Published On: Wed, Mar 11th, 2015

Greece Turns to Bank Rescue Fund for Lifeline

You may be beginning to wonder why I regularly write about Greece and its ongoing problems. The reason is simple – while the mainstream media seems to be distracted very easily from what may well prove to be the downfall of the eurozone, I am still focused on that fact, because the worldwide economic reverberations would be huge. Yesterday – and with no specific request from Greece – the Brussels Brigade allowed €550m from the HFSF (Hellenic Financial Stability Fund) to be released for use by the central bankers in Athens. And that despite the fact that negotiations about bailouts/loan repayments/Troika permitted in Athens again or not permitted in Athens again, are ongoing, with no resolution in prospect, and in increasingly acrimonious language at that. To me, the release of these funds confirms what I have realised all along – it’s Greece that holds all the cards here, not Germany. I go back to what I have suggested in the past – if Greek finmin Varoufakis had confronted Brussels right at the start of all these “negotiations”, with a very simple ultimatum, the country would have had its way, and he and his prime minister would have been hailed as national heros. It’s still not too late, but the clock is certainly ticking… What’s the ultimatum I refer to? “Write down Greek debt by 50%, and give us unlimited time to repay the remainder, along with making further funds available for short term bridging purposes. If you can’t accommodate us, then sorry, but we will unilaterally announce the 50% debt reduction tomorrow.”

For sure – and I really am 100% sure about this – if Varoufakis had said that (and been willing to stick to it), Brussels would have been forced to agree an extremely favourable deal with Athens. Certainly, “words” would have been found to dress up a 50% default as something completely different, and nicely complicated at that, to make the leaders of the eurozone not look as though they had capitulated. Nevertheless, that’s what they would have been forced to do! There is no legal mechanism whereby Greece – nor any other EZ country – can be forced to leave the euro. Indeed, there is meantime no mechanism whereby a country can leave, even if it wanted to do so. Greece would have kept the euro (as its people seem to want) and would have seen its debt fall to (perhaps) manageable levels. I say “perhaps” because I can’t see the country ever succeeding, to be frank. It has too many deeply ingrained cultural problems with tax, as in non payment of tax – and its oligarchs will remain untouchable in my view.

But of course the real reason Germany in particular dare not permit a debt reduction and then allow Greece to go its own way, albeit remain in the eurozone, is that to do so, would greatly endanger the beloved “Fiskalunion” concept – I’m pretty sure that both Angela Merkel and her finmin Schaeuble, are desperate to see a United States of Europe evolve – with them at the helm, naturally! If Greece is let off the leash, financially speaking, you can bet that Spain and Italy would be following close behind, and that certainly would (will?) totally destroy any United States of Europe ambitions that anyone might still harbour.

Meanwhile, EURUSD continues its fall towards parity – although I expect to see a strong bounce back up at any moment, while gold continues its drop towards $1140 or so. Again, a strong bounce back up is on the cards once that price area has been reached.


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About the Author

- Ian Williams has been trading stocks, indices, forex and commodities on his own account for over 30 years. He set up a "trading training" company in 2004, and since then he has helped a large number of people to become successful traders. His hobbies are skiing and flyfishing, spending his winters in the Alps and summers in Scandinavia. He can be contacted via