Posted on 06/17/2012 2:23:08 PM PDT by bruinbirdman
The exact circumstances and timing of Greece’s ejection from monetary union no longer have any systemic importance for global finance. The damage has already been done. The precedent of EMU break-up is by now priced into the credit markets. Formalising it changes little.
Central banks across the world are standing ready to shower markets with emergency liquidity. A dust-up in Athens is the excuse they need to launch a fresh blitz of stimulus as the global economy flirts with recession once again.
Fed chair Ben Bernanke requires a crisis somewhere to outflank his own hawks and slip another round of quantitative easing (QE) past the Tea Party Congress before the “fiscal cliff” – 4.5pc of GDP in tightening – hits the US economy with a sledgehammer this winter.
Mario Draghi at the European Central Bank needs one even more badly to check his own liquidationist reactionaries before they destroy Europe’s post-War order altogether.
Any action may already be too late to stop a synchronised slump on both sides of the Atlantic, with China, India, Brazil, and Russia in trouble too.
The US has slowed to stall speed. Retail sales have fallen for the last two months. Job growth has dropped from 259,000 in February to 69,000 in May, too low to stop unemployment rising again.
Europe’s depression is spreading, the result of triple-barrelled fiscal, monetary, and regulatory shock – the worst policy errors since 1931.
All key measures of the eurozone money supply are contracting, in breach of the ECB’s “twin pillar” mandate. This is what is killing southern Europe. Contagion from Greece has nothing to do with it.
I write before knowing the outcome of Greece’s election. For what it is worth, I doubt that Greece will elect a manipulator who knows he cannot tear up the bail-out
(Excerpt) Read more at telegraph.co.uk ...
It really does not matter if Greece will be using Euros, Drachmas, or Marks in the future.
The lazy, incompetent socialist parasites of the Greece have already de facto defaulted on their German credit lines, no matter which group of crooked Hellenic politicians wins the election. Nobody has any intention of paying back the loans.
The new Greece will be working to age 70, with minimal inadequate pensions, and with third world public medical care.
Maybe if someone in Greece had any brains or honesty (they don’t), they would encourage small business to prosper. This is the source of most new jobs in economically prosperous nations.
Communists, socialists, and the democrat party all despise small business.
Good post!
“The new Greece will be working to age 70, with minimal inadequate pensions, and with third world public medical care.”
... not so sure.
The new Greece will leave the Euro, print its own money, as we do - as much as it needs - default on its debt (as it has before), and many will line up to loan it more money, under the theory that it now has less risk.
At least two others will leave. One will be Spain.
Greek parties in favor of bailouts are combining for another push. Same around Europe and in world organizations. Looks like they’ll inflate ‘till she blows.
I have zero sympathy for the Germans because the way they structured this could not possibly end any other way, and I fully expect this whole boondoggle to end in another genocidal European war.
Like many outside observers, I have predicted this for some time. It didn't take much effort and there was never any possibility of being proven wrong.
Perhaps they should carpet bomb Greece with copies of “Atlas Shrugged” (in Greek of course).
The Greeks appear to have elected a government which will attempt to continue austerity and remain in the Euro-zone. Congratulations to them all for a wise decision.
It’s a terrible decision. Staying in the Euro gurantees the Greeks a decade or more of misery. Their only hope is to abandon the Euro so that they can try and achieve some measure of economic competitiveness so that they can grow their economy.
It’s a terrible decision. Staying in the Euro gurantees the Greeks a decade or more of misery. Their only hope is to abandon the Euro so that they can try and achieve some measure of economic competitiveness so that they can grow their economy.
which only means that it siphons off the puny savings of its citizens for the benefit of the government.
The above will happen regardless of who gets elected and which option they choose. When you are owned by the company store......
“......despise small business.”
On bothe sides of the Atlantic, the Freedoms required to generate profits and prosperity, by small business, are despised by socialists and central planners, as those Freedoms put the lie to their dogmas.
Big business requires a Fascist/corporatist relationship with their co-conspirators in socialist government s to survive.
It's been bandied about that a domestic Greek currency would have to be devalued about 50% to the Euro. That would cut in half the savings of all Greek citizens who haven't already managed to get theirs out of the country. It's a widely-held solution, but it is immoral and should be illegal.
I think Greece should stay in the Euro and cut government spending (without tax increases) until there is a surplus. At that point, capital will once again find Greece worth investing in. I understand that it will be politically difficult and perhaps impossible.
But economically, I think staying in the Eurozone is the best long-term option.
From NR:
“Greece’s main problem is that its currency overvaluation within the euro is on the order of 30 percent or more. Any new government — however successful at restoring the nation’s public finances — cannot possibly improve the productivity of Greek workers by one-third in any space of time. The more the EU softens the terms of its assistance, moreover, the less incentive Athens will have for trying. And the harder it tries, the more likely it is to provoke social unrest, to strengthen Syriza, and to weaken the commitment of the main center-left party, Pasok, to its governing partners and the deal with the EU.
Staying in Euro is a trap for the Greeks.
That is an apt observation. I can't disagree with it. But Greece will either go through a self-imposed devaluation by adopting its own currency or it will suffer another type of devaluation [deflation, actually] by staying in the Euro. Greece has no easy way out.
I tend toward the Euro because the politicians in Greece have no, or not much, control over it. By leaving the Eurozone, they will undoubtedly take the savings of the Greek people to make the government's balance sheet look better. In the Euro, they have no choice but to cut spending.
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