Quantum Pranx


Greece has defaulted and so has everyone else

with 3 comments

by Peter Souleles B. Com. LLB.
Originally posted 31 May 2011

Below: Protestor’s graffiti in Greece.
Translation: “Vote for Ali Baba, he only has 40 thieves.

“In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.”

DIRECTORS OF CORPORATIONS big and small are obliged to make such statements, as shown above, in the accounts of the corporation, otherwise they could well be personally responsible for any further debts incurred by their corporation by continuing to trade when the entity is in fact insolvent.

The funny thing is that politicians are not required to make any such statement and are never personally responsible for the mess they leave behind despite the catastrophic consequences to their nation, their citizens and the future. They simply walk away with their full pensions and entitlements regardless of how the nation fared.

The truth is that virtually no politician could sign such a statement because they are fully aware of the precarious nature of their nation’s finances as well as the world’s economic system.

Greece is currently in the eye of the storm that is brewing in Europe and clearly would have defaulted in 2010 had it not received any assistance. It is now even clearer that its Prime Minister does not have reasonable grounds to believe that Greece will be able to pay its debts as and when they become due and payable without the provision of further loans by Europe and the IMF.

Then again, it’s not just Greece but also Spain, Italy, Portugal Ireland and finally the USA amongst many others who are propping themselves up with fictional expectations, fictional money, fictional statistics and fictional calculations. It’s not just the accrued debt of these nations along with their current fiscal deficits that is daunting. It is also the insurmountable size of their unfunded pension and medical obligations.

The Europeans will no doubt not allow Greece to default in the legal sense as they would not be able to stem the tide of cascading defaults occurring across Europe. But I repeat, there is no package that will save any nation against the eventual tsunami of unfunded liabilities. There will be great relief when Greece signs the new deal which in reality is just a reprieve from execution. The markets will rise and the fools in Europe will rejoice.

However, until such times as politicians are obliged to sign on the dotted line, making themselves personally responsible for any worsening fiscal situation, we are condemned to spiral towards the economic drain. Until they are obliged to mortgage their homes, their businesses and the retirement accounts as a sign of good faith and unless they commit their own sons and daughters and grandchildren to the battlefields of this world, there will be no changes.

Until certain members of congress are subject to the same rules and penalties for insider trading as the rest of the population, they will continue to outperform the professional fund managers. Until government stops harassing girl scouts selling cookies on the front lawn of their home and instead rounds up those bankers that raped the system with arrogant callousness, there can be no faith in justice.

So while they try to prop up Greece, Portugal and Ireland, and whilst the USA can continue to print, it seems that everything will be OK. But it won’t. Even a fool with a broken calculator can see that the figures do not add up.

And so what is the bottom line? When the day arrives that the expectations of citizens far outweigh the means and the savings of government to make good on prior promises. This is what unfunded liabilities really are and at that point war will decide who gets what… because the printing press can no longer delude and denude the populace.

Greece and the others are already in default because they cannot make good on their unfunded liabilities. Legally it may not have happened, but in practical terms the outcome is set in concrete.

All nations have in effect defaulted on their future obligations (if not their current ones) and for those of you that understand this point, you are given the precious opportunity of preparing yourselves for the eventual reckoning that will take place once the general populace wakes up with an empty stomach and an angry disposition.

The smarter and better managed economies of Europe will steer clear of getting mixed up with the basket cases of Europe. If they don’t (and it looks that way) they will in the fullness of time of time understand what is meant when they say, “sleep with camels and you will wake up with fleas.”

If Greeks think that the worst part of austerity is over, then they will be sadly disappointed by the new measures the government will put into effect shortly and the new package she will be offered by her European partners. Tax free thresholds for pensioners, salary and wage earners and self employed people will be reduced, value added taxes will be further increased as will the cost of fuel and heating oil. On top of that, property valuations will be adjusted upwards despite the fall in property values and that in turn will lead to other tax increases. That’s right, last years European straight jacket will seem like a mink coat once the new screws are turned.

The Europeans have already indicated that they want to run tax collections and the sale (fire sale) of public property. Who knows, the people might accept such an arrangement if the Europeans promise and deliver on the prosecution of those politicians who literally sucked the country dry with secret commissions and cosy deals over the last 30 years.

In fairness to the current socialist government in Greece, it must be said that many of the changes they have tried to make are necessary, but the number of changes being pushed, the time frame allotted as well as the general world economic climate made a successful outcome highly unlikely from the outset and simply antagonised the populace and accentuated the downturn.

Right now, any European holding Euros as a major portion of their wealth is worse off than the man who has bet on the slowest horse in the race. Slow horses eventually cross the line. What is not so clear is whether the Euro will get over the line or whether it will be dead on arrival by the time this crisis resolves itself.

So which will it be? Unfunded liabilities denominated in fiat or fully funded assets such as gold and silver?


3 Responses

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  1. Spare me the gold and silver. Their value is as perceived as anything else.

    You can trade with them, yes. So can you trade using winkle shells, acorns or step ladders too if you wish. There is a good case for the winkle shell becoming a reserve currency: after all there is a finite supply of winkle shells – they do take some 20 years to grow to maturity.

    It would be an excellent way out for Mr Cameron in his present difficulties given the places they are usually found.

