:04 am

    I’ve heard that argument before. The thing that worries me is: if everything’s already priced in, why does the market keep swinging 2% based on rumors?
    The “5 years to fix things” argument only makes sense if TPTB actually FIXED things instead of sitting there with their thumbs up their asses.

  48. Matt_SE
    June 28th, 2015 @ 10:07 am

    I’m a regular reader, sometimes commenter.

  49. Matt_SE
    June 28th, 2015 @ 10:08 am

    The best thing about Vox Day is that he asks questions. Questions that are forbidden in many other parts of the internet.

  50. Matt_SE
    June 28th, 2015 @ 10:12 am

    Who’s the more irresponsible: the profligate Greeks, or those who lent to them? I say this is the subprime crisis all over again.