ATHENS, Greece – “It’s finished. The euro finished. Greece finished.”

With this apocalyptic shorthand, our taxi driver described the situation in Athens.

The banks here have been closed for two weeks. To try to prop up the crumbling banking system, the government has banned Greek citizens – but not tourists – from withdrawing more than €60 ($67) a day from the ATMs.

The breaking news this morning is that the government and its creditors have cobbled together a deal to keep Greece in the euro zone.

Prime minister Alexis Tsipras has caved in to creditors’ demands on economic reforms. Trouble is his countrymen voted to reject almost the same deal in last weekend’s referendum.

And Tsipras still has to push the reforms through the Greek parliament on Wednesday.

Otherwise all bets are off…

We Hopped on a Plane to Athens…

Like a storm chaser, on Saturday we hopped on a plane from London to Athens to study the tornado moving through downtown Athens.

It would be fun to see so many vanities and pretensions fly high, we thought. At the very least, it would be instructive – useful training for the storms coming elsewhere.

But nothing happened: No twister. No train wreck. No panic in the streets.

From our explorations in the historical Pláka neighborhood – on the slopes of the Acropolis – we found only tourists. And they seem to have no idea that there is a financial crisis going on.

Last night, we went over to the Syntagma Square – the city’s central square – to look for mayhem and chaos. All we found was a squad of police dozing in an armored bus.

ATMs were working; no lines in front of them. Restaurants were about half full.

Nor did we see signs of extravagant spending or reckless investment. In Athens there is no equivalent of the Arc de Triomphe. No Eiffel Tour. No Louvre. No fancy apartments. No gleaming offices.

At least, none that we saw…

Its main achievements were completed more than 2,000 years ago. You wonder how Ancient Greeks did it. The Parthenon – a temple on the Acropolis dedicated to the goddess Athena – required huge investment and meticulous organization.

It is breathtaking… an architectural masterpiece. There is no sign of such capability here today. Instead, Athens is a washed-out, slightly trashy Mediterranean burg.

“Hey, can I help you?”

A seedy-looking man approached. We didn’t know what he was offering, but we didn’t want any.

“No… thanks.”

We turned to walk in the other direction. He followed.

“Hey… what are you looking for? I can help you find it.”

“Well, I’m looking for signs of financial breakdown.”

“Oh, I can help you find drugs… women… gambling. But I don’t know anything about financial breakdowns.”

We gave the man another “thank you” and went off.

Makers and Takers

As you know, Greece is just another front in the Great Zombie War.

The real issue here is the same as all the other fronts: how to keep the credit flowing.

Honest people make. Zombies take.

They take what they can from earnings and savings. But it is not enough. It is credit that keeps them alive.

Zombie businesses borrow more and more to keep the lights on. They pay out big bonuses, and their stock goes up!

Cheap credit keeps the feds in business, too. Practically every government in the world is operating in the red. Take away the red, and zombie programs would have to be curtailed.

Cheap credit funds the layabouts, the chiselers, the lobbyists and lawyers, foolish wars and foolish investments, and all the many millions of people who live at the expense of others.

Want to know if you’re a zombie?

In theory, the test is simple: If no one were forced to support you, would you still have the same income?

If this answer is no, you have been zombified.

But in practice, it can be hard to tell a zombie from an honest living, breathing human being.

Often they don’t even know themselves. Some honest professions, for example, have been almost entirely zombified. So have entire countries.

Greece, for example, has been able to live beyond its means – on credit provided by Northern Europeans.

Many of its people – especially those who work for the government – have gotten used to earning more than they’re worth. (For more on this, scroll down to today’s Market Insight.)

There were few zombies in the world of Pericles, Aristotle, and Euclid. The economy could not support many parasites.

Now, the world is full of them.

Regards,

Signature

Bill

Family Wealth Series

Monday through Friday this week, we’re going to send you a special series of essays Bill has put together about the most important thing in the world – family.

These essays will show you how to build and preserve family wealth, thanks to a centuries-old secret used by the world’s most successful families.

The Rothschilds, the Rockefellers, and the Pitcairns – all have used this secret to build family legacies that have lasted generations.

It’s no coincidence that these families are extremely wealthy. In fact, lasting family wealth is an inevitable benefit of implementing this secret.

And when you read Bill’s essays, you’ll see how simple family solidarity goes hand-in-hand with family fortune building.

With this in mind, we’re calling this collection of essays The Family Wealth Series.”

Your first essay in the series, “Why Wealthy Families Don’t Last Long” will arrive in your inbox this evening.


 

Screen Shot 2015-07-06 at 3.10.18 PM by line

Some of the biggest zombies in Greece are its pensioners.

Now, they’re facing the axe…

In exchange for more than €86 billion ($95 billion) in further loans, Athens has promised its creditors it will slash its bloated public pension system.

The Greek government has complained bitterly about “austerity.” But as a percentage of GDP, public pension payments there are almost double the average in the rest of the European Union.

071315-DRE-Pension-Payments

As you can see from the chart above, public pension payments in Greece are 18% of its GDP. They average about 10% of GDP in the rest of the European Union.

And in the U.S., public pension payments are closer to 5% of GDP.


 

Featured Reads

BREAKING NEWS: Greece and Creditors Strike a Deal
Euro zone leaders have reached an agreement over a third Greek bailout after marathon talks in Brussels. There’ll be no “Grexit.” Greece will stay on the euro… for now at least.

Bill: Greece Is Just a Taste of What’s to Come in the U.S.
A monetary catastrophe much worse than what’s happening in Greece could affect your life in ways you never thought possible – including being locked out of your bank account and unable to use your credit card or deposit a check. To find out what has Bill so worried, watch his special presentation.

Cyber-Security Stocks Surge after NYSE Trading Halt
The NYSE claims a cyber attack wasn’t behind the computer “glitch” that caused it to halt trading last week. So why are investors piling into stocks that help protect against cyber attacks?


Mailbag

More reader comments today on whether gold is a useful currency to have on hand for the monetary catastrophe Bill sees coming.

The main concern I have about holding gold and silver is if the government may include it under capital controls.

Are they likely to prohibit trades in gold and silver when the going gets rough?

I think so. Lately I have thought that there is much value in possessing real trade items like guns, whisky, cars, ammo, etc. They may not be as likely of a target for government theft.

Also, recession resistant businesses are useful… and difficult for the government to grab.

The real problem is I don’t know how trading in gold and silver would work. I would be interested in seeing a study ofhow that was done in the olden days.

– S.J.

 

While gold would have very limited practical uses during a crisis, it would be of tremendous value post crisis.

When a paper currency collapses (which they all do eventually) there is always a transition to a “new and improved” paper currency.

At that point, holders of gold will be able to exchange it for an amount of the new currency that would have essentially the same purchasing power of the gold prior to the crisis.

Holders of the failed currency units won’t be so lucky.

– J.S.

Managing Editor’s Note

We recently upgraded Market Insight. It now includes a readers’ mailbag… links to further reading on important Diary themes… and updates on special offers… in addition to daily market analysis.

We are always striving to improve the service we provide for readers. So, we’d love to hear your thoughts on the new Market Insight format.

Contact Bill and the team at [email protected].


 

In Case You Missed It…

Editor’s note: Last week, we delivered this note to readers of The Bill Bonner Letter

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