This is a high stake game of poker, where each card says Germany Wins.
By far the two biggest beneficiaries with the EU have been Germany and France. German where the rules that are useful have been used to maximum advantage to grow their economy and increase their surplus with the rest of the EU and France, where it would have been an economic basket case long before now without all those subsidies and rules to make the EU countries around them much more like France to reduce their competitiveness compared to France.
Both French and German had overbought Greek sovereign bonds and would have been in trouble without the loans from the Troika that bought the Greek bonds back.
At 175% of GDP, Greece can never pay these debts back and the only quick route to recovery is to follow Iceland's example by defaulting and a Grexit. This they should have done at the beginning of the crisis which have saved them all this long term pain along with the rest of the Euro countries. They can then introduce their own currency and use the exchange rate to adjust their competitiveness against other countries. We could call the new currency TP (toilet paper) as that is what it will be with the extreme left-right coalition now in power, but who will care as their fate is then in their own hands. The losses to the Euro countries will be substantial and also be the first IMF losses in their history, but the IMF have IMO exceeded their remit and rules when bailing out the PIIGS, so this is no surprise. As John Redwood has often said, the Euro is like sharing your bank account with your neighbours and when one of them is a very indebted shopalcoholic then when you are over the age of consent and sign the joint and several agreement then you have to take it on the chin.
An alternative I can see where both Greek coalition parties are Putinphiles is them trying to use all countries have to agree to sanctions which are up for renewal for another year between now and July as a bargaining lever, but I think this will be a very dangerous game, where many EU countries are rapidly losing patience with Greece, everytime they look at where they are trying to use the German credit cards again for a shopping spree.
My money is still on the Euro failing as there is no resolution to the fundamental problems of the imbalances between the Euro countries economies which are meant to be moving together but are infact moving further apart. Without separate currencies, the only way to absorb the imbalances in by Government subsidies, like the UK does with Scotland, Wales and Northern Ireland but on a much bigger scale. Germany will never agree to this as the unification of East and West German currencies was ruinous enough and this is small change compared with what will be required to save the Euro. IMO Italy is the most likely stress and failure point, closely followed by France.
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Topic: Greece (Read 1203 times)