Forget Greece

New York. 21 June, 2011.

As the world is trying to cope with unsustainable debt and a trade war through currency devaluations, every now and then bulls try to distract the public about the causes of our enduring misery.
An easy distraction is Greece.
Here we go again: is Greece going to default?
Will the Greeks have to drop out of the euro?
Are Ireland, Portugal and Spain next in line?

The answers are no, no and no.
In the Anglo Saxon countries there is a total misperception of Europe’s commitment to the euro.
The European politicians all know that the end of the euro is the end of the European construction.
Which is bad in itself.
More importantly, it also would mean the end of their careers.
In short: as long as the European union is popular among the voteras, politicians will not let the euro go.

But, what about market forces?
Obviously, the first bailout package is already discredited.
So, how will Europeans once again avoid a run on the euro?
Reading the news, the answer here again seems obvious to me.
But nowhere have I seen it mentioned: the Greeks are defaulting secretly.

Everybody knows the Greek government will have to default on its debt.
However, if they do, Monsieur Trichet fears the euro will unravel.
So, Frau Merkel finally agreed with Sarkozy’s shrewd plan last week.
She declared that the private sector is encouraged to negotiate voluntary cuts.
Considering that the banks in Germany and France have all been bailed out and de facto answer to their governments, the word voluntary is quite humorous.
Anyway, Greece will not default.
And in a year from now we’ll learn that European banks have voluntarily taken a major cut on their Greek debt.
Stay away frome Credit Agricole.

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: