Wednesday 29 June 2011

Greece vote yes to can kicking!

On the one hand, that is great for the markets, which have been through a very rough patch and needed something to cling to. On the other hand Greece won't be able to make the tax rises and privatisations stick so is still going to end up in big trouble.

I bet they are drinking Champagne at the ECB tonight; they could easily end up insolvent as a result of this debacle.

So now we can start the guessing game all over again...when is Greece going to default...not 2011..2012 or 2013? In the long-term the short-term relief of getting past this issue may actually prolong the European debt crisis.

If Merkel and Sarkozy can force their banks to re-capitalise then it will be time well spent; if not.....


Budgie said...

Well, the dominoes are not falling over just yet then. Anyone who thought the EU power men would roll over right now, and consign Greece (et al, and their own banks) to financial Armageddon is looking as silly as the "end is nigh" street doomsters.

I would really have liked Greece to leave the eurozone, but it was always naive to think now was the time. Hopefully the bust up of the euro will happen, but I think it is some years away yet.

As before the the euro could survive long term if the EU becomes a nation like the USA. But time is running out.

Anonymous said...

After all this Greece, Italy, Portuagal, Spain and I suppose we could throw in Iceland ( I have not included UK but things do not look too rosey but we are not in the Euro but it affects us)it is time the powers that be start to seriously set about laying down the law to participating states, what they can and not do, the Central European bank acting like a central bank with clout, uniform rules, accounting, enforcing and making participating states tow the line, developing a balanced budget, gee, the list just gets longer and longer but you know what I mean. In the case of the UK forgoodness sake no more PFI's, politicians love those as they are off the books, only coming to light when things go wrong, I am not so sure that Dave will not be tempted.

Anonymous said...

PFI is a big industry with powerful lobbying. I am sympathetic too a tiny amount to needing long term finance to develop infrastructure assets; albeit it was never the solution to everything!

The euro elites have their day, but we all know the reckoning has to come. Now at a personal level we have some more time to prepare.

Steven_L said...

How can the ECB go insolvent? They don't still owe Mr Bernanke a wedge of greenbacks do they?

I can see how the ECB could make everyone else insolvent, but I can't see how they can ever have cash flow or balance sheet issue.

Budgie said...

Anon 5:49pm: "... it is time the powers that be start to seriously set about laying down the law to participating states ..."

a) the EU/ECB already do that
b) to what purpose?
c) to whose advantage?

It would have been better for all of us, the UK and the eurozone, if the EU "powers that be" had taken this opportunity to dismantle the Euro. But they are slaves to the power they have acquired for themselves, and will not.

The result will be a worse crisis in the future. And certainly the EU will increase its powers, thereby forcing its "citizens" even further down the road to serfdom. The potential crises, bust and loss of democratic accountability are not worth it.

Old BE said...

What about Paul Mason's hopeful point that the Greek governing class might just take this opportunity to push through some long-overdue reforms? I am guessing that the Greek government now has plenty of knowledgeable people offering advice, after all the lenders will want to get some of their money back.

Might this be Greece's 1979 moment?

James Higham said...

Fate of the EU in Greek hands - like that. You can trust a Greek.

Anonymous said...

Contrast with Iceland