Tspiras – The 2 Things He Must Do Immediately

oped_300He must be planning for the smoothest possible transition regardless of what happens. He cannot be putting all his eggs in one basket.

This means he must do these two things immediately to prepare for a possible #grexit

1. Tell Greeks he has printed the Drachma

2. Outline how he will address the trade deficit

In more detail.

1. Without a ready to rock currency he has no bargaining position. The ECB can simply keep the banks closed until the Greek government folds to its demands.

We saw it in Cyprus, we will see the same again in Greece.

2. The trade deficit must be fixed immediately.

It is all very well having the currency ready to go but if there is a trade deficit then there must be capital controls, at least in the first few months until things stabilise.

Things will only stabilise when businesses around the world see that Greece is working towards a balanced trade account with the rest of the world.

If Tsipras and Varoufakis have not put these plans in place then they are acting in the most stupid way imaginable.

As I said.

If Tsipras and Varoufakis do not have the Drachma ready to roll they have no power in the negotiations.

They are completely dependent on the goodwill of the people they are negotiation with, they are completely subservient.

Without a ready to go currency the ECB/EU can simply keep the banks closed until the Greek voter submits to their demands.

To say Tsipras and Varoufakis are doing a disservice to Greek voters (by not publicising their contingency plans) would be an understatement of epic proportions.

And I will go even further.

You would have to say Tsipras and Varoufakis are well aware of the consequences.

In which case they will be using the suffering of the Greek people as a bargaining tool.

Tsipras and Varoufakis will be showing that they prefer to make the Greek people suffer rather than make simple and straightforwards preparations.

Which will mean that their top priority is not the welfare of the Greek voter but some socialist ideology of income redistribution.

Varoufakis has made it quite clear that he wants to see profits of German exporters redistributed to the customers of those same German exporters.

It is a clearly ludicrous situation, a ludicrous ideology.

In summary

Without having a ready to go currency and without plans to balance the trade account it is irrelevant what the Greek voters vote for.

In fact, the situation would be so absurd as to suggest the whole standoff is not about the Greek people at all.

You could draw the conclusion that in fact the Greek voter is an innocent casualty in the struggle between Keynesian and Hayekian ideologies.

With everyone on the Keynesian side and Germany on the Hayekian side.

You could quite easily draw the conclusion that the Greek voter is being used as a bargaining chip, a PR tool to get the sound money supporters to surrender to those who think wealth comes out of a printing press and not through human ingenuity.

This has the potential to become very messy.

And make no mistake. I believe Tsipras and Varoufakis are simply useful idiots for the Keynesian camp.

They are there to cause chaos, wittingly or not, to cause a political PR disaster for the German nation as a way to make it politically acceptable for Germany to give the green light for full steam ahead money printing.

To repeat, all the problems could be avoided by having a ready to go currency and a plan to balance the Greek balance of trade.

These two simple things will dissolve all of the negatives.

But with these preparations, Varoufakis will see his dream of a surplus recycling mechanism in the Eurozone disappear

And for this reason, the current Greek government has every motive not to make any preparations and every motive to turn this into a completely unnecessary and artificial economic disaster as a means to ram through the larger socialist agenda of the EU and ECB.

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