^[1]Do I have to say it?

Maybe not; but I will anyway.

I told you so.

But then, anyone watching the Euro Crisis closely—or just the Greek crisis—would have known that any deal that the Greeks were offered, other than a near full write down of their sovereign debt, would be a loser and unworkable.

I said months ago that the Greek crisis would end with Greece leaving the euro behind…

And that the Eurozone powers would “double down” on the euro…

But in order to do so, the “European Union” would have to become more of a union and less of a group of disparate nations and cultures separated by centuries of hatred, grudges, cultural dislikes and temperaments, and of course, multiple languages.

And, in order to make the Eurozone a real European Union, there would have to be enforced acceptance of the euro…

But, as we see, it is easier said than done…

Eurozone Deconstruction

Because the Eurozone today is flying apart.

The PIIGS nations, which are at the edges of the Eurozone, are also among the weakest economies.

But it is the weakest economies that produce the least, are also the ones with the least fiscal discipline, the most socialized, and the most in debt.

Greece is the poster child for this, but certainly is not alone.

But as noted in the Macro Minute last Friday, the “deal” that was announced between Greece and the Eurozone money authorities was a deal only in concept, regardless of the signatures on whatever piece of paper.

The reasons that Greece is beyond any deal are as simple and they are profound…

The have incurred the debts of an economy that is several times the size of their actual economy…

This means that the debt is outside their ability to normally take on…

And therefore, is outside Greece’s economic ability to even begin to pay it back.

Even a 50% haircut on their outstanding debt isn’t enough to really make the deal realistic…

Because so much of the Greek economy was “false” in that it was financed by outside investors who allowed Greece to way over leverage itself…

And to over-socialize itself.

Even as of 2011, about 30% of Greek workers were on the government payrolls.

What were they producing?  It would seem nothing of any real economic value.

The Irony of Austerity

Also, the austerity that has been mandated upon the Greek economy by the debt restructure agreement is, ironically, counterproductive in two ways…

First it will cause even greater contraction in the Greek economy, which limits demand, and second it will force greater levels of unemployment, which also shrinks demand and shrinks tax revenues…

Making it impossible for Greece to honor the deal even if it wanted to…

Another very important reason that the deal is nothing more than an illusion at best is, as I have mentioned before, the political reality in Greece.

Greeks are rapidly becoming impoverished by their enormous debt and the resulting collapse of their economy.

As I noted last week, for the leaders of Greece who agreed to the debt repayment deal, sticking to the agreement is quickly becoming the furthest thing from their minds…

The angry and violent mobs in the streets of Athens with nothing left to lose are foremost on the minds of Greek leaders…

The deal is a deal, sure, but is it realistic to think that Greeks will submit themselves to generations of austerity and debt slavery to live up to their bargain?

What do you think?

And so, what happened in Greece right after the deal had been signed and cuts were announced?

Violence filled the streets of Athens as a general strike was called…

And five Greek politicians resigned after European leaders demanded they implement even deeper spending cuts…

And set the deadline for those cuts for the middle of this week.

And if Greece fails to make the cuts?

A Debt Paid In Blood

Bailout money will be withheld from Greece and they will have officially defaulted on their sovereign debt.

Such a default will have a global impact upon the financial world and may well lead to deeper and more widespread chaos throughout Greece…

Political disintegration and social instability are very contagious among countries on the edge of financial survival…

Spain, Italy, and Portugal are not far behind Greece…

But, Eurozone authorities have said plainly that Greece is a special case, and that such “deals” will not be made with other PIIGS nations…

Again, the Eurozone leaders are just dreaming if they think they can send Greece and the other PIIGS nations into a sort of national debtor’s prison while the social fabric of those nations unravels amid financial collapse, civil unrest, and political impotency.

But that, it seems, is the plan.

It is akin to Shakespeare’s play, The Merchant of Venice, wherein the infamous Shylock insists upon his pound of flesh from Antonio…a debt that if paid, would be fatal to the debtor.

Of course, Antonio avoids paying the debt to Shylock by a shrewdly applied legality that voids the debt because the spilling of blood is not in the contract.

But in the modern tragedy of debt and debtors, although the spilling of blood is, presumably, not in the deal at hand, it’s a sure bet that blood will be spilled, either in the paying or collecting of the debt…

And those are…The Gorrie Details.

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