Friday, June 19, 2015
Friday Beaver Greek tragedy edition
Beavers don't need home loans and you may not like the second act Mrs Lincoln.
Greece that ancient bastion of democracy is slowly crumbling along with the rest of the world. Question remains will it take everybody else down in the process? Democracy a system of government whereby the majority of people rule either directly or by representation. Demos = people Kratos = power or rule. And it's the only reason Greece has the government it does because neither the banks nor the corporations could buy off the government there.
What does it all mean one might ask? Banks are trying their best to steal, yes steal the wealth of the people. And prior governments had a hand in it by borrowing money then lowering taxes and letting the very rich hide their money off shore. Hum sound familiar? And now the bill comes due but there's no money left to pay it. It sits quietly in the Caymans collecting interest untouched and untaxed.
And what a Ponzi scheme we've created for ourselves. You take out a loan with interest which is created from money that never existed. Your friendly banker takes that loan and sells shares (leverages it) at around nine times its' value. The system works well until either somebody can't pay or too many want to cash in their shares. Then the system collapses. With a home loan the borrower loses his house and still must pay back any difference if the home value is less than the loan (known as due on default). The share holders lose by getting pennies on the dollar if that. The bank wins all around. It has possession of the home, the difference on the loan balance and can tell the shareholders to bugger off also charging them a fee to try and sell their shares. And let's not forget the fees which in some cases can amount to one third to one half the loan balance.
So getting back to Greece it's a safe bet whatever happens they're screwed. If they were to take the Euro deal their pensioners and public workers might as well take a poison pill. If they don't take the deal and have to go back to the Drachma then it would become basically worthless paper. After all who'd want to hold currency in a bankrupt country or buy a bond from it? And from the latest reports people aren't waiting around to see which way this is going. Money is flooding out of banks in millions of euros. Come and get it before it's gone.
All of this could have been avoided if all parties had looked at past history. You can't expect anyone in a tough financial situation to cough up more than they have. Germany for one seems to forget that they had much of their debt after WWII forgiven and the rest was financed over a 55 year period. They just finished paying their war debt in 2005 believe it or not.
And what banks failed this week? That's right they never really fail they just change their name and keep stealing. We'll look later...