(Mish) “We will not get to see the precise wording of Prime Minister George Papandreou’s referendum because enough cowards in the Greek parliament in conjunction with blackmail by Merkel and Sarkozy have put an end to Papandreou’s regime. Thus, the on-off on-off Greek referendum is once again set to ‘off’ this time permanently.”

(NYTimes) “Europe’s leaders should have paid more attention to the distress of ordinary Greeks and less to the distress of well-heeled European bankers. Rather than trying to punish the ‘profligate,’ they should have thought about the consequences of condemning Greece to years of negative growth, soaring unemployment and rising taxes with nothing promised in return except that maybe, a decade from now, its ratio of debt to gross domestic product might get back down to the problematic levels of 2008-9.

Greece needs to make serious, painful reforms, including doing away with antiquated labor rules, streamlining a bloated public sector and selling off poorly managed state assets. Mr. Papandreou was already making real progress. But it was becoming impossible to keep laying off thousands of state workers while austerity choked off any realistic possibility of their finding private sector jobs or to keep slashing social benefits and services while the numbers of poor and unemployed surged.

It is late but, we hope, not too late to avert a full meltdown. Europe’s leaders need to renegotiate the pending Greek bailout deal to emphasize reform and growth over unremitting austerity and offer other bailout applicants the same approach. If they want any of the money lent to Greece paid back, Athens needs room to grow and earn.” — Greece on the Brink (NYTimes)

(Mish) “Democracy Dies to Protect Banks – Indeed, resolution of this mess has been 100% about how to bail out banks at taxpayer expense even though banks brought this mess onto themselves by treating sovereign debt as if it had zero risk. Worse yet, banks plowed into sovereign debt trades with massive leverage.”

Notice the tight convergence of all Eurozone country sovereign debt interest rates before 2009. European banks and other investors placed foolish bets anticipating little or no additional risk. They priced in virtually no risk premium holding Greek bonds over German bonds.

(Mish) “Merkozy and the EMU ought to be spending time on developing a full blown Euro exit strategy for nations because there has never been a currency union in history that has survived without a fiscal union in place at the same time.”

Full Story: Eurozone’s Waterloo; Papandreou Forced to Cancel Referendum; Democracy Dies to Protect Banks; Germany’s Dilemma: The Eurocratic Nanny Zone Vote (Mish)

(MartinArmstrong) “The most important aspect is the economy. Screw that up and you get war, depression, and starvation. We then elect a whole bunch of people to posts and automatically assume these people have the (1) real intelligence ABOVE average to comprehend such complex subjects, and (2) they understand the right thing to do. Where did we ever get these ideas? Most of the staff members employed by politicians are smarter than the people they work for. But unless they believe an economic crisis is possible, they will not even look at the issue.” — Martin Armstrong, Happy Days Are Here Again

(Mish) Great article by Mike Shedlock on the Greek/Euro Dilemma – “Is there any reason Greek voters should not be given a choice? I think not. They may not make a wise choice but what is the likelihood that political hacks and political opportunists will?”

“Take a good look at Iceland. In repeated attempts, political hacks (with banker’s interests in mind) attempted to sell Icelandic citizens into debt slavery. A referendum saved the day. Sadly, voters were forced to repeat the referendum, and once again voters made the correct decision. .. Iceland is now in full recovery simply because it told the EU and IMF to go to hell.”

“Greece does not have an easy way out. However, its problems are no doubt far worse than if it told the EU and the IMF to go to hell two years ago.  Greece should have gone bankrupt long ago. Heck, it should not be in the EU in the first place, and the EU is primarily to blame even though Greece lied to get in.”

“(PeterTchir) If a leader in the Middle East finally gave into months of protest and decided to give the people a real say on an important issue, the Western leaders would be rejoicing. .. But if a fellow Western leader dares let his people express their wishes more directly than via “their representatives” they are all shocked and outraged. In the meantime other Greek politicians are busy taking advantage to gain power rather than helping their citizens.”

