Greece is the word (but the bad tune is the Euro)

Some astute extracts of recent commentary and analysis:

  • Who’s next for Berlin’s financial blitzkrieg? Finnian Cunningham,

    In 2010, Greece’s total debt was €110 billion, or about 130 per cent of its gross domestic product (GDP). In 2014, fuelled by reckless EU creditor largesse, the debt ballooned to €315 billion, or 170 per cent of GDP. With the latest bailout, the country’s debt will reach €400 billion – over 200 per cent of GDP. Most of the capital is from Germany, with the most powerful banks in Europe, and euphemistically referred to as “international creditor”.

    The pattern is obvious.

    Greece is lured into ever-deeper, un-payable debt under the absurd guise of “reducing arrears”. In this inevitable condition of debt-slavery, the country is bled dry and its assets can then be seized. Or as the Washington Post admitted: “A financial gun is held to the head of Greece”.

  • Europe: running on borrowed time, John Mauldin,

    … the eurozone has been an utter disaster for most of its members. It has been a triumph for Germany.

    Germany now exports almost 50% of its GDP, with half of that to its fellow European Union members. Germany has prospered with a far weaker currency, the euro than it would have with its deutschmark. The southern members of the eurozone (including France) have suffered with a far stronger currency than they deserve…

    Greece will again go critical, if not next year, then the year after. If Schäuble is still around, he will again say that the Greeks have to figure out their own financing… 

    That will continue to happen until one country or another finally reaches the endpoint and says, “We are out of here.” But when it happens, it won’t be a last-minute surprise. Greece taught a lesson to all those who might someday want to leave the euro. If you want to exit, then you have to plan for it. Waiting to the last minute is an absolute, utter, complete, total, (insert your own adjectives and expletives) disaster. 

     If Tsipras had wanted to do more than bluff, he should have started contacting currency printers about printing his new currency. He should have been making real plans to exit. He should have told the voters that he was prepared to walk away from the euro. So he walked into a poker game holding a pair of deuces and tried to bluff his way through… 

     Tsipras broke the first rule of politics: don’t bring a knife to a gunfight.

  • Germany’s Destructive Anger, Jacob Soll, The New York Times

    Here lies a major cultural disconnect, and also a risk for the Germans. For it seems that their sense of victimization has made them lose their cool, both in negotiations and in their economic assessments. If the Germans are going to lead Europe, they can’t do it as victims.

  • Europe’s Many Economic Disasters, Paul Krugman, The New York Times

    Why are there so many economic disasters in Europe? Actually, what’s striking at this point is how much the origin stories of European crises differ…

    What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket. Finland had a very severe economic crisis at the end of the 1980s — much worse, at the beginning, than what it’s going through now. But it was able to engineer a fairly quick recovery in large part by sharply devaluing its currency, making its exports more competitive. This time, unfortunately, it had no currency to devalue. And the same goes for Europe’s other trouble spots.

    Does this mean that creating the euro was a mistake? Well, yes…

  • Bailout Money Goes to Greece, Only to Flow Out Again, The New York Times

    Much of the previous bailout funds have gone to pay off Greek bonds held by private investors and other eurozone governments, rather than stoke growth…

    Instead of writing off those countries’ debts — standard practice when a country borrows more than it can pay — other eurozone countries and the I.M.F. effectively lent them more money. One of the main goals was to protect European banks that had bought Greek, Irish and Portuguese bonds in hopes of making a tidy profit.

  • It’s up to Germany to end the game of chicken with Greece, Henrik Ederlein, The Guardian

    The bailout money hasn’t benefitted the Greek population, but in its largest parts has gone straight from European bank accounts, through Athens, and back to the European Central Bank or the International Monetary Fund

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