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EU: Germany holds a gun to Greece's head
The Telegraph ^ | 5/23/2012 | Ambrose Evans-Pritchard

Posted on 05/24/2012 12:35:03 AM PDT by bruinbirdman

Pressure on Greece increased dramatically on Wednesday night after Germany's central bank called for a suspension of financial support to Athens and eurozone finance ministries agreed to draft contingency plans for a Greek exit from the euro.

In a blunt warning to Athens, the Bundesbank said a Greek withdrawal from the eurozone would be disruptive but "manageable", undermining claims by Greece's radical anti-austerity leader, Alexis Tsipras, that Europe would not dare pull the plug.

"When the Eurosystem provided Greece with large amounts of liquidity, it trusted that the programmes would be implemented and thereby ultimately assumed considerable risks," said the bank. "In the light of the current situation, it should not significantly increase these risks."

The German financial daily Handelsblatt said the Bundesbank was "holding a gun to Greece's head", hammering home the message that Germany will not submit to blackmail from populist politicians in Athens.

Berlin also leaked news that their member on the European Central Bank board, Jürg Asmussen, is to head an ECB taskforce to handle the Greek crisis.

There was confusion in Brussels over leaks that EMU finance ministry officials had agreed in a meeting on Monday – allegedly in the name of Eurogroup executives – that each state should draw up a national plan to cope with a Greek exit.

Athens issued an angry denial, saying the claims were false. The European Commission stressed that it was not told about the meeting, even though it is a member of the working group. "We are not preparing such a plan, though we are ready to face any eventuality," said an official.

There were suspicions that Germany had leaked its own proposal without gaining the assent of other EU states. The move has further poisoned the atmosphere, though officials played down the exit

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Crime/Corruption; Foreign Affairs; News/Current Events
KEYWORDS: eucrisis; greececrisis; merkel

1 posted on 05/24/2012 12:35:09 AM PDT by bruinbirdman
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To: bruinbirdman

Another slanted British article.

Let’s review the facts. You as a nation have about six weeks of cash left in the pot to run your government, your police, your fire departments, and all essential services. You have only one true option on the table....accept a loan from your neighbors and promise to live under austere conditions for the next couple of years. Most political parties are pleading with you to deny the loan and to fall into some kind of chaotic pit of government operation. Your neighbor says...stop stalling and just get on with cleaning up your mess.

If you follow the British attitude here...you should never tell your weak-kneed neighbor how to fix their problems. If you only have six weeks to settle on some answer....I wouldn’t be sitting around debating much at this point, unless of course...I was a Greek.


2 posted on 05/24/2012 12:53:54 AM PDT by pepsionice
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To: bruinbirdman

Everyone has a gun to everyone’s head.


3 posted on 05/24/2012 1:06:10 AM PDT by Berlin_Freeper (Novus Ordo Seclorum)
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To: bruinbirdman

Yesterday I read an interesting article on how the Greeks would have a roughly 46-hour window to manage a default and exit from the Eurozone. The gist of the article is that the Greeks would have a window from when the markets close on Friday until the re-open in Asia/Pacific Monday morning, assuming this event were to happen on a Friday. Here’s a link to the original: http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_23/05/2012_443463

Given the Greeks seeming inability to do much of anything in a reasonable timeframe, the idea of them suddenly being able to pull this trick off is laughable, and I’m being charitable when I say that. In 46 hours, the Greeks would likely still be debating how much baklava to order for the conference committee.

Hilarity ensues.


4 posted on 05/24/2012 2:17:28 AM PDT by AnAmericanAbroad (It's all bread and circuses for the future prey of the Morlocks.)
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To: bruinbirdman
At this point, it's hard to believe that the drachma won't live again.

As to timing, the practical question has to be will doing it earlier rather than later bring an even greater flood of tourists with strong euros in their pockets over the summer? It's already late May, so the upheaval from an exit needs to be either done quickly, or postponed until after tourist season.

Greece's economy could become 30% tourism if the drachma becomes cheap enough quickly enough. It's already between 15%-20%, depending on whose numbers you use.

5 posted on 05/24/2012 2:24:07 AM PDT by snowsislander (Please, America, no more dog-eating Kenyan cokeheads in the Oval Office.)
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To: bruinbirdman
Image and video hosting by TinyPic
6 posted on 05/24/2012 3:52:11 AM PDT by cartan
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To: Berlin_Freeper

“Everyone has a gun to everyone’s head.”

Quite so. And no matter who pulls the first trigger, they will all go off.


7 posted on 05/24/2012 4:39:17 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: AnAmericanAbroad; FerFAL308

Perhaps we should all turn our history books to Argentina 2000-20001 to see some of the possible twists and turns of a rapid currency/banking switcheroo.


8 posted on 05/24/2012 4:42:21 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: AnAmericanAbroad
Weekends are traditional times to pull this switcheroo. Obviously because the banks and markets are closed, giving enough time for the armored cars to make their runs.

It takes time to print all the cash (fiat) money Greece needs. Unless they have already started in secret, it won't happen this weekend.

9 posted on 05/24/2012 4:53:21 AM PDT by Former Proud Canadian (Obamanomics-We don't need your stinking tar sands oil, we'll just grow algae.)
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To: snowsislander
They will shortly run out of money. No more Euros to pay for imports or to pay for any government obligations.

They can't wait until summer. The interesting thing is that there really is no government in charge. No one is willing to make this call and take the blame for the result. It's like watching a train wreck in slow motion.

