Once elected, Syriza officials have been touring Europe, meeting serially with all the people they denounced as cruel, stupid, and wicked during the campaign, and discovering what an intelligent 10-year-old could have told them: nobody wants to give or lend them any more money because people distrust them and don’t see how the promises they have made to the voters can possibly be reconciled with any of the agreements Greece has made in the past.Apparently they're not making much headway by saying "Dude, I'm totally going to pay you back" followed shortly by "You used to be cool."
Extra - German's finance minister: "It's cute that you guys had an election. Where's our money?"
6 comments:
Both sides are bluffing. There will be a deal.
Maybe I'm missing something but I don't get why the EU would want to keep Greece. What's the downside to kicking them out? I would think it would enhance the value of the Euro.
*Booting Greece would cause them to default on their loans, which would instantly explode a fiscal bomb throughout the EU.
*The banks conspired to approve risky loans Greece did not qualify for; the effect is that $200 billion of European banks’ exposure has now been transferred to Europe’s taxpayers. Any European leader who wishes to hold his or her office has a vested interest in thwarting a default.
*Spain, Portugal and Italy are in much the same condition as Greece. A Greek exit could very easily spark one or more additional defections. The EU will not work without the U. Argentina and the Soviet satellite states are recent blueprints for how the economy of Greece (or Spain, or Portugal, or Italy) could endure a short-term haircut before rebounding. None of these defections would shore up the Euro's value; they would hobble it.
*The global market has already reacted sharply and negatively to the speculation that the EU might sever ties with Greece. The real thing would be worse.
*Upon Greece's exit, Eurozone stocks will immediately plunge, by as much as 50% by some estimates. Outside investment would also dry up until the crisis has past. Bond yields would shift, and many EU members’ ability to service their own sovereign debt would take a major hit.
*The Austro-Hungarian empire is a troubling precedent for what can happen once a monetary union starts to disintegrate.
*It’s no stretch to foresee a scenario where where hat-in-hand flying-solo Greece finds closed doors across Europe, and becomes a better buddy of Vladimir Putin's.
It's fun to blow off steam about how Greece should "get what it deserves." But Germany and others didn’t spend all that time making public threats about which way the Greek election needed to go because they believed they'd be better off cutting Greece loose.
Other than that, the downside of kicking Greece out is manageable.
Thanks, that was very helpful. I guess I was looking at it through the prism of Greece paying pennies on the dollar or nothing. Is that really a choice?
"And if thy right hand offend thee, cut it off, and
cast it from thee: for it is profitable for thee
that one of thy members should perish, and not
that thy whole body should be cast into hell."
Europe is seeing Greece through a prism of fear right now. You'll notice that of "Drachma's" points, every one of them was speculation except the second one.
"Fiscal bomb", "Additional defections", "the real thing would be worse than the speculation", "immediately plunge by 50%", "investment would dry up", etc.
The reality is that Europe is on the hook for some stupid loans. The Greek economy is about 2% of Europe's GDP.
Most of the fear mongering by European leaders was designed to get a preferred result in the Greek election, or failing that, some influence on post-election Greek policy. Think of it like the fear mongering of global warmists and you'll put it in it's proper perspective. Fear is a lever for aquiring/maintaining power.
Here's a good rule to live by. When fearful things are being predicted, you can bet they're not going to happen. It's when the waters appear calm that you have to be wary.
No, the second one is speculation, too, discussing a potential threat to future reelections, should enough voters act in concert.
"What would happen if..." is the whole point of this standoff. It's the bedrock of the negotiations between Greece and Germany.
I can meet you halfway on the "fear mongering." Global warming is happening, but Greece's expulsion will not be.
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