Monday 30 January 2012

Eurozone summit reveals Germany's madness

"We need more leadership and monitoring when it comes to implementing the reform course. If the Greeks aren't able to succeed themselves with this, then there must be stronger leadership and monitoring from abroad, for example through the EU" Philip Roesler, German Economy Minister, in an interview with Bild today.

And so it rolls on. Greece, unable to really pay its debts back to Germany or anyone, is struggling to follow the orders from Berlin. Even the newly appointed 'technocratic' Government, sanctioned by the EU, cannot follow the orders from German.

Why? Well when the orders are the  to slash your public sector, wages and increase taxes to push up, induce a large recession and destroy pensions arrangements - well these are difficult to enact. The Greeks themselves in all the interviews I have seen are fearful of falling out of the Euro and the huge disruption that would cause.
What they can't see is that at least for them there would be light. Post-adjustment (50% devaluation, yikes)  their economy may start to grow, tourism would pick up as would domestic industry. The Cityunslicker clan would book a now affordable summer holiday there. Better would be a Euro devaluation to enable adjustment alongside the current default talks. At the moment the default option is not being done to help Greece, but Europe. how can Greece default and yet still have GDP debt ratio of over 120% (by 2020, even higher today!)
I don't see this a good outcome very likely, even more worryingly is the quote above from a senior German minister. The Germans are clearly getting desperate as their ludicrous plans fall apart. Mario Draghi's huge lending  spree by the ECB has prevented a 2008 style collapse in this quarter. The German plans would have ensured this. But what next for them as they continue to insist that everyone else is not only wrong but that they must follow our rules. What next, tanks to be dispatched to the Acropolis?
This scary posturing by someone who should know better is another huge attack on Democracy in Europe and of course at its heart is the contrarian German doublethink:
Germany will not countenance a debt union for the currency union nor give up any of its own democratic powers over its economy, but all other EU States must comply with Germany's instructions and follow their economic ideology to become good 'EU' Countries.
This ludicrous position is only going to end in tears for all.


Mr Ecks said...

Most likely the germans have seen the writing on the wall and want to force the Greeks into default. It will happen anyway so way not try for a controlled explosion?.

Madness but no more mad than getting into such a mess anyway.

All governments are scum.

Caronte said...

Re-introduction of the drachma and its progressive devaluation might help the Greek trade balance - though not all that much if tourism is all they can export.

But don't forget that Greek debt is denominated in euros, and the burden of repayment and debt service would skyrocket in drachmas, to the point of becoming prohibitive, leading to default if not yet occurred, or to a much more serious default than staying with the euro.

Sean said...


The whole point of default is not to pay your debts back.

The ECB will be the idiots holding the debt as they where stupid enough to lend it to them.

I see that the Greek health service has weeks to go but the armament contracts France and Germany have with Greece have yet to be cancelled.

Anonymous said...

As you're on a history kick - I think we all
know where this ends!

Phil said...

Caronte, if Greece quit the € they would almost certainly default on all the external debt and convert the internal debt to drachma on a 1:1 basis at the same time. That's the privilege of the sovereign bit in sovereign debt after all...

I think CityU is right: the Germans are preparing for Greek default & whilst they now see it as being inevitable they don't want to be seen to force the issue by refusing to extend more cash. Hence the ever more onerous demands to go along with the cash until eventually the Greeks cry "no more!"

dearieme said...

If they're going to land us all in the poo, can we call them The Turd Reich?

Anonymous said...

As I have said before, the German government are once again setting us on a path to war in Europe. The exact nature of this war is yet to be determined but that is the inevitable direction in which the EU is headed at the moment.

Merkel is smart enough to realise this so we must assume her actions are inspired by her former Marxist/Stasi past which she has studiously covered up (I notice that even English Wikipedia has now been edited to remove references showing her father to have been a Marxist in East Germany with high connections). I assume she is trying to foment war in Europe at the behest of Putin, with whome she has a close relationship (she has been making sure that Germany is even more dependent on Russian gas). This woman is seriously dangerous and we have underesdtimated her, just as all those that once were above her have underestimated her. She likes to pass herself off as a quiet hausfrau when in fact all her actions betray her utter ruthlessness and connections to people in low places.

Meanwhile there are 50,000 people living in the streets in Greece, young women are handing their babies over to charities because they can't look after them anymore, and almost none of this is reported in the European press which is being stifled by the EU when a 3rd world style calamity is happening oin our doorstep that we could do something about.