The German Siege Of Greece Begins (No, This Is Not A Repeat From 1941)

Siege - Public DomainDid you notice that Greece’s creditors are not rushing to offer the Greeks a new deal in the wake of the stunning referendum result on Sunday?  In fact, it is being reported that the initial reaction to the “no” vote from top European politicians was “a thunderous silence“.  Needless to say, the European elite were not pleased by how the Greek people voted, but they still have all of the leverage.  In particular, it is the Germans that are holding all of the cards.  If the Germans want to cave in and give the Greeks the kind of deal that they desire, everyone else would follow suit.  And if the Germans want to maintain a hard line with Greece, they can block any deal from happening all by themselves.  So in the final analysis, this is really an economic test of wills between Germany and Greece, and time is on Germany’s side.  Germany doesn’t have to offer anything new.  The Germans can just sit back and wait for the Greek government to default on their debts, for Greek banks to totally run out of cash and for civil unrest to erupt in Greek cities as the economy grinds to a standstill.

In ancient times, if a conquering army came up against a walled city that was quite formidable, often a decision would be made to conduct a siege.  Instead of attacking a heavily defended city directly and taking heavy casualties, it was often much more cost effective to simply surround the city from a safe distance and starve the inhabitants into submission.

In a sense, that is exactly what the Germans appear to want to do to the Greeks.  Without more cash, the Greek government cannot pay their bills.  Without more cash, Greek banks are going to start collapsing left and right.  Without more cash, the Greek economy is going to completely and utterly collapse.

So yes, the Greeks voted for change, but the Germans still hold the purse strings.

And right now the Germans do not sound like they are in any mood to compromise.  The following comes from a Reuters report that was published on Monday…

German Chancellor Angela Merkel’s deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.

Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that euro zone leaders would meet in Brussels on Tuesday evening (1600 GMT).

German Vice-Chancellor Sigmar Gabriel, leader of Merkel’s centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.

Leftist Prime Minister Alexis Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise,” Gabriel told the Tagesspiegel daily.

In addition, Angela Merkel’s office released a statement on Monday that placed the onus on making a new proposal to end this crisis on the Greek government

It is up to Greece to make something of this. We are waiting to see which proposals the Greek government makes to its European partners,” the office of German Chancellor Angela Merkel, Europe’s leading austerity advocate, said in a statement.

Just because the Greek people want the Germans to give them a very favorable deal does not mean that the Germans will be inclined to do so.  The Germans know that whatever they do with the Greeks will set a precedent for the rest of the financially-troubled nations all across Europe.  If Greece gets a free lunch, then Italy, Spain, Portugal, Ireland and France will expect the same kind of treatment

Angelos Chryssogelos, an expert on Greek politics at the London-based think tank Chatham House, said the strength of Sunday’s mandate handed to Tsipras means it will be almost impossible for the prime minister’s leftist Syriza party to make a deal with European creditors.

“The Europeans made it pretty clear where they stand, and they have been consistent,” Chryssogelos said, adding that the creditors also are unlikely to back down. “Right now, voters across the eurozone largely support the tough stance taken by the eurozone.”

Chryssogelos said Greek voters may have underestimated the resolve of the creditors to reach an accord on their terms. “If someone is seen getting preferential treatment, then someone else will want that treatment,” he said, referring to other eurozone debtors such as Ireland and Portugal.

And remember, there is a very important Spanish election coming up in December.

If Syriza comes out as the big winner in this crisis, it will empower similar movements in Spain and all over the rest of the continent.

So look for Greece’s creditors to tighten the screws over the coming days.  In fact, we already saw a bit of screw tightening on Monday when the ECB announced that Greek banks would not be receiving additional emergency assistance

In a move sure to increase pressure on Greece’s flailing banks, the European Central Bank on Monday decided not to expand an emergency assistance program, raising fears that Greece could soon go completely bankrupt.

The move put a swift crimp on Greek leaders’ jubilation after winning a landslide endorsement from their citizens to reject Europe’s austerity demands and seek a new bailout bargain. Now they must seek a bargain before the money runs out within days, which would likely force them off the euro.

Basically we are watching a very high stakes game of chicken play out.  And as the cash dwindles, economic activity in Greece is slowly grinding to a halt.  The following comes from the Washington Post

The dwindling cash is sucking the life out of everything from coffee shops to taxis, as anxious Greeks economize amid fears for the future. Greek leaders also banned transfers of money abroad, meaning that very little can now be imported into the country.

Printing plants are warning that they may run out of paper to print newspapers by the end of the week. Butchers say that stocks of imported meat are dwindling.

Some are even projecting that we could see civil unrest erupt in Greece in about “48 hours” once the ATM machines  run out of cash

Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.

Yes, the Greek people exhibited great resolve in voting against the demands of the creditors on Sunday.

But how long can they endure this economic siege?

It is inevitable that a breaking point will come.  Either the Greek government will give in, or the Greeks will leave the euro and start to transition back to the drachma.

