The one and only thing that might possibly spare Greece the agony of a completely worthless currency is Greece’s small hoard of 111 tons of gold.
Pact With the Devil
Yet, in the fine print in the latest deal, Greece’s lenders will have the right to seize its gold reserves according to the New York Times article Growing Air of Concern in Greece Over New Bailout.
In the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign — Greece relinquished fundamental parts of its sovereignty to its foreign lenders, the European Commission, the European Central Bank and the International Monetary Fund.
“This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders,” said Louka Katseli, an independent member of Parliament who previously represented the Socialist Party, using the abbreviation for the Organization for Economic Cooperation and Development. She was one of several independents who joined 43 lawmakers from the two largest parties in voting against the loan agreement.
Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.
Causing a Nightmare Scenario
On Tuesday, Finance Minister Evangelos Venizelos defended the new debt agreement, calling it “the most significant deal in Greece’s postwar history” and asserting that it had “averted a nightmare scenario.”
Today this same puppet of the Troika installed government claims, as he has been for weeks, No Loan Deal Means Absolute Catastrophe
Greece Finance Minister Evangelos Venizelos said Thursday Greece would face an absolute catastrophe if it didn’t approve the terms demanded by international creditors in exchange for a second bailout, which includes a EUR107 billion debt write-down plan.
Greece is already in a state of absolute catastrophe. The one thing 100% guaranteed to make matters worse for Greece is if Greece lost its hoard of gold to the thieves and plunderers at the IMF and Troika.
Rather than “averting a nightmare scenario” that pact is going to “cause” a nightmare hyperinflation scenario.
Value of 111 Tons of Gold
One tonne = 1000 kilograms = 32150.746 troy ounces.
At $1780 per troy ounce, the value of that gold is roughly $6.35 billion.
Given an estimated size of the Greek economy at $290 billion or so, that is not a huge hoard.
However, something is better than nothing as Zimbabwe proves. Something is enough to prevent a currency from going completely worthless, although obviously not enough to prevent a massive devaluation.
There is still time for Greece to come to its senses and reject the deal. Also recall the conditions of the deal require a constitutional change and that is impossible before 2013.
For details, please see Greece Needs New Constitutional Provision Imposed by the Troika; Slight Problem, Constitutionally It Can’t Do it
Biggest Hope for Greece is Germany
In an enormous irony, Germany may be the biggest hope for Greece. Although France and other countries do want this pact to go through, Germany’s words and actions prove that Germany does not.
Germany has put up roadblock after roadblock attempting to get Greece to scuttle the deal, only to have fools like Finance Minister Evangelos Venizelos agree to them.
It may be up to Germany to come up with still more ludicrous demands in hope that the Greek finance minister and Greek politicians finally get the message “it’s not wise to make a pact with the Troika devil”, especially one that requires Greece to relinquish its gold.