Tanks on the Streets of Greece

That is what the Greek deputy prime minister has said will happen if Greece defaults

I think I have heard this before, it was in 2008 when Hank Paulson the US Treasury secetary threatened members of congress with the same ultimatum if the the 2008 US banker bail out was not approved.
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So this is what it has come to, the threat if military action against the Greek people if the bankers don’t get their money

To quote Panagalos from the Athens News “A return to the drachma would mean that the next day banks would be surrounded by people trying to get their money out. The army would have to use tanks to protect (the banks) because there wouldn’t be enough police to do it,” he was quoted as saying.

“There would be riots everywhere, shops would have empty shelves and people would be jumping out of windows … It would also be disastrous for the entire economy of Europe.” (AP)

We have covered this before, because of the reasons he gives, the black economy will save Greece. In Greece cash is king, the closing of the banks will not be as catastrophic as it would be in the UK for example.

And the reasons he gives also reinforces why an early default is preferable to a long drawn out process, better default while the Greek people have as much money in their hands as possible.

I have also written previously that the politicians in Greece seem to be addicted to bail out, addicted being the operative word. They are continuing to do something which is damaging the country they are supposed to be representing.

Panagalos is also correct in saying that immediately after default times will be difficult. Again something I have covered before. Lets imagine the clock is rewound to 2010 before the first bail out. Imagine Greece is not bailed out, imagine Greece defaulted in 2010, that banks closed and people lost their money.

Now let’s imagine that Europe, the EU, IMF, World Bank decided to bail out the Greek people directly after the default and give 110 billion Euro directly to the Greek people, in other words imagine the Troika gave every man, woman and child 11,000Euro cash back in 2010 to re capitalise the Greek economy. Of course it is open to dispute but I think this would have been a far more constructive use of the bail out money and in the long run it would be cheaper as the Greek government would not be asking for another bail out of 110billion Euros in 2011 because they were taken out of the picture in 2010.

I think it shows the absurdity of the whole situation in Greece and the USA. The taxpayers are being asked to bail out the banks when it would be far more cost effective to let the banks go bankrupt and to give the bailout money directly to the people.

In the same article in Athens News, Papandreou is quoted as saying “I call on Europe, for its part, to give Greece the time and the terms it needs to really pay off its debt, without strangling growth, and without strangling its citizens,” he said.

In my opinion Papandreou has lost all credibility and is now simply lying. At no point has it been mentioned that Greece will pay of it’s debt. The target for Greece is to get a government spending deficit of 2%. The target is to continue increasing Greek public debt just at a slower pace than now.

To even talk about Greece paying off the debt is completely wrong. Paying off the debt is not on the agenda, never has been. So I have no clue why Papandreou would say it.

Going past the obvioulsy false statement he talks about the not stangling growth or the Greek citizens. Either he is completely detached from reality or he chooses not to see what is going on around him in the street and what is happening with the economy.

Greek unemployment has increased almost 50% in one year. An estimated 100,000 businesses have closed in the last 12 months, the Greek economy shrank by 2% in 2010 and is forecast to shrink 4% in 2011

What planet is Papandreou, the complete quote included in the Athens News is the EXACT OPPOSITE of reality!

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