France Fails Greece.

For decades the Greek government has been spending far more then it raises in taxes. As a result they've be forced to make up the shortfall by borrowing on the international markets. With the interest payments on these loans adding to the budget deficit Greece has been forced to borrow ever larger amounts of money at ever higher rates of interest.

This became completely unsustainable and in 2009 the Greek government simply ran out of people prepared to lend them money. With Greece needing fresh loans to repay the existing loans this should have cause Greece to default on its debt.

Contrary to what the Greek people have been led to believe default does not mean that a nation's debts suddenly disappear. Instead it means the nation just gives up any say in how it's debts are repaid. Normally default leads to creditors seizing a nation's assets including money held in private accounts in national banks and imposing trade sanctions that see a levy imposed on all import and export transactions that anyone in the debtor nation participates in until the debt is repaid. In the past these type of measures have triggered civil wars, famines and disease epidemics that have killed tens of millions of people but the debt always gets paid.

However with Greece being a member of the European Union (EU) its 27 neighbours were not prepared to let the Greek people endure this type of suffering so stepped into help. The first thing the EU did was to use its collective bargaining power to simply write off 50% of Greek debt - worth around USD250bn.

Having been involved in the anti-globalisation movement of the late-1990's and in particular the "Jubilee 2000" drop the debt campaign I know that this is simply unheard of - particularly for a nation such as Greece which would be more then capable of paying it's debts if the usual measures were imposed.

Contrary to what the Greek people have been led to believe Germany's war time debts were not simply written off in the 1950's. Instead they were incorporated into the Bretton-Woods agreement and Germany continued to pay those debts even while helping Greece pay its debts.

In order to deal with Greece's remaining debt the EU in conjunction with the IMF put in place a complicated mechanism which essentially sees the EU provide money to Greece's banks which allows those banks to buy new rounds of Greek government debt to prevent the Greek government defaulting on its existing debts. However in order to reduce the overall level of debt the EU requires that each new round of Greek government debt is slightly smaller then the previous round. This reduction in borrowing obviously requires the Greek government to both reduce it's spending and increase its tax revenues.

Despite the extraordinarily generous terms of this deal the Greek government still refused to implement the spending cuts and tax increases so in 2012 the agreement was tinkered with to make it even more favourable to Greece. At this point Greece did start complying with the EU plan and the country was just starting to turn the corner recording 1.5% growth in the second half of 2014 - the countries first growth in more then 4 years.

Greece's next problem arose in the form of the form of the Communist and frankly amateurish SYRIZA coalition. With the economy finally turning the corner SYRIZA saw their last chance to grab power forcing the collapse of the Greek government and an election SYRIZA won in January 2015. Despite Greece being on course for around 3% economic growth this year - some of the strongest in the EU - SYRIZA went a bit mad and immediately cut taxes and increased government spending - mainly to provide government jobs for SYRIZA members.

With Greece effectively withdrawing from the agreement the EU began to debate whether the agreement would be able to continue. Matters came to a head on June 26th (26/6/15) when Greek Prime Minister Alexis Tsipras called a referendum on the agreement. Being so far out of his depth it is ridiculous Tsipras simply thought that if he could engineer a "No" result he could wave it around like a bit of agit-propaganda and the EU would simply cave and continue giving Greece free money. What Tsipras failed to do was actually read the referendum question which asked whether Greece wants to continue to be part of the bailout. If it doesn't then it wants to withdraw entirely from the international community including the EU.

When the Greek people turned around and said "No we don't want to be part of the bailout" the EU simply respected the democratic will of the Greek people and the bailout ended. However as a sign of goodwill the EU simply stopped providing Greece with fresh money rather then moving to recover the outstanding debt by seizing all the money in Greek banks which is the normal course of action under the circumstances.

Despite the EU's continuing charity and currency controls that have effectively shut-down the Greek banking system and the wider economy Greek banks are still expected to run out of money either today or tomorrow. At the end of this week the Greek government has to pay salaries to its workers. With the banks having no money to lend to the Greek government this simply would not happen.

You would think then that Tsipras would have been forced to address the nation to apologise to the Greek people for misleading them and dragging them down this road to destruction before issuing his resignation. However displaying a dictator's desire to cling to power at all costs Tsipras instead decided to defy the will of the Greek people and make an new offer to the EU to continue the bailout.

The offer that Tsipras made requires a much faster reduction in Greek debt through deeper spending cuts and higher tax rises. It also requires Greece to set up a special fund controlled by its creditors. This is the first step in the type of trade sanction that Greece will have to endure if it moves to default. These are also not the conditions of a new bailout deal. They are simply things that Greece will have to do in order to get the EU back in the room to discuss the possibility of a new bailout.

Even this was only possible because France chose to put great pressure on the EU to open fresh bailout negotiations. Given France's own rather shaky economic position this strikes me as a grave mistake because it is clear that Tsipras is not going to go back to the Greek people and admit that he has failed them. Instead he's going to go back and continue to lie to them about how the evil EU is cause of all of Greece's problems and he - the glorious leader - has forced concessions that will protect the Greek people.

With neither Tsipras, SYRIZA nor the Greek people admitting that they've made a huge mistake it's obvious that they're going to make the same mistake all over again and the EU will be back having this same argument in about six months time.

15:15 on 13/7/15 (UK date)

Edited at around 15:50 on 14/7/15 (UK date) to add;

In order to put pressure on the negotiations in order to secure this deal France put on a hostage seige at a Primark store just north of Paris. Bringing back memories of the Charlie Hebdo terror attacks this was intended to give everyone a big shock. It also raised the point that if Greece were to collapse it would leave them even less able to deal with the floods of refugees from, primarily, Syria amongst whom terrorists may be hiding. The flip side of that argument though is that if Greece leaves the EU it makes it much easier to keep those refugees out of the EU.

Mainly though it was intended to make us all feel concerned and sorry for the innocent people trapped in the store. I think Primark are likely to sue because although their clothes are extremely cheap and made in sweatshop conditions the company itself is actually highly profitable. Unlike Greece.

Although the UK opted not to participate in the negotiations over Greece it does continue to work extremely closely with France particularly on security issues. For example just today it was announced that the UK will pay to build a secure area at the port in Calais to keep migrants out that will be operated by France. Therefore they seem to have found out in advance about the Primark robbery not least because the French were likely boasting about it in advance to their allies within the negotiation.

Therefore the UK decided to muscle in on the action with an explosion at an industrial park in Hellesdon, Norfolk, East Anglia. The Charlie Hebdo attacks of course ended at an industrial park and in all official documents Greece is referred to as "The Hellenic Republic." This was obviously the UK trying to force its way into the EU discussion but also an attempt to make sure that Prince William, Duke of Cambridge wasn't overshadowed on the first day of his new job as pilot for the East Anglia Air Ambulance. If an Air Ambulance was required to respond to the explosion and if the weather had allowed Prince William would have flown it.

Yesterday I was very busy with lots and lots of things to do none of which included the UK Monarchy's latest desire for attention. However these things are usually intended to show that the Monarchy are just like normal British people in order to trick the British people into continuing put up with them. With the Duke talking about how important he thought it was for him to work in order to keep himself grounded I also took it as an indication that the UK is still clinging to the idea that I should give up my current role in order to go work in a shop or something.

What made me laugh though is that in looking for a job that would show Prince William to be a grounded man of the people the answer the Crown came up with was; "Helicopter Pilot."