10 posted on 05/24/2012 4:57:53 AM PDT by Former Proud Canadian (Obamanomics-We don't need your stinking tar sands oil, we'll just grow algae.)
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To: pepsionice

The best long-term solution is to leave the Euro and not accept more “loans” with draconian measures with Germany controlling interest rates with a one track mind of a southern sea


11 posted on 05/24/2012 5:09:30 AM PDT by wolfman23601
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To: cartan

There has been no, nana, zero ‘Austerity’ in any of the Western Governments, it is a false meme proffered by the bankrupt left. The pEEEUUU is doomed to fail just like all fractional reserve bank based economies.


12 posted on 05/24/2012 5:27:10 AM PDT by iopscusa (El Vaquero. (SC Lowcountry Cowboy))
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To: Berlin_Freeper

I found that an odd phrase for the title. Threatening to stop giving unlimited money to someone who is spending so far beyond his means just doesn’t strike me as a gun to the head. It’s more the reverse. Greece has been trying to shoot itself in the head for years, and Germany, after years of giving Greece money to keep them from pulling the trigger has decided to get out of the way so Greece can decide whether they really want to accept the consequences for what they have been doing.


13 posted on 05/24/2012 5:43:41 AM PDT by Pollster1 (“A boy becomes a man when a man is needed.” - John Steinbeck)
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To: cartan
Thanks for posting the political cartoon. Some observations: 1. Notice how they depersonalize the “bond markets”, which are really people lending money that (gasp) expect it back. 2. The socialism sign and cheering people in the background who are foolish enough to think that socialism is the answer,not the problem. 3. The French chick needs more armpit hair to be realistic.
14 posted on 05/24/2012 6:35:52 AM PDT by jdsteel (Give me freedom, not more government.)
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To: jdsteel
Indeed. Sadly, Merkel is losing ground in Germany, too. She has already lost the upper house to the socialists, and if the current trend continues, she will be replaced by some big fat socialist weasel. Then, the socialists around Europe will be cheering and happily start printing money and spending again, and everybody will be happy…until they realize that for the millions of free government money they can buy no more than half a loaf of bread.
15 posted on 05/24/2012 7:01:16 AM PDT by cartan
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To: bruinbirdman
claims by Greece's radical anti-austerity leader, Alexis Tsipras, that Europe would not dare pull the plug

A skateboarder punk playing "chicken" with a Mack truck.

16 posted on 05/24/2012 8:45:26 AM PDT by Moltke (Always retaliate first.)
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To: Former Proud Canadian
They will shortly run out of money. No more Euros to pay for imports or to pay for any government obligations.

Socialist governments aren't known for their economic savviness.

I suspect that, if the drachma is revived, the Greeks will run the presses to pay for anything they can buy with drachma, default on obligations that cannot be paid in drachma, and hope for a flood of tourists with lots of (relatively) hard euros in their wallets.

If that scenario develops, of course it will be hard to pay for imports (about 40 billion euros per year) but a drastically devalued drachma is going to make their manufactured and agricultural goods attractively priced relative to the euro. I wouldn't be surprised to see some continued upsurge in their exports (currently about 20 billion euros per year) if the drachma is revived.

17 posted on 05/24/2012 3:56:04 PM PDT by snowsislander (Please, America, no more dog-eating Kenyan cokeheads in the Oval Office.)
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To: Travis McGee

Ever see Reservoir Dogs?


18 posted on 05/24/2012 4:04:50 PM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: Berlin_Freeper
"Everyone has a gun to everyone’s head."

yitbos

19 posted on 05/24/2012 8:00:53 PM PDT by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: cartan
"if the current trend continues, she will be replaced by some big fat socialist weasel."

Even if Merkel loses a working coalition, Deutschland has no other leader.

Merkel would probably remain Chancellor of a national unity coalition.

yitbos

20 posted on 05/24/2012 8:22:06 PM PDT by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: Lurker

No, missed that one.


21 posted on 05/25/2012 4:13:03 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: pepsionice
"Another slanted British article."

A E-P responds to another critic,

"Well, I didn't say Germany should do anything in this piece.

I reported on a dispute between Germany and France.

The point about the credit card referred to eurobonds not the ECB.

(By the way, eurobonds are not my cup of tea. They are the catalyst for an EU state that I don't wish to see. But that is what the Euroland states probably have to do if they want to save EMU, which is the context here. Personally, I do not particularly wish to save EMU, but what you or I want is irrelevant)

As for the ECB -- and I regard monetary policy to be an entirely different issue to debt mutualization or fiscal policy -- if it engaged in overwhelming bond purchases (not piecemeal, which is counter-productive and subordinates other creditors), this would not amount to Germany opening its credit card.

The issue would be different. Germany would have to tolerate higher internal inflation if the ECB chose to end debt-deflation in Club Med by QE.

Now that is certainly a real concern for Germany. "

yitbos

22 posted on 05/25/2012 1:34:16 PM PDT by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: Travis McGee

At the end of the movie all of the bad guys, none of whom trust each other anymore, are all pointing guns at each other. One of them twitches, and they all fire at the same time. They all end up on the floor with holes in them with sirens blaring in the background as the cops close in.

It reminds me of this situation.


23 posted on 05/25/2012 2:06:34 PM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: Lurker

Mexican standoff meets circular firing squad. One shoots, all shoot.


24 posted on 05/25/2012 7:54:32 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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