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Greece, Diversion, and the New World Order

Politics / New World Order Jul 30, 2015 - 12:41 PM GMT

By: Submissions

Politics Raymond Matison writes:Since 2009, the world has been made acutely aware of Greece’s troubling debt problems.  At that time commentators and analysts noted that its debt was too large to be paid off, yet Greece was given a multibillion dollar bailout loan.  Soon thereafter another large loan was extended that further increased Greece’s previously acknowledged, unpayable debt level.  If Greece was deemed unable to repay its debts of $113 billion in 2009, then six years later with a shriveling economy, capital controls, and the addition of $242 billion in additional debt (or a tripling of its debt), it is clearly even less able to repay such a sum.  Even the IMF now suggests that some debt forgiveness has to be considered in order to make its debt repayable. 

One should ponder the meaning of such bailouts, when the preponderance of those loans went to pay interest or principal on EU’s previous loans, rather than to fund improvements for the Greek economy or its citizens.  If the result of loan proceeds almost exclusively benefits the lender, then one might wonder what the real purpose of this loan was.  Cleary these loans could not have been based on sound economics or defensible bank lending practices – therefore one would be forced to assume that they were politically motivated, or were made to serve some other purpose.  A few weeks ago, the Greek people rejected the idea of additional austerity with their national referendum, yet its government agreed to accept terms put forth by lenders in a total rejection of its populist referendum results, and is negotiating additional bailouts and increased debt.

So, if everyone knows now, and knew then that its debt was unpayable, why do we still have negotiations for additional debt?  Why is the can still being kicked down the road? Why hasn’t Greece simply been kicked out of the EU, or why has it simply not declared bankruptcy, or why haven’t the lenders forgiven some portions of its debt, when everyone is clear and agrees on the real status of that debt?  What is going on?

To understand this inconsistency one needs to use skills watching a performing magician. When a magician puts out his hand towards you in order to focus your attention to it, it is to divert your attention from what he is doing with the other hand. So in the case of continuing Greek meetings and negotiations we should be asking what is it that our attention is being diverted from?  Clearly all these potential issues from which our attention is being diverted from have to be far more significant than the straw-man issue of Greece.

This is not to minimize the real tragedy of the Greek people. When jobs are scarce, unemployment rife, savings spent, banks closed, access to cash restricted, stores running out of food, hospitals depleted of medicines, national assets being sold off to foreign lenders, and social unrest in the streets – it is a real life crisis. Arguing that is was the country’s past economic and socialist welfare policies, or that of corrupted politicians which brought it to this calamity does not diminish the pain.  Yet the EU is not blameless since it was their decision to bring a financially weak Greece into the EU, and provide what now appear to be odious loans.  The country is unfortunately being played as a pawn in a game of large economic and geopolitical stakes.  That is always the fate of all small countries among larger and more powerful predators.

Overall issues worthy of diversion.

There are a number of issues which are good candidates as reason why the Greek drama is being drawn out to more than just one act: the problem with some other EU countries not being able to repay their debt, a risk to the unraveling of the whole EU, potential domino effect of collapsing global debt triggered by either sovereign defaults or the rise of interest rates collapsing derivatives, the decline of the petrodollar and reconfiguring of our global reserve currency to include the Chinese yuan, the expected beneficiaries of the presemt world order being suddenly challenged by the BRICS nations.

Politicians are masterful magicians able to divert our attention from the real issues of concern.  Together with the help of accommodative mainstream media this is not difficult to achieve.  Take, for example, the last several year diversion of news related to Syria, Iran, and Ukraine. We have been inundated with propaganda that Syria’s president is a beast killing his own people; Iran is a nation whose citizens hate America and whose goal it is to bring death to the United States; the Russians are bringing internal war to Ukraine in order expand its empire.  It may surprise some, but there are alternative explanations of these specific conflicts.  It may simply be a masterful diversion, in order to better achieve America’s own strategic goals regarding global energy flows, as well as denying economic benefits to countries that possess natural energy resources, or those that would benefit from their transmission through its territory heading towards Europe, thereby denying competing nations from these economic benefits. That is not to propose that the leaders of these aforementioned countries are blameless, but rather that these issues are much more complex than presented to the public, which usually has a hidden agenda that is diverted from citizen attention.

