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This post was edited by abramicus at 2015-6-14 07:01|
HOW THE GREEK COMEDY WILL PLAY OUT . . .
First of all, the Greek debt repayment crisis has no real deadline. The current deadline can be moved to a later date, by agreement or by unilateral action with the other party acquiescing, and the technical default can be made into a commercial default, etc., with little consequences for either Greece or the EU/Germany.
Secondly, the crisis can end in some kind of a restructured loan repayment schedule, or outright default of the Greek government with no repayment scheduled. The former is a win-win proposition, and the latter is a lose-lose proposition, and there is no other alternative. Therefore, the former is a foregone conclusion.
Thirdly, the question devolves to WHEN Greece and the EU will agree to a structured repayment schedule.
This leads us to an analysis of the problem as no longer involving the self-interests of Greece or of the EU, since a restructured repayment schedule is the only solution, and therefore some other EXTERNAL FACTOR is keeping the talks from winding down to reach an agreement on a foregone conclusion.
In analyzing all kinds of SCAMS and SHENNANIGANS, the most important questions to ask are: (1) Who primarily benefits from it? and (2) Who suffers the most from it?
Dragging out the negotiations between Greece and the EU benefits the EU in that the Euro held by other countries, like China, become devalued - but such benefits can be realized only when holders of the Euro sell out while the Euro's value is depressed, like right now. Therefore, continuing the Greek comedy by kicking the can down the road serves to put pressure on China to sell its Euro's at a low exchange rate, and increases the chance that China will do so, the more time they give China to do so, by prolonging the talks.
Indirectly, this benefits Greece too, because the earnings that the EU makes when China sells her Euros and the Euro rebounds right afterwards when Greece and EU then agree on a restructuring of Greek debt, could be used to make up for the concessions that Greece and the EU each have to make to the other to come out even.
Who have they then decided to be their mark, to pay for the gap between the Greek and EU positions? China, but only if China sells its Euros when the Euro exchange rate is depressed.
The Greek debt crisis is doubly painful for China to bear because it's game plan of intentionally overvaluing the Yuan by buying Yuans in the market with its dollar reserves, sustaining month after month of loss of export earnings, is made worse if the dollar itself becomes overvalued due to the global "flight to safety" of the rest of the world, made fearful due to the potential collapse of talks between Greece and the EU. In order to avoid draining all its dollars, China may have to sell Euros, convert them into dollars, in order to then sell the dollars to support the Yuan.
Therefore, the logical solution to the Greek Comedy is for China to devalue the Yuan, save its dollar reserves by not using them to prop up the Yuan, and save its Euro's for the windfall to come when the Euro rebounds due to the inevitable restructuring of Greek debt. A more daring gamble would be to buy Euro's with dollars and Yuans, and reap an even greater profit when the Euro rises again, as it must. This is one way for China to "PLAY THE GAME" of the Greek debtor-vs-EU lender comedy, and end up laughing all the way to the bank, the PBOC that is.