Less than a week after the Greek people voted against the latest EU bailout ultimatum, the Greek government caved completely and approved what amounts to the very same harsh bailout terms. Tspiras and the "radical left" were too afraid to actually listen to their own people and act to take their monetary future back into their own hands. They are good at talking but not doing.
With cooing noises from the IMF and some Euro leaders, markets thought this meant a new Greek deal was as good as done for this weekend. Some in the Eurozone see the need for a serious debt haircut for Greece to recover, Germany, Finland, the Netherlands, and a few others don't see it the same way. Germany has now floated a 5 year suspension of Greece from the Eurozone to "get their shit together", while allowing it to stay in the EU.
Their were all kinds of uncertainties after Greece voted No on the referendum. These continue to unfold over the weekend and I am sure will continue throughout the next week. This situation can still spin out of control in many different directions. Each kick of the can for Greece gets more expensive and this next one, priced at around $80 billion, may have reached a threshold where it overwhelms the political desire to keep the Eurozone dream alive. Fascinating, isn't it? Everyone knows that a new deal only makes the problem worse -- unless there is giant haircut which causes other kinds of big problems right now. There is no way out.
My friend Mr. T has one prediction...Pain!
Greece is the domino
ReplyDeleteSo if it falls then we will know
That the Euro is sure to go
Since all that cash will start to flow
Can we really count on Spain?
What is real and what is feigned?
The experts predict more endless gains
I have my doubts, we both see pain
Let the chips fall where they may
As some "invest" and hope and pray
The risks are high, I won't be swayed
I've turned my back and walked away ;)
Stagflationary Mark,
DeleteHaha! We get to watch the Greek domino theory play out. I pity the fool.
The plan seems to be to simply remove the weakest link. Easy peasy.
ReplyDeleteThe funny thing about that plan is that a new weakest link is guaranteed to pop up instantly. It is not possible to have a chain with no weakest link, no matter how many links you remove.
The ultimate end game therefore appears to be a chain with just one link left. Germany? That's assuming that you won't remove the weakest link if it is also the strongest.
We may be seeing Darwin's survival of the fittest in action.
Germany? World War One
Germany? World War Two
Oh, oh. They're back, lol. Sigh.
Stagflationary Mark,
DeleteI am not sure how many painful lessons they will have to learn that it is the design of their system that is broken. If Greece somehow stays in, they will be in a permanent depression with a 1000 year payback schedule (until it gets worse). If Greece leaves, the next country will fail in the same way. Where is my popcorn?