When it suited our global policies, former president Clinton met Syria’s president Assad a leader who seemed tolerant and protective of multiple religions practiced in his mostly Muslim country.  When decades ago we installed the Shah of Iran, undermining its democratically elected president, we noted that its people were more modern and Eurocentric than the rest in the region, being descendants of the former great Persian Empire; Russia finds it more difficult to overcome its former communist Soviet Union legacy, as our long-existing global strategy is to oppose any sovereign power that has the potential to be a viable regional competitor to our hegemony.  However, it is quite clear despite the diversionary illusions, that the ordinary citizens of these countries could all surely get along well with the highly generous and diversity tolerant people of America, as we could with them.  It is strictly leaders and some statistically small extremist groups who create divisions and potential for antipathy and conflict.  

Change the leaders and the country dialogue, and the relationship between countries and their people will also change. In this context it is very likely that our replacing Iran’s elected leader with a pliant pro-western ruler gave rise over time to his ouster and replacement by the present anti-American theocratic government.  After many years of theocratic rule, one can envision now another, internally driven change in the leadership of Iran towards a more secular government, which makes it imperative for the United States to seem conciliatory towards Iran now - if we are to have a voice or profit opportunity in developing Iran’s vast oil resources.  This is the deciding factor in our present negotiations with Iran.  Syria, Iran, and Russia are important future players in the global energy game, and so these countries must be presently vilified in order to justify political or military actions that can bring about results we desire.  However, when the loss of control is imminent, we must become practical and “make nice” with our hostile adversaries. This multi-year diversion is so complete as to make one forget that all of this posturing is to obscure the target of our energy and hegemony policy.

Current issues worthy of diversion.

Over the last six years a masterful diversion also has refocused our attention from what really was taking place with EU and its banks.  Initially European banks had massive exposure to Greek debt, and its default at that time would have collapsed Europe’s banking system, with severe global implications.  With highly leveraged balance sheets, it requires very little defaulted Greek debt to evaporate meager bank capital. So over years while Greek bailouts were taking place and constantly in the news, the real action was in banks reducing their exposure to destructive Greek sovereign debt.  European commercial banks now have little or no exposure to this debt, and have insulated themselves from this threat as the second act of this Greek drama starts playing.

With this amazing example of diversion, we now ask the question of why does the media and Europe’s policy continue to play the Greek drama?  Fundamentally, this Greek drama should have ended six years ago, with decisive action; yet politicians have continued to kick the can down the road keeping Greece in the news and an economic penumbra.  It is clear that once the Greek tragedy is fully completed, media’s and other politician attention should be focused on the other high risk, indebted countries of the European Union.  Most followers of business news are aware, that Portugal, Spain, and Italy are next in line to confront their debt problems, but while Greece is in the public eye, other country problems simply aren’t covered.  It seems that they do not even exist. 

Any of the constituent EU countries could pose a mortal risk to that union and the global financial system.  While Spain and Italy are noted to be too large to bail out, even Germany could become the problem country if Deutsche Bank’s enormous derivatives exposure starts to suffer even a low default rate.  So it is likely that other such huge potential financial problems are being worked on while the Euro theatre is still playing the all-captivating Greek drama.

Before the end of the current year, several EU countries will have elections through which they could determine their desire to remain in the EU.  Due to the present acrimony and division, it is possible that these near term elections may determine the future solidity of the EU.  That is to say that a process outside debt considerations also may play a role in the unraveling of the EU. 

Near term issues requiring diversion.

The world is awash in money.  Central banks print it for their own country economic manipulation, or for remaining pari passu with foreign trading competitors.  Given that money creation stems from issuance of debt, the oft repeated observation that the world has too much debt by correlation states that we have too much fiat money.  Overabundance of this money produces market volatility, as funds transfer with the click of a computer button from one corner of the globe to another.  Such movement of massive fund flows stimulated by speculation can neutralize intentions or intervention of all but the largest central banks and their policies. 

The huge global debt bubble could be pricked by central banks promising to raise interest rates.  It is likely that actually only token rise in rates could be managed, because a meaningful rise in rates would not only collapse the bond market, it would also blow up financial (interest rate) derivatives collapsing major banks, while government budgets and deficits would explode through increased debt service costs.  However, we can be sure that leaders in the interest of self preservation are trying to find an acceptable solution to this intractable problem.  In the meantime playing act three of the Greek drama is an effective attention grabber, keeping our focus from this cataclysmic problem.