If we do see a “Grexit”, and many analysts believe that one is coming, it could set off a chain of events that could cause immense financial pain all over the planet.  There are tens of trillions of dollars of derivatives that are tied to European bond yields, European interest rates, etc.  The following is an excerpt from a piece authored by Phoenix Capital Research that explains what kind of jeopardy we could potentially be facing…

The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.

Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.

Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.

If Greece gets a “haircut” on their debt, other European nations would want the same and that would cause massive chaos in the derivatives markets.

But if Greece does not get a deal and ends up leaving the eurozone, that will cause bond yields to go crazy all over Europe and that would also cause tremendous chaos in the derivatives markets.

So much depends on keeping this system of legalized gambling that we call “derivatives trading” stable.  We have allowed the global derivatives bubble to become many times larger than the GDP of the entire planet, and in the end we will pay a great price for this foolishness.

Every pyramid scheme eventually collapses, and this one will too.

But the difference with this pyramid scheme is that it is going to take the entire global financial system down with it.

Deal Or No Deal: John Kerry’s Historic Diplomatic “Mistake” Proves That Obama Does Not Want Peace

U.S. Secretary of State John Kerry holds a bilateral meeting with Saudi Foreign Minister Saud al-Faisal at the U.S. Department of State in Washington, D.C., on April 16, 2013.When it comes to diplomacy, Russia is playing chess, Syria is playing checkers and U.S. Secretary of State John Kerry is playing tiddlywinks.  On Monday, Kerry said that Syrian President Bashar al-Assad could avoid having his country bombed into oblivion by turning over “every single bit of his chemical weapons to the international community in the next week.”  Of course Kerry just assumed that Assad would never do such a thing, but the Russians immediately pounced on his statement.  Russian Foreign Minister Sergey Lavrov quickly announced that Russia would encourage Syria to turn over their chemical weapons to international control in exchange for a guarantee that the U.S. will not attack, and subsequently Syrian Foreign Minister Walid al-Muallem stated that his government was prepared for “full cooperation with Russia to remove any pretext for aggression.”  Later on Monday, UN Secretary-General Ban Ki-moon indicated that he is thinking about asking the UN Security Council to support such a deal.

Do you know what they call such a move in chess?

Checkmate.

We were originally told that the primary goal of a U.S. military strike on Syria would be to prevent them from using chemical weapons in the future, and then John Kerry said that Assad could avoid a conflict by giving up all of his chemical weapons.

Well, the Russians and the Syrians have called the bluff.

So does this mean that we will have peace?

Unfortunately, the Obama administration does not seem to want that.  The State Department has already come out and announced that what John Kerry said was a mistake.  They insist that it was a “rhetorical argument” instead of an actual peace proposal.

But why wouldn’t the Obama administration grab such a deal?  The American public does not want this war and neither does Congress at this point, so this could be a way out for Obama.

Wouldn’t getting Assad to give up all of his chemical weapons be a major coup?

And it certainly sounds like Syria wants peace

Syrian Foreign Minister Walid Moallem told reporters in Moscow that his nation “welcomes” a proposal by Russian Foreign Minister Sergey Lavrov during talks on Monday: put Syria’s chemical weapons under international control to avert a U.S. military response over an alleged poison gas attack last month.

“I declare that the Syrian Arab Republic welcomes Russia’s initiative, on the basis that the Syrian leadership cares about the lives of our citizens and the security in our country,” Moallem said. “We are also confident in the wisdom of the Russian government, which is trying to prevent an American aggression against our people.”

We already know that a military strike would not get rid of Assad’s chemical weapons.

So wouldn’t a diplomatic solution that got rid of those weapons be far more preferable?

You would think that would be the case, but the sad truth of the matter is that this was never about Syria’s chemical weapons.  This conflict is about money, religion, a natural gas pipeline, and looking out for the interests of Saudi Arabia, Qatar and Turkey.  The Obama administration is not going to be able to achieve what they really want in Syria without military conflict.

And Obama seems to have developed a real appetite for military action.  In fact, Business Insider has pointed out that the attack on Syria will be the eighth military conflict during Obama’s presidency…

In 2011, America was more or less kicked out of Iraq. By then, Obama had surged troops in Afghanistan and increased cross-border strikes in Pakistan.

He took what was a one-off cruise missile strike in Somalia in early 2008, and expanded it into a concerted military operation against Boko Haram. That’s four.

He also cut a deal with Yemeni President Abd-Rabbu Mansour al-Hadi to conduct counter-terrorism operations and a bombing campaign in Yemen. That’s five.

He initiated a bombing and air campaign in Libya that ended in a boots-on-the-ground situation that was likely much bigger than anyone without a clearance knows. That’s six.

He then aided in French direct operations in Mali by providing surveillance drones and transport. That’s seven.

Now he’s pitching the idea of a cruise missile attack and possibly even a aerial bombing campaign in Syria, one that could conceivably lead to further escalation.

That’s eight.

But of course the Obama administration is promising that the assault on Syria will be very “limited”.  On Monday, John Kerry even went so far as to claim that the attack would be “unbelievably small“.