“(PaterTenebrarum) The eurocracy is at its heart deeply undemocratic – if it were up to the ‘technocrats’ leading it, national subsidiarity would have long ago become a relic of the past and democratic interference with their plan to erect a socialist super-state would be kept to a bare minimum. .. This can be seen by the fate suffered by previous referendums: when the Irish and French e.g. said ‘no’ and ‘non’ respectively to the Lisbon treaty, the referendums were simply repeated to get the ‘right’ result. As Stalin once sagely remarked, it doesn’t matter who votes for what anyway – what matters is who counts the votes. So far, the eurocrats have always gotten the results that they wanted, by hook or by crook.

Shall I tell you the truly terrifying thing about the EU? It’s not the absence of democracy in Brussels, or the ease with which Eurocrats swat aside referendum results. It’s the way in which the internal democracy of the member states is subverted in order to sustain the requirements of membership. ..

I wish I could convey the sheer horror that his proposal provoked in Brussels. The first rule of the Eurocracy is “no referendums”. Brussels functionaries believe that their work is too important to be subject to the prejudices of hoi polloi (for once, the Greek phrase seems apposite). Referendums are always seen as irresponsible; but, at a time when the euro is teetering on the brink, Papandreou’s proposal was seen as an act of ingratitude bordering on treason. ..

Eurocrats are prepared to pay any price rather than admit that the single currency was a mistake – or, more precisely, to expect their peoples to pay, since EU officials are exempt from national taxation. The peripheral countries are to suffer poverty, unemployment and emigration, the core countries perpetual tax rises, so that supporters of the euro can save face.”

“(DanielHannan) Euro-enthusiasts in Brussels and in Athens are ready to bring down an elected government rather than allow a referendum. Yet the funny thing is that Papandreou is a Euro-enthusiast. He fervently wants to remain in the euro, and had been planning to campaign for a Yes vote. His sin, in the eyes of Brussels, was not to hold the wrong opinions, but to be too keen on democracy. ..”

“Whose Skin Are We Saving? No eurocrat or politician outside of Greece gives a rat’s ass about helping Greece. The only skin they want to save is their own.  That realization coupled with my earlier proposal that Papandreou was tired of beatings, meetings, and riots is by far the most likely reason Papandreou decided to “walk away” from the mess via referendum.”

Full Story: In Praise of Papandreou’s Referendum Decision; Eurocrats Terrified of Democracy; Parade of Cowards (Mish)

As usual, this is more about bailing out the banks and protecting those who made foolish investments above all else.  It’s also interesting to note that while private bond holders of Greek debt was expected to take a 50% haircut, my understanding is that the ECB (who currently owns about half of all outstanding Greek bonds) would still be holding their Greek bonds at par.

This is not to say Greece is not also at fault.  There’s plenty of blame to go around.  However, to this day the War Reparations forced upon Germany after World War I are still largely blamed for leading Germany into hyperinflation and the eventual rise of Hitler.  And perhaps Germany eventually owning and/or controlling most of Greece’s key assets to pay back its debts is not something those “pesky” Greek citizens are willing to accept quite that easily.

Regarding Papandreou’s recent changes to his top military staff, while only Papandreou and his closest confidants know exactly what’s going on, given he called a referendum to offer the people a “say”, it would seem unlikely he is considering a “military coup”.  I would speculate his motive would more likely be to assure that the military will remain loyal to the “best interests of Greece”, as opposed to the “best interests of the European Union”.

