by Karl Spain
When I predict things I like to take into account two very different types of variables. The first is the mathematical backdrop. This is like the background in a painting, it’s not what you’re looking at but it creates the picture. For example, I don’t think Maduro is long for leadership in Venezuela, not because he isn’t consolidating power – he is – but because the background is so poor, with no cash, no military experience and dropping oil prices, he’s in a mathematical corner it would take Einstein to get out of, and Maduro is no Einstein.
Same picture in Israel actually. Netanyahu is a thousand times brighter than Maduro and 10,000 times the politician but the economy is bad in Israel, and he’s been in power a long while and when you’ve had power and things get worse, people want a change.
Greece is another story altogether. Here you have years of stagnation, decades of corruption and mishandling of government funds and now a crazy populist appears and seizes power. This is a dangerous time with a crazy front man in the picture and bad, bad things like this in the background — that together form a combination of very ugly proportions.
But don’t take my word for it, I’m not a European and I barely understand them. Here’s a little ditty from Bloomberg that tells the tale, (I think).
(Bloomberg) — Erik Nielsen likes to spend Sunday mornings ruminating over the world economy at a cafe near his west London home.
Finding his favored Caffe Nero too crowded on Mother’s Day, the chief global economist of UniCredit Bank AG beat a retreat to his own study. From there, he also changed direction on Greece.
“I am throwing in the towel,” Nielsen wrote in his “Sunday Wrap” report. “If they don’t want to play by the rules (and the past weeks give me little hope,) they should get ready to leave!”
“And please appreciate what a difficult conclusion that is to draw for a deeply committed European like myself,” said Nielsen, who previously worked at the International Monetary Fund and Goldman Sachs Group Inc.
The reason? Greek Prime Minister Alexis Tsipras’s call last week that Germany pay World War II reparations shows things have gone “plain nuts” in Athens.”
You don’t know Erik Nielsen and neither do I, but I know one thing, it’s bad he’s given up on Greece.
Because that probably means they are out of the EU — and although that all by itself might not even be a bad thing, right now with the world teetering on a massive deflationary spiral, pushing that economy into complete collapse may not be wise any more than pushing Russia into collapse will be.
Does the world know how careful, humble, compassionate and extraordinarily brilliant Angela Merkel is managing things these past 6 months? She should get the U.S. Medal of Freedom for simultaneously preventing WWIII and holding the EU together and using Germany as the lever to do it all.
God bless her. It’s difficult to pat the Germans on the back after the last 100 years but to be honest, right now, she’s holding Europe together and facing down Putin pretty much alone and I respect her for it.