Who would have believed that eurofudge would win yet again. instead of a nice resolution to the real issue, namely Greece's massive uncompetitiveness due to its over-valued currency, we get some more, delicious fudge.
However, as with all sweet goods, the initial rush and taste will be welcome but the side effects wear off quickly. For a start, Greece will ask for better terms on its debt repayments and other concessions - all these things cost other people, not Greeks, more money. Moreover, when the inevitable default arrives, this is more money that has been wasted.
Now of course, with a magic money printing machine this money was in many senses never real anyway. The reality of monetary economics is of course under huge attack from the efforts of central banks playing with fire by printing money whilst hoping trust in paper currency does not collapse.
I don't think we are anywhere near that point yet; indeed, whilst the bailouts and eurofudge continue, the chimera can continue. The turning point will be the first default when the ECB should go technically bust, but somehow miraculously won't.
What will people think then of the digits they have in their bank accounts? Scary as the prospect is I am intrigued to see what the reaction is when people start actually questioning what money is and what has value. That way of course lies hyperinflation - policies today are determined to keep us in a Japan style financial repression for the foreseeable future to prevent this scenario from occurring.
Let's see what the next week brings....
