Text 20381, 86 rader
Skriven 2011-07-02 10:42:48 av Robert Bashe (2:2448/44)
Ärende: Forget the nitpicking (was: What a day!)
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Just to repeat an _important_ matter, in contrast to the nitpicking:


Well, the Greek parliament passed the emergency austerity measures of the
government, and for the present, the Euro (and the EU) has been saved. Only
time will tell what happens now.

The reactions are frightening, however.

The Greeks are furious, not only at their own politicians but mainly at the
Germans, who have never ceased to pat themselves on the back at their economic
recovery and berate the Greeks for "sponging", "being lazy", "taking too much
vacation" (this from Ms. Merkel, who hurriedly became silent after she was told
that Germans have more vacation than Greeks), and advising the Greeks  - as if
most of the latter didn't realize their difficult situation - how _they_ should
act. Naturally the Greeks, in their present situation, resent such attitudes
bitterly.

The Germans, on the other hand, are screaming about "handouts" to "deadbeat"
Greece and worried about having to pay even more to keep Greece afloat. Many
think the Greeks should leave the Euro zone (how? the treaties don't provide
for such an event)) and everthing will be just fine. Most also propose a return
to the DM. A recent poll indicated that around 70% of those asked would prefer
the DM to the Euro.

Few on either side consider the consequences of a Greek default, or - if even
possible - a withdrawal of Greece from the Euro zone. That, naturally, would
produce economic chaos not only in Greece, but in the entire EU and probably
throughout the world. In case of a withdrawal, the value new/old Greek
currency, the drachma, would drop through the floor and Greece would be forced
to default on all outstanding Euro-denominated bonds. That, in turn, would not
only kill any hope of Greece managing to borrow on international markets in the
forseeable future and drive both inflation and unemployment to record heights,
but it would also put many large banks in the EU - mainly in France and Germany
- into bankruptcy and they would have to be bailed out, costing additional
funds the respective governments simply don't have.

American banks, that have been leading the way in default swaps, would
similarly be in trouble, although nobody really knows how bad the situation
would be.

In the case of Germany, a return to the DM would be similarly disasterous,
since the exchange rate of the DM (to the dollar and whatever is left of the
euro) would then go sky high, effectively pricing German exporters out of
foreign markets and killing the mainstay of German prosperity - goods export. A
steep recession and large-scale unemployment would threaten.

Whatever the result, the economic crisis - coming so soon after the crisis of
2009 - would not do the world economy any good, and would doubtless financially
hurt quite a lot of people in quite a number of countries.

Most of the populations on both sides - Greek and German - are either resigned
to their fate or only interested in their own situation, as they see it and
ignoring the effects on trade and their economy that a collapse of the EU zone
would cause.

Nobody really has a good answer to the situation, and it seems to me the
politicians, for once, are thinking more clearly than their populations. But
some may be thinking better than others - Sarkozy's proposal for banks to
exchange short-term loans for longer-term ones when the former become due is at
least a positive idea, in contrast to most of what I've heard from Berlin up to
now. The main problem most proposals face is that any debt restructuring must
be _voluntary_ on the part of the creditors to avoid a declaration of Greek
default by the rating agencies, which in turn would trigger massive reactions,
not least by the ECB, which could then no longer accept Greek bonds as
collateral. An uncontrolled default of that type would be even worse than the
current situation.

Greece should never have entered the Euro zone, but that's water over the
bridge and it's there now, and what affects Greece affects the Euro and the EU.

The main thing now is to keep the Greek crisis from becoming a Euro-zone crisis
and then an EU crisis. I hope that will be possible, but the reactions of the
populations in Greece and Germany certainly don't give much reason for
optimism.

Cross your fingers and hope for the best - that's what I'm doing too.

Cheers, Bob

P.S. I've intentionally ignored the "domino effect" a Greek default could have
on other Euro-zone countries, since that is really speculation at this point.
But if Greece goes down, it won't be the only Euro-zone country to do so.

--- GoldED+/W32 1.1.5-0613
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