Tuesday, 13 April 2010

Germn anger at Greek rescue package - nothing new there

Following the usual pattern, the day the latest rescue package is announced the Euro roars up and the day after, when the market realises it is just more Euro babble the market falls back. Euro politicos are used to getting away with saying one thing in Brussels and something different domestically. It obviously works with their largely uninformed electorate but with well informed financial markets it just makes things worse. They have cried wolf once to often and nobody now will take them seriously.

As I noted yesterday and as a Berlin spokesman pointed out today, "Help is not automatic and cannot be activated if any state objects" Also the plan is clearly a subsidy as pointed out by a member of the Dr Frau's coalition who then added, "We're on very thin ice legally.

There are things Brussels wants and things it must have and the Euro is one of the latter. Allowing Greece to effectively default and exit the Euro would signal the end of the Euro and the great European project with it. The Brussels elite will do anything irrespective of its legality to stop Greece leaving the Euro.

The German taxpayers are not happy with Merkel's perceived caving in to Brussels pressure and one of their leading economists, Prof Ellard Wenger said, "the aid for Greece was another step on the slippery slope downwards. All rational economic rules are being thrown out the window. This is a bottomless pit. In the short run this may calm things but within 10 years the eurozone is not going to exist any more in its current form.

The IMF are much clearer about the only possible solution for Greece in the Eurozone is deflation, a debt restructuring, ie a de facto default. Easy for the IMF to say from Washington but on the streets of Athens there would be major civil unrest. Bad news for Greek politicos.

Things will stagger on a bit longer but sooner or later the money will run out.

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