Thursday, April 9, 2015

GREXIT watch: Greece establishes "Public Debt Truth Commission"

Greece's parliament voted to establish a "Public Debt Truth Committee" and conduct an examination and audit of the public debt, and the circumstances under which the former Greek government entered into the agreement.

Two short video clips, with the tag line "Check it, Erase it" were already in the can and ready for mass distribution by Zoi Konstantopoulou, the head of the Greek parliament as soon as the vote had wrapped up in Athens.

Following on the heels of tiny Iceland's successful repudiation of their international debt in 2012, complete with indictments against the bankers involved in the fraud, Greece now elects to give serious consideration to the legal concept of "Odious Debt", which would determine how much, if any, of the outstanding debt was illegal and unenforceable.

As financial markets blog ZeroHedge notes:  

If the Greek "Debt Truth Committee" indeed persists with determining how much of its debt is legal and enforceable, and ultimately decides to rescind some (or all) of it, the only question is how long until other countries around the world, all of which are burdened with massive, untenable debt loads across the government, financial and household sectors, decide it is time to do the same and declare a fresh start. 

With a growing belief in the rights of states to unilaterally repudiate their debts, will this give momentum to the domestic US "Audit the Fed" movement?

When the head of JP Morgan takes to the talk show circuit to reassure markets that his bank has pre-emptively "stressed tested" a GREXIT scenario, anything is possible.

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