(MartinArmstrong) “The most important aspect is the economy. Screw that up and you get war, depression, and starvation. We then elect a whole bunch of people to posts and automatically assume these people have the (1) real intelligence ABOVE average to comprehend such complex subjects, and (2) they understand the right thing to do. Where did we ever get these ideas? Most of the staff members employed by politicians are smarter than the people they work for. But unless they believe an economic crisis is possible, they will not even look at the issue.” — Martin Armstrong, Happy Days Are Here Again

If this is accurate, it’s pretty frightening stuff, right along the lines of complete “New World Order” totalitarian domination over all of Europe. Open to hearing any thoughts to the contrary…

(abgeordneten) “EU: Treaty of debt (ESM) – stop it now!” Deputies on Check.de – The EU is threatening to transfer a debt-based Union of turning a liability community. In addition, the fiscal and budgetary powers of national parliaments will be given to an EU-Governors. This is based on the only recently become known to the draft treaty called “European Stability Mechanism (ESM)”, decide on the members of the German Bundestag probably after the summer break of 2011. German tax money to answer for the debt policies of other EU countries. We should work to make the banks any losses. The taxpayer is prescribed compulsory solidarity. The banks are on a voluntary basis here. The citizens of this free will not to admit you. We have to pay. The ESM contract can not therefore pass through the German Parliament”

Key Details of ESM Accord

• Article 8 says “Authorized Capital stock 700 billion Euros”
• Article 9 says “ESM members irrevocably and unconditionally undertake to pay capital calls on them within 7 days”
• Article 10 allows the ESM board of governors to “change the authorized capital and amend article 8 accordingly”
• Article 27 says ESM shall enjoy “immunity from every form of judicial process”. Thus the ESM can sue member countries but no one can challenge it. No governments, parliament or any other body or laws apply to the ESM or its organization.
• Article 30 says “Governors, alternate governors, directors, alternate directors, the managing director and staff shall be immune from legal process with respect to acts performed by them (…) and shall enjoy inviolability in respect of their official papers and documents”

Site Link: Initiative Stoppt EU-Schuldenunion (ESM-Vertrag)!

(Mish) “There are no independent reviewers and no existing laws apply. Thus Europe’s national budgets will be in the hands of one single, unelected body that is accountable to no one and immune from all legal actions. Is this the future of the EU or will the German supreme court and other governments put an end to it?”

Full Story: Treaty of Debt – An Eye Opening Video on the ESM Bailout Mechanism (Mish)

(Mish) “Klaus Regling, head of the European Financial Stability Facility has proposed European Bailout Fund Could ‘One Day’ Issue Bonds in Yuan. Financial Suicide – Issuing bonds in another currency risks financial suicide. Currency movements add to the already massive potential risk of huge fluctuations because of leverage. Argentina blew up when it could no longer hold a peg in US dollars. While not a peg, imagine the losses on long-term bonds on a leveraged fund were the Yuan to rise by 33% vs. the Euro.”

Full Story: Financial Suicide: Head of EFSF says Bailout Fund Could One Day Issue Bonds in Yuan (Mish)

Very nice interactive visual guide by NYTimes charting the web of debt exposure among sagging economies, and showing how much each European country owes and to whom.

(NYTimes) “Arrows show imbalances of debt exposure between borrowers in one country and banks in another; arrows point from debtors to their bank creditors.  Arrow widths are proportional to the balance of money owed.  For example, French borrowers owe Italian banks $50.6B; Italian borrowers ower French banks $416.4B.  The difference – their imbalance – shows France’s banking system more exposed to Italian debtors by about $365.8B.”

Full Interactive Chart: It’s All Connected: An Overview of the Euro Crisis (NYTimes)

Great video presented by Timothy Terrell at the Mises Circle at Furman University: “The Coming Currency Crisis and the Downfall of the Dollar”.  For those who are interested in better understanding fiat currencies and reckless inflation from a history perspective, this video provides a terrific overview.

You’ll also gain a better understanding of  the magnitude of damage and theft inflation perpetrates against a country’s people (and especially against its middle and lower classes who least understand its disruptive effects).

Everyone’s thrilled when Apple’s iPad2 provides a greater bang for the buck for less money than the original.  So why do governments and central banks try and convince people that higher prices are good for everything else?