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July 5, 2015 | OXI

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

First, angry Albertans punted Tories and installed Dippers in the legislature. Then delusional Vancouverites voted down a tax funding the future. Now the Greeks have embraced economic suicide instead of financial servitude.

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall

At least, as I scribble this out on a Sunday afternoon, that looks to be the Hellenic epiphany. Exit polls and early results were all but decisive, giving more than a 60% mandate to the No forces, led by socialist PM (and now temporary hero) Alexis Tsipras. The margin of defeat for the pro-euro forces is relatively vast – at late as Saturday night it was still being touted as too close to call. But a 60-40 split? That’s massive, baby.

For he that gets hurt
Will be he who has stalled

We’re now entering the unknown, in a big way. Greek banks are still closed. The stock market, too. People have been wounded in less than a week, with cash rationing leading to starving stores. By voting against a package of reforms (higher taxes, fewer benefits, more austerity) the country is opting to gamble it can get a better deal from the great powers of Europe. And, if not, how much worse can it be than having 50% of your young people out of work?

Europe may cave and offer emergency bailout loans to keep the lights on and prevent the Greeks from taking an even more radical turn (Hello, Mr. Putin?), or it might decide this small country is just too irritating to bother with. After all, five months of high-stakes talks with Tsipras & Co led only to a pouty exit from the bargaining table, and this surprise referendum, peppered as it was with massive demonstrations.

There’s a battle outside
And it is ragin’

So Greece could be kicked out of the EU, lose use of the euro, default on almost all of its debt obligations, and within a month be forced to print its own currency. That, experts surmise, could lead to a 30% or 40% drop in average net worth, and a far worse outcome for the people. But Tsipras says no. He claims it was never a vote on staying or leaving Europe, but one of dignity. Now, he adds, he has the mandate to go back to the bargaining table and kick serious butt.

For other countries, central bankers, monetary agencies and markets it means turmoil. Maybe compromise. Perhaps not. After all, the establishment forced countries like Ireland and Spain to put up with similar belt-tightening and collaring in order to stay in the club. Now the Greeks have refused to come to heel, and still expect a seat at the table. Such. Hubris.

It’ll soon shake your windows
And rattle your walls

So last week Greece became the first developed country ever to miss a debt payment to the august International Monetary Fund. This week its citizens told the IMF to piss off. Some will argue average voters did not understand the complex 68-word ballot question, nor comprehend the implications of a No decision. They’ll say people misinterpreted this as simply a way of bolstering their government’s bargaining power, instead of choosing proud over practical.

But that’s the democratic flaw. When you ask people something, giving them the power to make it so, you must live with the consequences, as illogical as they may at first appear.

Tomorrow the banks in Athens will edge closer to having empty vaults. Those investors who bet wrong will be punished. The leaders of wealthy, powerful nations will shake their heads in disbelief and dismay. Average Greeks will face a crisis, and smile.

For the times they are a-changin’.

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July 5th, 2015

Posted In: The Greater Fool

One Comment

  • Avatar Robert Laden says:

    50% of the young people in Greece are out of work. But why? Where did the jobs go? Here’s a clue: China exports more to Europe than they export to the U.S. Europe is China’s biggest market. Did the jobs in Europe actually migrate over to China – just the same situation as in the U.S. and Canada? Many millions of former Chinese subsistence farmers are now working in factory dormitory complexes.

    Maybe lending more money to Greece would be a bad idea anyway? The Greek consumers might just spend the borrowed money on more imported junk anyway?

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