Greek Referendum – Switching Off the Voice of the People

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Prices Tell Lies…

It’s times like this we wish Hunter S. Thompson were back on the beat. He never wrote about money. But his political journalism was revolutionary and spot on. His book, Fear and Loathing on the Campaign Trail ’72 is legendary.

He sniffed Richard Nixon out as a ‘greedy little hustler’ years before Nixon was forced to resign the presidency due to the Watergate scandal. He saw through the spin and got to the heart of politics – its corruption – better than anyone.

What would he say about the Eurozone’s current implosion at the hands of their politicians? At best he’d call them swine. Or devious little rats jumping on and off barely floating ships (of state).

The latest news from Europe, which will change tomorrow so don’t get comfy with it, is the Greek referendum is now off. The market liked it.

They also liked the fact that new European Central Bank (ECB) boss Mario Draghi cut interest rates by 25 basis points to 1.25 per cent. But they didn’t like that he was reticent about using the ECB’s printing press to buy up the debt of bankrupt sovereigns. For the record, the rate cut will be just about useless.

Back to the Greek referendum, or lack of it. Sorry Greek people. You were going to be consulted on your and your children’s economic fate but that consultation risks the fate of politicians. And guess what? Politicians are far more important than you.

Sarkozy and Merkel were livid with Greek PM George Papandreou for having the hide to see whether his people wanted to stay in the Eurozone or not – and put up with a prolonged depression to do so. They immediately went on the offensive. Sarkozy threatened that Greece would not get ‘a single cent more’ should the people vote no. Talk about debt servitude.

For Sarkozy it was about ‘obeying the rules’. Greece wasn’t playing nicely. No one seems to be pointing out that France ignored many of the rules of EU membership too, which is why its AAA sovereign credit rating hangs in the balance. But hypocrisy and politics go hand in hand.

This is all about political survival and to hell with everyone else. If Greece exits the Eurozone on its own terms, it will very likely start a domino effect that will lead to the disintegration of the whole euro project.

Why else is Greece getting so much attention? Ordinarily European politicians wouldn’t give two hoots about Greece. They would happily let it go to the dogs if its exit from their club didn’t threaten their own political ambitions.

The tragedy in all this is the Greek people remain at the bottom rung of the ladder…as all the crap from the political animals scrambling for power above them falls on their heads.

Amid the daily changing headlines, all you need to do is keep this in mind – sacrificing society to bailout bankers will not work in the long run. The Eurozone is a dysfunctional state. Many of its members are trapped in a gold standard regime, having ignored all the rules of a gold standard in the lead-up.

These austerity experiments have never before been tried. The closest we came was in the Great Depression. Back then, ignoring the rules of the gold standard while the debt bubble grew ended in the gold standard’s eventual demise.

The same will happen with the Eurozone. The people calling the shots are fools, hypocrites and, as Hunter S. Thompson would say, swine. They’re trying desperately to keep a badly designed construct together for their own political purposes. Nature, eventually, will tear it down.

What does this mean for you? More market volatility.

Greg Canavan
for The Daily Reckoning Australia

Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.
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3 Comments on "Greek Referendum – Switching Off the Voice of the People"

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shortchanged
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As I have said before Greg, beware the political ego, everything else is nought. We the people, do not exist, except to pay, pay, pay.

technofreak
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Hunter would have a field day right now!!

Joe
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So, little lost George thinks that the Greek people would vote YES to a referendum on taking the latest bailout along with further contingent grief for the Greek people, and so we don’t need to have one. Nothing to do with being faced down by Merkel and Sarkozy and blackmailed over a credible Greek government cash book. So again Democracy in the European Union is truly dead. Is was demonstrated when the constitution was rejected in the early 2000’s and so not liking the results of required ratification referendii they held them again until they got the YES they wanted… Read more »
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