Russia is the Greek Ace in the Hole?

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By Jacob Maslow

Moscow Kremlin at nightUsually, during a tough poker game, it’s very easy to think your competitor is on the ropes or has run out of cards and is basically just trying to squeeze out of a tight spot. You might think that you have him exactly where you need him to be before you deliver a killing blow. Usually, this takes the form of raising the ante. You can try to bluff but chances of him bluffing with a totally blown set of cards are actually quite low.

Well, this is one way to look at the current high-stakes drama playing out in Europe involving Greece. Greece is looking like it’s running out of options. It can’t grow its way out of its debt hole because its economy is so weak. On the other hand, Europe, especially the Germans are hesitant in extending another bailout and forking over billions of dollars to Greece with no assurance that they would see any of that money back. It’s like throwing good money after bad.

Well, there’s been a lot of digital ink spilled regarding all the negative consequences of Greece finally leaving the European Monetary Union. I’ve consistently maintained that’s it’s not a question of if Greece will leave but a question of when. The numbers just don’t add up. The possibility of Greece staying in the European Union is going to be extremely expensive, and it’s not a sustainable solution.

This is why it’s actually a piece of good news that there are a lot of noises coming out of Greece that it may lean on Russia for some sort of financial aid. This can play out quite well in Greece’s advantage if Greece leaves the European Union. It can have enough of bridge loans so it can get its financial house somewhat in order for it to devalue its way out of the hole that it’s in.

However, Russia is not a sucker. Putin is one of the most intelligent and crafty political leaders out there. Any deal that may involve Russia holding an empty bag is definitely going to be off the table. Maybe Greece is just waving the possibility of a potential Russian bailout or assistance to get a better deal from the European Union. This is really just grasping for straws in a desperate gambit. Nobody in their right mind would knowingly get into the Greek mess, unless there’s some solid collateral.

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