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date 5.Jul.2015

■ Greek referendum on EU: making heads and tails of it

The world and his wife knows that today the Greeks are voting for their future. Pushed in the corner, feeling betrayed and exploited, Greeks feel that it is a lose lose situation. Some down here have lost everything that's to be lost already, so they feel definitely rebellious. How many of them exist we'll learn at the end of today. They want to tell the Germans and co to stuff it. 5 years of unemployment and general deterioration are likely to do this to a man's soul.

Most europeans are probably fed up with Greeks. They think we're just a lazy bunch that spent over their head for way too long and now is the time to pay the bill. But the bill is impossible to pay. Imagine you as an individual owing a billion dollars to your credit card; there is not a chance to repay such a debt. However EU have their heads well deep in the sand about this obvious problem pretending it will go away.

One will say that back in 2011 greece was already saved once with a 50% write off of the private sector debt. Economics is very murky and I am just an informed engineer but if we just concentrate on figures, Greece at the beginning of the crisis owed 105% of its GDP, then after 5 years of "inspired" austerity measures imposed by the creditors, lost 25% of its GDP and the debt rocketed again to 177% of its GDP. Following simple arithmetic the debt went up in real terms from 250 to 320 billion (!). So what kind of debt did they write off? The original debt of plain greek bonds owned by european and USA banks was merely repackaged as european member state loans, backed by UK law (that is very hard for Greece to write it off unilaterally). And the money that poured in Greece all these years has been mainly spent (90%) to repay these loans.

So this is a very funny rescue indeed. How on earth did the debt increase? These last 5 years we had hoards of experts like BlackRock inventing debt, while adding billions to it to cover their fees for their "expert opinion". I believe (correct me if I'm wrong) that a large chunk of the debt increase was manufactured by declaring all Greek banks more or less insolvent and then imposing on the Greek state to get loans to bail them out. In contrast other european banks in the same situation got money for "free" using the quantitative easing that eventually got to work in europe too.

Now Greek banks are again on the brink of destruction. The leftist government played a poker game with the creditors for 5 months and they called our bluff. The talks broke off and in the space of just one week (amazing!) there was a bank run, capital controls and a large part of the greek economy has stalled. There are reasonable fears that all banks will be rendered insolvent and eat up people's deposits in the bail-in style that premiered in Cyprus a couple of years ago — but in Greece it will probably start from the 1st euro deposited, failing the 100K europe-wide bank guarantee.

Our fellow europeans probably believe that putting more money into Greece is like throwing them down the drain. I assure you this is not a fault of our own. The "lazy middle aged pensioners" saw their incomes plummet by half, those that managed to keep a job that is. Unemployment is the highest in europe now over 26%. The IMF-EU-ECB troika must admit that their measures basically took Greece from bad to worse. Mr Schaeuble must be visually impaired as well as an invalid when he cannot see the obvious and demand more austerity measures of the same kind that brought us here.

What a complex mess this is! But it is a time for change. The conception of the monetary union is flawed. Yes, Greece is a backward country, corrupt and inefficient and full of not so bright people that are spoilt by the good weather, and probably needs a good shock to wake up. However my fellow europeans, we are not base animals to be disciplined or exterminated. We had a civilization once upon a time that enchanted your ancestors and helped you acquire the celebrated prosperous state you are in now. It is not a nation's fault that its governors happen to be poker theorists. We must rethink this europe matter or break it up, but like adults, not with kindergarten quarrels.

Despite feeling dejected, in the interest of my kids future, I will be voting YES in today's referendum. I want greece to be part of the european family. But family means brothers, not vultures. I am amazed to find many people that will vote NO among my close friends, educated and well off people. I am certain that the desperate masses in Greece, those that are already at the lowest possible rung of the ladder will also be voting no. So I am unable to offer a prediction of the outcome. It's going to be pretty close.

Let us avoid a mutual annihilation, whatever the outcome. The world markets are relatively calm presuming a YES vote, but let me tell you that this is not in the bag...

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