The Greek referendum

In 2008, Iceland became the state for boom and bust. The country’s three main bank grew rapidly and consumed debt worth £55bn ($85bn) to find collective balance sheet of 10 times bigger than the country’s economy. In 2008 as financial crisis hit all time low and triggered a collapsed sparking a downturn.

Since then their economy staged a valiant rebound producing a growth rate above 3 per cent, as IT, Energy and Tourism flourished and became a main source jobs. Greek, Portugal and Italy should follow painful, stressful experience which Iceland successfully surmounted as they embrace the excruciating restructuring and currency losing half its value.

The Iceland government has managed to avoid the sovereign debts by using capital controls to prevent investors freely exchanging Krona for foreign currency. This was fundamental in preventing widespread capital flight and empowered Iceland to protect its financial system, which in fact not only created a space for economic recovery but also removed the pressure of dealing with debt restructuring. When their three banks collapsed, the government decided to save the domestic parts of the system and its own taxpayers but put maximum pressure on foreign creditors and depositors. So bank bonds held by foreigners were tossed into default and were trapped in Icelandic Krona by capital controls.

If the referendum in Greece is No then Greek will have chance to be out European Union and start their own new currency. They should seek advice from Iceland how win this economic downturn. With the advent of the new currency the Greek banking system will collapse, then it up to the Greek government to put pressure on foreign creditors and depositors. The easiest way for any one to move their money from Greece was to put it Bitcoin or a censored block chain. May be Greece should launch their own City coin and Peer to peer so you control your currency. Bitcoin is completely neutral, does not care if you are rich or poor which could become alternative barter system. Banks are creating or counterfeiting money every time they are lending. Greece should build their own currency and transparency and accountability and have an excellent opportunity to be the leaders in the world of finance.

All the contingency plans prepared by Greek banks will be derailed if a NO vote wins the referendum. Banks in Greece have been shut since last Monday, when capital controls were imposed to prevent a bank run after the Government’s called for referendum.

The Greek prime minister Alexis Tsipras had spent the previous night inside the European Commission’s Brussels headquarters, meeting with Jean-Claude Juncker, the commission president; Mario Draghi, The European Bank head and Christine Lagarde, the International Monetary Fund chief and gave a final bail out offer. The two sides were €600m apart and the Eurozone officials were willing for hotels to be moved from 23 per cent VAT rate to a new 13 per cent bracket, closing the gap to €400. But Mr. Tsipras returned wielding a new paper demanding 10 new concessions. Eurozone officials suspected Yanis Varoufakis, Greece’s charismatic finance minister, was sabotaging the talks to that Athens can default, and vitally gaining debt relief. Why we recommended NO in the referendum, Greece’s creditors refuse to reduce their un payable public debts, and insisted that it should be repaid parametrically by the weakest members of the society, their children and their grand children. Greece benefited from joining the Euro. That is why people want to be in the Euro, as Greece’s borrowing cost reduced from 15 per cent to 5 per cent.

Germany has got debts, which it cannot collect.

Greek 10year bond deal which started in 1990 at 24 per cent three times average for countries that would join the Euro with Greece. By 2002, the cost of long term borrowing for Greece converged at 5 per cent and they fell further in 2010.

Amid fears the Greek bankers and business people plans for a possible bail-in of depositors which call for a “haircut of 30 per cent on deposits above €8000. There must be fifty ways not to pay creditors just say no, the Germans do not care, they got plenty of experts.