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Within our small circle of friends belong an older lady and her husband, both retired, with an interesting perspective on world affairs (I did not ask permission to use her name, so she will remain nameless for the purpose of this post). She is of direct Greek descent and still has family around Athens. She last visited two months ago. In speaking with her tonight about the Greek chaos, she offered a few "boots on the ground" observations that lend a very human feel to the deplorable situation the Greeks are currently suffering:
- Greece is in a true "great depression." It doesn't matter if they drop out of the Euro and revert back to the Drachma.
- She has witnessed well dressed Greeks searching for food in garbage cans, something never before seen in Greece as society has (until now) prevented "street people."
- Her father used to rent apartments to college students. Recently, business has gone away due to either a total lack of college students or students who leave in the middle of the night without paying the rent. The family stands to lose considerably in their real estate endeavors.
- One of her relatives relies on a very expensive chemotherapy drug to keep her cancer in remission and requires the drug to be administered at a hospital every couple of months. The last time her infusion was scheduled, the hospital was unable to supply the drug. No public or private hospitals anywhere in Athens had the drug in stock - they drove to all of them. No pharmacies had it. It was unobtainable within the country because no bank is willing to lend the hospitals or pharmacies the money to purchase it. The cash price is approximately $7,000. Her option is to either travel outside of the country and pay for the drug in cash, or stay at home and eventually die.
- Greece lost 200 billion Euros to capital flight over the course of the last year, including nearly 2 billion Euros in a single day just recently. Bank lines are believable as the people try to pull their money out while they still can. The country has lost half of its assets over the course of the last three years. Pay cuts of 50% are becoming common - the average working person simply cannot live on such cuts.
- Her family stands to lose 90% of what they have due to deteriorating economic conditions. Due to looming capital controls and the lack of cash available at banks to withdraw, they can no longer move their money out of the country fast enough to save themselves. They are becoming victims of a true economic collapse.
- In her own words, "it could happen in this country, too."
In a similar story, the Swiss National Bank has enacted currency controls to peg the Swiss Franc to Euro exchange rate to 1.20:1. This was purportedly done to insulate Switzerland from the Euro crisis and attempt to help stabilize the region . Switzerland has positioned themselves to purchase unlimited amounts of foreign currencies to stabilize the exchange rate.
This is very, very bad. The Swiss Franc has historically been one of the most stable currencies in the world, even more so than the U.S. Dollar. Now, the Swiss have intentionally inserted their own currency into a deteriorating union that is threatening to collapse (because they believe the Euro and the EU will stay intact against all odds). This is a real problem for world stability for two reasons:
- One of the most stable currencies has now voluntarily been degraded in an attempt to stem the flow of collapse. Europe's last stable currency of any value at all is the British Pound. Last I checked, Britain was in the same financial crisis as everyone else and their debt to GDP ratio was nearing 1000% when private and financial industry debts are factored in. Yes, that's one thousand percent .
- Foreign investors will now be forced to purchase physical assets (gold) rather than sovereign bonds. This may drive investment out of Europe even farther and exasperate the situation.
In love of liberty,
The Bulletproof Patriot