So precisely how does the launching of hundreds of cruise missiles constitute an “unbelievably small” strike?

I think that John Kerry will end up deeply, deeply regretting that statement.  He is an incompetent bumbler that is making the United States look like a total fool.  Instead of being our top diplomat, he should be mopping the floors in a Dairy Queen somewhere.

When the U.S. attacks Syria, there is a very good chance that we could be starting World War III.

You see, it won’t just be a matter of Syria retaliating against the United States.  Assad put it this way during an interview with Charlie Rose

“You should expect everything. Not necessarily from the government”

So what does Assad mean by that?  Debka gives us a clue…

The Syrian and Hizballah armies Sunday, Sept. 8, finished supplying rockets to dozens of Palestinian groups, some invented ad hoc, and deploying them on the Syrian and Lebanese borders facing Israel, debkafile’s military sources disclose. An array of Katyushas, Grads and Fajr-5s, with ranges of up to 70 kilometers, is now in place. This development prompted the first deployment in the Jerusalem region Sunday night of an Israeli anti-missile Iron Dome battery.

The information reaching Israeli intelligence is that the newly-armed Palestinian groups fully intend targeting the Israeli capital, following the example of Hamas, which aimed missiles from the Gaza Strip at Jerusalem and Tel Aviv in November 2012.
In his interview to PBS’s Charlie Rose Show airing Monday, Bashar Assad spoke of “people aligned to Syria” carrying out “some kind of retaliation” for an American attack.

It now turns out that he intends using pro-Syrian and amorphous Palestinian groups as his instruments of retaliation, while at the same time disavowing responsibility for their actions.

In the south, likeminded Hamas and Jihad Islami groups in the Gaza Strip may try and join the rocket offensive against Israel. It will be hard for them to stand aside and watch, although Egypt’s counterterrorism offensive in Sinai is cutting into their resources.

In addition to what the Palestinians have, the Syrians have approximately 100,000 rockets that they can fire at Israel and Hezbollah has approximately 70,000 rockets that they can fire at Israel.

If thousands of rockets start falling in Israeli cities, and if especially if any of those rockets have unconventional warheads, Israel will respond with absolutely overwhelming force and the number one target will be the city of Damascus.

Then we will have World War III, and the rest of the world will blame the United States and Israel.

Anyone that claims that this upcoming conflict will be good for the U.S. or for Israel is not being very smart.

There is so little that could be gained from a war with Syria and so much that could be lost.

And at this point, the American people are overwhelmingly against attacking Syria.

A brand new CNN poll has found that the American people are opposed to a military strike by a 71 percent to 27 percent margin if Congress does not approve it.

And if the vote was taken right this moment, it would almost certainly fail in the U.S. House of Representatives.  If you doubt this, just check out the chart in this BBC article.

And a different survey has found that the American people are against military action in Syria by a 63 percent to 28 percent margin…

Opposition to U.S. airstrikes against Syria is surging, a USA TODAY/Pew Research Center Poll finds, despite a White House campaign to convince Americans it is the right course ahead.

By more than 2-1, 63%-28%, those surveyed Wednesday through Sunday say they are against U.S. military action against the Syrian regime for its reported use of chemical weapons against civilians. In the past week, support has declined by a percentage point and opposition has swelled by 15 points, compared with a previous Pew Research poll.

Hopefully Obama is listening.

If the American people were told the actual truth, those numbers would probably be even more lopsided.  At least that is what U.S. Representative Justin Amash thinks

If Americans could read classified docs, they’d be even more against action. Obama admn’s public statements are misleading at best.

So will the American people get to see the “evidence” that the Obama administration has been touting?

Of course not.

In fact, a request by the Associated Press to see the evidence has been denied

The Associated Press ran a skeptical piece Sunday about the Obama administration’s public case for military intervention in Syria in response to a reported Aug. 21 chemical attack.

The AP’s Zeina Karam and Kimberly Dozier wrote that “the U.S. government insists it has the intelligence to prove it, but the public has yet to see a single piece of concrete evidence produced by U.S. intelligence — no satellite imagery, no transcripts of Syrian military communications — connecting the government of President Bashar Assad to the alleged chemical weapons attack last month that killed hundreds of people.”

The Obama administration has released videos to make its case, but the AP noted that its requests for additional evidence the government claims to possess have been denied

Instead, we are being told to “trust” Barack Obama and John Kerry as they lead us toward World War III.

And Obama seems absolutely obsessed with making this conflict happen.  According to Politico, an unprecedented media blitz is planned to drum up support for this war…

Obama will tape interviews Monday afternoon with anchors from ABC, CBS and NBC, as well as with PBS, CNN and Fox News, the White House said.

The interviews will be conducted by ABC’s Diane Sawyer, CBS’s Scott Pelley, CNN’s Wolf Blitzer, Fox’s Chris Wallace, NBC’s Brian Williams and PBS’s Gwen Ifill.

The interviews will air that night, ahead of Obama’s Tuesday speech on Syria.

So what do you think?

Should we attack Syria and potentially start World War III?

Please feel free to share what you think by posting a comment below…

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