    Yes, you can laugh – but remember the Zim dollar. It would take a considerable number of them to buy a single, almost worthless winkle shell. And for sure, there are not 100 trillion winkle shells in existence, there were hundreds of thousands of Z$100tn bank notes.

    So perhaps we value the winkle shell against … well perhaps oak trees? Again they are beautiful and take a long time to grow. So the value of a winkle shell is guaranteed. Simple, huh?


    07/06/2011 at 8:44 pm

    • Hi Gem, I just spotted what you wrote, and I thought to answer this privately.I’m going to take you to task here. I’m not sure I understood at all what you were getting at. Just what is your point? The reality is that gold and silver do play unimaginable parts in the human financial system, much as the Central Banks pretend otherwise.It is quite nonsensical to state, of gold and silver: Their value is as perceived as anything else.Today, the gold price commanded 1,055 per ounce. There is no metal other than platinum that is valued as highly by our paper currencies. You do not see the huge battle behind the scenes that attempts to push the gold price down, even hopefully to the value of a winkle shell, by those vested interests that would far rather we succumbed to the lie and deceit of a piece of paper printed with a number of units. Why do think the Central Banks of the world, and the Banksters have denigrated gold and silver in every way possible, for a century, at least?The only way they could exert full control on the population was to shift the aspect of “value” from gold, silver, copper, etc to a piece of paper, and invest it with some artificial mythical power.But the real intent behind the game was to enslave us via the concept of debt. There is absolutely no case for a winkle shell ever becoming a reserve currency. There may be a finite supply of shells, but that fact actually precludes from it becoming a currency, and the central controlling authority would not want a finite, or hard to grow/mine source, such as shells, or gold. The easiest kind of currency for the controlling authority is paper (or to be precise, the kind of linen mix as used by the Fed). And today, we (or rather, they) have left that behind as well: only about 1% of all the money in the world is actual physical money, notes, coins, etc. All the rest, the other 99% is digital, and exists only as electronic bits of nothingness inside computer systems, and that fact should scare us all somewhat. Don’t you see how incredibly easy it is for the controlling authority to use this mechanism to move great volumes of “money” (power) around the world? Whatever a reserve currency might be, paper, shells, blocks of stone, whatever, it has to be controlled by a central authority, who can vary the amount of the currency (whatever it might be) in circulation in order to control the economic environment, but the underlying intent is to always keep the people controlled. There is always the self-serving Elite at the top to ensure this. There are countless articles on QP that describe the whole mechanism at work here, the mechanism of fiat currency. If winkle shells were to become a designated currency, you can be absolutely sure that those who designated such a thing would ensure that they controlled the world supply of winkle shells. Never forget what the Jacob Rothschild said: “He who controls the money controls the world” what he meant was, of course, money controls governments, NOT the other way round. The greatest fallacy of the age is to believe that politicians are at the top of the pyramid. Of course they’re not, they’re entirely controlled by financial interests. By the way, your mention of the Zim trillion dollar notes buying shells is saying nothing more than that one valueless “currency” can buy another valueless “currency”. This is a circular statement that goes nowhere. I’m off!!R x x >

      > New comment on your post “Greece has defaulted and so has everyone else” > Author : Gem (IP: , > E-mail : gem@gemmas-interieurs.nl > URL : http://www.gemmagic.nl > Whois : http://whois.arin.net/rest/ip/


      07/06/2011 at 11:57 pm

  2. Sir, thankyou for a spirited reply! My apologies for not responding earlier.

    I have been amassing my fortune in winkle shells down on the beach. You did not address the more pressing question of how one might usefully employ step ladders as an alternative reserve currency. Surely there is only one way with them, and that is up?

    The thrust of my argument goes back to biblical times and the famous king of Gordium. No, not the man who tied that canny knot but his grandson. Midas. In and of itself, gold is nothing more than a mineral. It has an atomic number of 79 and is found in the series of the transition elements. It is a yellow coloured metal that is malleable and is used to make jewellery, whilst latterly owing to its being highly conductive, is used in electronic circuitry where contact resistance and transmission resistance are at a premium.

    Those are the facts about gold. In the atomic series of elements, there is no corresponding value attributed to a higher or lower atomic number. Indeed elements quite close to gold are all but worthless, lead for example! (Lead is no. 82 by the way).

    So what is it that makes gold special out of the trash of all the elements? Let us look at some of the lesser known physical attributes of gold. Gold is always found as a metal, never as an ore. Its chemical salts come in all the colours of the rainbow. It is malleable enough that you can flatten it so that it becomes semi transparent and you can see all the colours of the rainbow. Where do you see all the colours of the rainbow? In sunlight.

    Silver has never held the place of gold in the imagination of mankind. Her salts are either black or white.

    So why all the hype about gold?! Because it is socially acceptable to think of gold as money. Gold is assumed to have value. However one can say the same about the dollar, or for that matter my own passion, winkle shells. A value is not a given fact. It is by its nature subjective.

    Put bluntly: gold as a mineral is what it is, that it has a value is entirely in the imagination of man.

    There is no argument on this point, otherwise Midas would not have realized his folly. That was four milennia ago, and we still have not learned from his mistake!

    A value is a value, and can be applied to ANYTHING from clams to oysters to … step ladders. They have all been used as currencies in the past, with the possible exception of the more sensible step ladder. After all, with a step ladder how can you go down?


    10/06/2011 at 5:06 pm

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