Written by J.D. Heyes, Natural News, February 26, 2015
(NaturalNews) The fate of the euro — and, effectively the European Union — could rest on what the political and financial powers within the union itself decide to do regarding the new Greek government’s push to restructure its debt and end the austerity measures imposed upon it as part of a 2012 bailout agreement.
As noted by Michael Snyder over at The Economic Collapse blog, Greek leaders have already met with EU officials to discuss what the next economic steps forward will be for their country. But prior to the meetings, new Greek Prime Minister Alexis Tsipras, head of the far-left Syriza party, had stated that he was not prepared to accept an extension of the current bailout agreement. In fact, Tsipras was elected on promises to end the austerity measures altogether, even though the Greek economy has not appreciably improved.
Meanwhile, Eurozone officials have countered that they expect Greece to honor the conditions of the bailout. So, Snyder noted, “basically we are watching a giant game of financial ‘chicken’ play out over in Europe, and a showdown is looming.”
“Run by radical leftists”
He further notes:
Adding to the drama is the fact that the Greek government is rapidly running out of money. According to the Wall Street Journal, Greece is “on course to run out of money within weeks if it doesn’t gain access to additional funds, effectively daring Germany and its other European creditors to let it fail and stumble out of the euro.”
Now, there have been previous moments of crisis involving Greece, obviously. But things may be different this time around, Snyder warns. The new government is being run by radicals, and their entire campaign was based on ending the austerity that was imposed by the bailout, which was worth more than $270 billion.
“If they buckle under the demands of the European financial lords, their credibility will be gone and Syriza will essentially be finished in Greek politics,” he wrote. “But if they don’t compromise, Greece could be forced to leave the eurozone and we could potentially be facing the equivalent of ‘financial Armageddon’ in Europe. If nobody flinches, the eurozone will fall to pieces, the euro will collapse and trillions upon trillions of dollars in derivatives will be in jeopardy.”
How many trillions? According to the Bank for International Settlements, more than $24 trillion in currency derivatives are tied to the value of the euro.
To put that in perspective, Snyder notes, the U.S. government is on pace to spend about $4 trillion in fiscal 2015. The entire U.S. national debt, while very large itself, is only $18 trillion.
“So 26 trillion dollars is an amount of money that is almost unimaginable,” he wrote. “And of course those are just the derivatives that are directly tied to the euro. Overall, the total global derivatives bubble is more than 700 trillion dollars in size.”
“Heal the ‘wounds‘ of austerity“
Is a deal in the offing, however?
Reuters reported Feb. 13 that Greek leaders have agreed to talk to its creditors as a way out of the financial mess on the horizon:
Prime Minister Alexis Tsipras, attending his first European Union summit, agreed with the chairman of euro zone finance ministers, Jeroen Dijsselbloem, that Greek officials would meet representatives of the European Commission, the European Central Bank and the IMF on Friday.
“(We) agreed today to ask the institutions to engage with the Greek authorities to start work on a technical assessment of the common ground between the current program and the Greek government’s plans,” Dijsselbloem tweeted.
On arriving at the summit, Tsipras said, “I’m very confident that together we can find a mutually viable solution in order to heal the wounds of austerity, to tackle the humanitarian crisis across the EU and bring Europe back to the road of growth and social cohesion.”
Mountains of money will depend on what Greece and the EU decide to do next.
For the record, the austerity was insisted upon by Europe’s finance ministers because the Greek government was bleeding money on overly generous government pensions and other social spending (sound familiar?).