Greece as a Revolution

I got a message today on how Forbes was pushing a "military coup" in Greece to keep them on the straight and narrow, however, this was late to the party in that progress of a revolution is either back and forth blows by different sides, or once a side has established power, a sequence that is designed to drive down the other factions. In Greece we have had a series of elite coups, where by the future of the country is mortgaged to allow the elites to move their fortunes to safety, and a series of popular reactions. Each popular reaction was insufficient to block the elite coups, but destabilized the assurance that the elite coups would hold.

What happened in the last week was that the Prime Minister threatened to hold a referendum – that is, a member of the elite was using the threat of a popular blow to enhance his own position. The result was a no confidence vote being scheduled, which is, as my essay made clear, a constitutional coup. The PM withdrew the referendum call, and was allowed to remain in power. The return blow then, must be from the public. If the public does not topple the government, then they are accepting the outcome that all main political parties regard protecting Greek elites as the paramount concern of government. The Greeks will then have to vote with their feet, as they have in the past, as Greece, itself, will be driven down deep into second world status, with a deflationary spiral causing repeated crushing burdens imposed, and demands for everything to be sold off at fire sale prices. They are, as Ireland and Portugal were, at the end of the line.

This is not about "the ability to borrow." It is about the elites having liquidity to leave Greece, and then buy back in at lower prices later, while the public is stuck with illiquid and vanishing assets - pensions, rights, franchises, monopolies. All of these will be taken away, because they cannot be converted into hot money – the Euro.

Contrast this with Greece going off the Euro - which it should not have been on – and going to the drachma, with a forced conversion to drachma of Euro based assets owned by Greek citizens. That this point the elites could no longer flee Greece, nor buy back in later – using catastrophe arbitrage. Greece could borrow, either in Drachma from its own citizens, or in hard currency from the outside world, though at rates which would end lending. Now, they will borrow, in order to bail out others. The money will not "bail out" Greece, but instead be charged to Greece to bail out others. Greeks over the next generation will be bailing out others, not be bailed out themselves.

The key rule of financial crisis is to prevent flight of assets and liquidity, however, corrupt elites have flight as their first priority. Therefore, if the public wants to have a country left in such moments, they must demand that capital flight end, if necessary, by toppling governments until one committed to remaining in the country takes power.

Since Portugal would not do this, and it seems Greece will not, these nations are going to be crippled for years to come, or have a half life prosperity only by doing off shore work for someone. Do not be surprised however, if Greece ends up going the road of Albania, and becomes a haven for drug running, gun running, and other forms of smuggling – because these are the businesses which they will be able to enter.