Were you all sitting on the edge of your seats on Father’s Day waiting to see if the Greeks would vote to stay in the Euro Zone or not? Probably not. But there were many who were sitting on the edge of their seats until the news broke that the party favoring the European bailouts, New Democracy, finished first with 29.5%; while the socialists PASOK party, also pro-bailouts, took 12.3%- The radical-left party, Syriza, which was against the bailouts, finished second with 27.1%. Confused? A socialist party in favor of staying in the EU and a radical-left party in favor of leaving the EU is fodder for confusion. The bottom line is that the New Democracy and PASOK will form a coalition and for the time being Greece will stay in the EU.
So, indeed there are many who are breathing a sigh of relief today. But for how long? We are talking about Greece after all.
“Unless they make a radical change, we will be back with another Greek cliffhanger in three or four months’ time,” said Darren Williams, a European economist at AllianceBernstein in London. (Source)
Yuppy! Three or four months! Then what? Why does anybody care about tiny Greece and their tiny debt? The Greek debt is nothing to the world’s largest economy. So what is the big deal? The problem is: if Greece can leave the EU without paying its debts, what is to stop Portugal or Ireland or Spain or Italy from doing the same thing? That would be a ver y big deal indeed.
So, we are back to the “then what” question. The European Union was a dumb idea to start with. It was doomed to fail. The idea that a bunch of countries with different languages and different cultures could pretend to be one nation with one currency but multiple fiscal policies was asinine.For the European Union to work, the citizens of the 17 nations would need to vote to give up their sovereignty and become an EU with one government and one fiscal policy. That ain’t going to happen. But not to worry. The banking elite and the political elite have a plan. They want to form a banking union for all the EU. In other words, the EU would have a single banking system (under the thumb of the Bundesbank, i.e., Germany). Then they could issue Euro Bonds in the same way that the US issues bonds. To do this requires the heads -of-state of the 17 nations to give their approval. Then the citizens of Finland and Italy and all the other countries will wake up to find that they are no longer sovereign nations; that the fiscal policies of their countries are now being dictated by a committee of bankers in Brussels.
So, will the nations of Europe remain sovereign or will the bankers win? Don’t the bankers always win?
Well, that’s what I’m thinking. What are your thoughts?
17 thoughts on “A Sigh of Relief Over Greece…Or Not”
I remember just six years ago or so everyone was saying that Europe was the next superpower. Their economy was bigger than the U.S. and the European Union was the future.
As usual the elite were wrong.
Yep! the elites out smarted themseves, but good.
Stephen King of the Financial Times offers this sobering assessment of the Greek election:
“before we drink too much celebratory retsina, we must recognise that Greece still has mountains to climb: its access to international capital markets is non-existent, the economy is set to shrink further, and its creditors expect to see far more reform than has so far been delivered. The eurozone has its own Mount Olympus to conquer. Austerity hasn’t worked, no one wants a wave of defaults and, as yet, the Germans are dead against fiscal transfers.”
King says austerity hasn’t worked. How can he say that? The Germans are the only ones to try it and it worked quite well, I would say.
Only a matter of time untl obummer will lend a hand and no doubt we already have via the IMF. Just wait until after the election. He will have ” more flexibility “
That is a scary thought!
Yes, bankers always win. Just saw a headline: “Islamic Banking Could be a Perfect Fit for Sweden.”
Islamic bankng a perfect fit for Sweden? Really? Why?
For those that don’t know what Islamic banking is, this from Wikipedia
“Islamic banking (or participant banking) (Arabic: المصرفية الإسلامية) is banking or banking activity that is consistent with the principles of sharia law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam (“sinful”). Although these principles have been applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only in the late 20th century were a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.”
The election was useless as I thought it would be. The Greek democratic system cannot solve the problem because it cannot produce strong governments. They can only produce coalitions that are inherently weak.
The Greeks have decided to kick the can down the road, which is not surprising for one, and it serves me well for the next 4 months. The solution for Greece is to handle the “Crisis Italian Style”, and forget about their democracy temporarily.
Unless the EU were to appoint a German dictator over Greece, there is no hope for them.
They have done a good thing lately; they beat Russia 1-0. That is enough to like them.
I watched the highkights of that game. I love futbol.
You are right. It will be deja vu all over again in a few months. So far, the Greeks have not been able to put a workable coalition together, and something tells me that they will not have a workable government. Plus, now we have France skating closer and closer to the edge. So, there will be nobody to bail out anybody. Maybe I should do as my wife suggests and sell all my stocks and funds, now, and avoid the rush later.
It’s been my experience, Bob, that I usually regret it when I don’t listen to my wife.
I had a feeling they would find a way to stay put in the EU. But like you say, they’ve only kicked the can further down the road. One way or another the EU will have to be dismantled, the sooner we get it over with the less painful it’ll be.
Ironically, the EU could lead the world back to sanity; but i doubt they will.
The unpopular bailouts that have kept Greece from defaulting on its debts in the face of an ongoing recession include budget cuts demanded by international lenders. Voters punished New Democracy and its former coalition partners in the socialist party Pasok in the earlier vote in May, but reopening the agreement would set up a confrontation with the other countries that use the euro — the common currency of 325 million people across 17 European nations.