It appears that the head of Greece’s radical left party believes that there is little chance that Europe will cut off funding to the country, and if it does, Greece will repudiate its debts. Seriously…
In an interview with the WSJ, Alexis Tsipras, the 37-year-old head of the Coalition of the Radical Left, also known as Syriza, warns that financial collapse in Greece would drag down the rest of the euro zone. Instead, he says, Europe must consider a more growth-oriented policy to arrest Greece’s spiraling recession and address what he calls a growing ‘humanitarian crisis’ facing the country.
‘Our first choice is to convince our European partners that, in their own interest, financing must not be stopped,’ Tsipras said in an interview with The Wall Street Journal Thursday. ‘If we can’t convince them-because we don’t have the intention to take unilateral action-but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors.’
According to recent opinion polls, Tsipras’ party is poised to win the most votes in repeat elections next month, bettering its surprise, second-place finish in an inconclusive May 6 vote that left no party or coalition with enough seats in parliament to form a government.
Tsipras says that, if push comes to shove, Greece can manage on its own. By not paying its debts, the country will have enough cash to pay its workers and retirees. He also proposes cuts in defense spending, cracking down on waste and corruption, and tackling widespread tax evasion by the rich..
The craziness in Greece doesn’t end here. The government has been having trouble getting the citizen’s to pay their property taxes, so they decided to bundle the property taxes with the electricity bills, since the citizens were more inclined to pay those bills. The government had hoped to raise €1.7bn-€2bn from the levy in the fourth quarter of last year. But a massive unions-led civil disobedience movement against this “injustice” scuppered that and a ruling that it was illegal to disconnect people’s electricity supply for non-payment sent the collection rate even lower.
Now the power company is not getting the revenue from the electricity bills and it has now had to be bailed out by the government to avert a nationwide energy crisis. For these and many other reasons, we are still shorting the euro using the leveraged ETF EUO.