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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Greece Referendum Vote Result Forecast Yes Win, But Depression Will Continue

Economics / Eurozone Debt Crisis Jul 05, 2015 - 02:52 AM GMT

By: Nadeem_Walayat

Economics

Its referendum day for a possible doomsday for Greece where the marxist Syriza government has been hell bent on engineering a Greek exit from the euro-zone ever since its election victory 6 months ago, towards which it has been working step by step attempting to trick the 70% of the Greece electorate who have consistently stated they wish to remain within the euro-zone resulting in a convoluted and confusing referendum question called on short notice that Syriza hopes will convince the majority to vote NO to the euro-zone and europe.


Therefore the question is has Syriza propaganda done enough damage to the rational thought processes of most of the Greek electorate to convince them Islamic State style that a Utopia of sorts awaits them on NO vote Monday, one where Greece has no austerity, no debt and receives unlimited financial aid from its euro-zone partners who apparently following a NO vote would be happy to grant the Greek people all of their wildest desires with a wave of the magic ECB money printing wand.

Could Syriza be right ? That Zeus will descend from Mount Olympus and make manifest all of the wishes of the Greek people, or has Syriza now sown the seeds of an economic catastrophe that will end up being TWICE as bad as the Great depression of the 1930's that saw the US lose 25% of its economy, roughly what Greece has already suffered to date, which suggests Greece is only half way through its nightmare, especially as Syriza instructions to shut all of the banks has flung the Greek economy off the edge of a cliff as the Greek economy literally grinds to a halt.

Will Greece Vote YES or NO to Europe?

My consistent view since the referendum was first declared is that Greece, just like its subsidy forever without any debt inflation consequences SNP brethren in Scotland vote on UK membership, will like wise vote YES to remain with-in the euro-zone without which Greece would have gone bankrupt 5 years ago, forced by the markets through INFLATION to make severe the structural adjustments to wages and public spending within a few short months rather than the decade long adjustment that Greece appears to be working towards at huge cost to euro-zone tax payers.

04 Jul 2015 - Will Greece Commit Suicide? Syriza Propaganda and Greek Mass Delusion

Greece Becoming Scotland

The latest in a string of 'final' deadlines is today at 11pm when Greece is expected to default on its debt repayment due to the IMF, though as expected the IMF is already backing away from its implications by changing its rhetoric to imply that Greece would just be in arrears rather than default which once more pushes the final deadline further down the road to now the 5th of July referendum when Greece, 3% of the euro-zone electorate profess the right to decide the fate of the Euro-zone much as 4% of the UK electorate in Scotland decided on the fate of the United Kingdom in Scotland's referendum of September 2014.

However, just like the Scottish SNP Government, the Syriza government paints a bogus picture of Greece's predicament, one of blatant lies as Greece has made NO debt and interest repayments, nor has Greek banks paid a single euro to withdrawing customers as all of which including billions to finance Greek public spending has been financed by Euro-zone tax payers and the ECB as Greece attempts to make its subsidy permanent Scotland style as I have covered at length over the past few weeks with key points excerpted below.

The bottom line is that SYRIZA GREECE is blackmailing europe, where 3% of the euro-zones electorate profess the right to decide the fate of the whole euro-zone just as SNP SCOTLAND blackmailed the rest of the UK, and similarly Greece WILL vote to STAY in the Euro-zone just as Scotland had voted to stay in the UK. Though it remains to be seen if that will be possible given the delusion in Greece that expects the euro-zone member states, many of whom are far poorer than Greece to finance the Greek life style in perpetuity.

So to reiterate once more that my expectations are that Greece will vote YES to remain within the Euro-zone. However, the damage was done as soon as the banks were closed and capital controls implemented for which Greece will now pay a price for many years and likely see its economy shrink by at least another 15%. So Greece's economic depression is going to get a lot worse! And it is not a done deal that a YES vote does not mean that Greece will remain within the euro-zone for the fundamental reason that now the crisis in Greece is much worse than it was just a week ago! The economy has collapsed which means Greece's budget deficit has worsened.

What if Greece Votes NO

If my YES vote expectations prove to be wrong and Greece population suffering from mass delusion, convinced by Syriza propaganda that they are the victims of the evil Troika by effectively voting to commit suicide (NO) then the starting point for leaving the euro-zone will be hyperinflation because Greece will immediately start to print its own currency be it counterfeit Euro notes or some other form of IOU's as I wrote several days ago -

02 Jul 2015 - Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros!

In the face of this crisis, Greece does have the nuclear option, one that could threaten to blow the whole euro-zone apart as what apparently no one is reporting on is the fact that Euro's in Greece are printed by the Greek central bank. Therefore Syriza faced with empty bank vaults could just command the Greek Central Bank to start printing Euros without ECB authorisation, which would instantly result in a devaluation of Greek Euros that would be marked down in value against other nation Euros.

Greece printing euros would instantly wipe out the value of the debt denominated in euros as well as wipe out most of the value of savings and purchasing power of earnings i .e. Greece would effectively be printing money to inflate its way out of the crisis and thus the Greek inflation rate would soar.

With dire consequences for the euro-zone as continued in the article -

The reason why this is so dangerous is because contagion would be immediate in that German Euro notes would be deemed as being the most valuable and those of the PIIGS nations being marked down in value as each Euro note serial number is marked with the country of origin prefix as the following Italian euro note illustrates that is identified by S -

So, for example someone shopping in a store in Greece and eventually the other PIIGS would be able to buy MORE with the same denomination German Euro note marked with an X then the notes of other euro-zone nations and especially that of Greek Euro bank notes marked with an Y.

Whilst today the suggestion that Greece could start printing euros without permission may seem impossible, however so did Greece defaulting on the IMF loan and a collapse of its banking system just a week ago!

So all this talk in the media of it being impossible for Greece to launch and print its own currency for many months if not years is WRONG, for Greece already has printing presses ready that can immediately print Euros without limit.

In fact Greece may have been stealthily stock piling currency paper and ink in readiness of detonating its nuclear option. In fact Greece may already be printing billions of euros in secret that will only start to become apparent when Greece as if by magic is able to start to relax its capital controls such as limits on withdrawals. In fact the euro notes would be just the tip of the money printing ice-berg for the Greek central bank only needs to press a few buttons to electronically print tens of billion of euros and then eventually in the hundreds of billions as Greece goes through its own hyperinflation event and we will probably see inflation take off in all other euro-zone nations except Germany.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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