3 Min. Gold News – Jim Rickards – Greece – Bloomberg – June 30, 2015

3 Minute Gold News

A Quick Read for Busy People

A synopsis of interview with Jim RickardsNew York Times bestselling author of The Death of Money and Currency Wars, by Stephanie Ruhle and Olivia Sterns from BloombergTV.

Jim is the Chief Global Strategist for West Shore Funds, former general counsel for Long Term Capital Management, and a consultant to the US Intelligence community and the Department of Defense.

Topics:

Greece Steps Closer to Default
Greek Pensions
Whose Fault Is it?
US
Contagion
Social Unrest

 

Rickards - Brisbane

Jim Rickards

Interview link

GREECE STEPS CLOSER AND CLOSER TO DEFAULT

The current situation looks like a German miscalculation. Jim thinks that the Germans will have to blink and back away.

The Greek plan and the European Central Bank euro plan are not that far apart.

Greek Finance Minister Yanis Varoufakis has said they’re pretty close. He divides between what he calls the parametrics and the structural plan. The parametrics are extremely close and he wants a long term solution.

He makes a lot of sense.

For example, Europe complains that Greek pensions are too high as a percentage of GDP.

Greek pensions have come down 40%.

What happened is that the GDP imploded so the fraction goes up when you implode the denominator.

Germany miscalculated and pushed Greece a little too far. Maybe Greece was a little impetuous in their reaction but Germany is going to have to back away from this and get it done.

WHOSE FAULT IS IT?

Over the long term Greece got themselves into this with a little help from Goldman Sachs cooking the books in the earlier part of the decade.

But everyone is in this together and this is not the time for finger pointing.

US

Where is the US in the Greek situation?

Greece is a NATO member. Greece has a pretty good navy and they control the sea lanes. Does the US want Greece cozying up to Russia? There’s a lot going on here behind the scenes.

Greece is not technically in default. They’re in “arrears” but there are ways out of this.

The European Central Bank owes Greece billions from the profits from securities market transactions. Varoufakis said, “Why don’t you take the money you owe us and pay the IMF?” That’s one way out.

The Greeks might vote ‘Yes’ and that’s another way out.

Or the Greeks could call off the referendum.

You do have a couple of paths out of this.

CONTAGION

Contagion is a slow motion process.

In 1997 and 1998, that financial crisis started in Thailand in June 1997 and ended up in Russia with the Long Term Capital Management crisis in August 1998.

That was fifteen months.

In 2007 and 2008, that panic started in 2007 with the Bear Stearns hedge funds and didn’t come to full fruition until 2008.

Don’t underestimate contagion just because this time it hasn’t happened in two seconds.

This contagion issue isn’t about Greek banks — it’s about Spain, Portugal and Italy.

That hasn’t been priced in yet.

SOCIAL UNREST

Social unrest is the real wild card.

You can manage the financial side of this but when you have riots, tear gas and military responses then it can spin out of control.

 

Jim Rickards can be found on Twitter and at James Rickards Project.

 

 

 

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AlbumCover.PreparingfortheFall

 

Preparing for the Fall is available on iTunes — featuring Wag the Dog, Black Swan Dive,  American Pie and Gods of the Copybook Headings.

 

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Wag the Dog (Drums of War and Backroom Banker Passes)
words and music Elaine Diane Taylor
© 2014 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

Coins and Crowns
words and music Elaine Diane Taylor
© Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

 


The Gods of the Copybook Headings
words by Rudyard Kipling and music by Elaine Diane Taylor
©2014 Intelligentsia Media Inc.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

 

Another Week on Wall Street (Naked Short Selling and Fiat Currency)
words and music Elaine Diane Taylor
© 2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

 

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

 

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