Over the last several years, many erudite observers have written about a persistently eroding Petrodollar.  It requires no economic wisdom, just some common sense to recognize that China, being the world’s number one or two sized economy, should have its currency included in the global reserve currency line up.  This simple acknowledgement forces us to recognize that U.S. dollar must diminish in its importance, as the yuan gets increased demand for its currency that previously was garnered only by the U.S. dollar.  That refocus in relative demand for the yuan and the dollar has severe implications for the exchange value of these two currencies.  It is highly unlikely that the dollar does not lose value, even allowing for the fact that in a global financial crisis many foreign funds will flow to the U.S. dollar for perceived safe haven.  Therefore, this critical global problem warrants playing act four of the Greek diversionary drama.

Longer term issues requiring diversion.

Over the last twenty years American presidents, notably the senior George Bush, spoke often about the emerging new world order.  With NAFTA and WTO trade agreements in place while others are being negotiated, transnational corporations expanding world-wide and extant U.S. military dominance, elites could have confidence in their expectations of a world order that favors the U.S., EU, and Japan. 

In a surprisingly short span of years as measured in the last two decades, the BRICS (Brazil, Russia, India, China, South Africa) nations have suddenly grown and matured into a compelling group of challengers to that previously settled expectation of world order.  With present negotiations regarding Iran’s development of nuclear power, and effective loss of sanctions there is another large and energy rich country that will be added to the BRICS list of countries challenging the present world order. One can foresee that this new grouping of countries may adopt the new acronym of CRISIS (China, Russia, India, South America, Iran, and South Africa) countries, which coincidentally will provide more precise meaning to our embattled world.  The “S” part of this acronym representing South America is more appropriate than just Brazil, as South America will soon include more countries than solely Brazil. During previous decades, particularly throughout the 1980’s, many countries (Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela) throughout S. America were forced to renegotiate and restructure their debt agreements with the IMF or World Bank.  

John Perkins, author of “Confessions of an Economic Hit Man” states “Economic hit men are highly paid professionals who cheat countries around the globe out of trillions of dollars.  They funnel money for the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources.  Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder.  They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.”

Many of these countries no doubt see themselves as having been exploited. David Korten, author of “When Corporations Rule the World” notes that World Bank and the IMF together “have arguably done more harm to more people than any other pair of nonmilitary institutions in human history”.  If true, there will be little difficulty to have other South American countries aligning with Brazil and the other competitor BRICS nations, as plundered countries do not soon forget their depredations, as the joy and hope of signing a multi-billion deal is but a fleeting moment while the pain of repaying a long-term failed and restructured debt lasts for decades.  In addition, most Central America nations had the same financial experience – but they are too small to put up any resistance, or to make much difference.

Losing the moral high ground for any country has significant long term costs, and this is even more true for a world leader – particularly if that leader was seen previously in the world as virtuous, promoting democratic ideals, diminishing enslavement, promoting human rights, fighting against fascism, communism, and other forms of repression.  Ensnaring financially less sophisticated but resource rich countries into large infrastructure transactions requiring large debt assumption, which are designed to fail in order to force acceptance of harsh restructuring terms does not lead to the moral high ground.  Over time it leads to losing your allies, and an alignment of nations who seek at a minimum to insulate themselves from such exploitation, and optimally to inflict pain to such a wrongdoer. When opposition is developed and united far enough, it means that a new world order gradually becomes established. This potential development is worthy of extending our Greek drama to five acts.

Therefore, it is likely that Greece will remain in the news for a long time, even though its own economic and social future of the next several decades was determined more than six years ago.  But, there are so many important global issues unraveling, that diversion of public attention from these issues is compelling to our politicians – for it otherwise would unmask the incompetence, corruption, hunger for greed and power, playing countries as poker chips, in a game which risks fomenting a violent citizen revolution in the countries of the old world order. 

Raymond Matison

Mr. Matison is a U.S. patriot who immigrated to this country in 1949. With a B.S. in engineering physics, an M.S. in Actuarial Science, work in the actuarial field, and as a financial analyst at Legg, Mason Inc., Lehman Brothers, and investment banking at Kidder Peabody, and Merrill Lynch provides a diverse background for experience.  First-hand exposure to fascism, socialism, and communism as well as the completion of a U.S. Army military intelligence course in the 1960’s have inspired a continuing interest in selected topics in science, military, and economics.

Copyright © 2015 Raymond Matison - All Rights Reserved
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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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