Τρίτη, 15 Μαΐου 2012

German voters must break the Merkel mindset that got them into this

της Robin Wells

Sometimes, just sometimes, economics and politics are like physics – one can recognize immutable forces. One of those times is now, as Greece is inexorably pushed out of the euro. It took no particular talent to have seen this coming, just the recognition that it has always been a fantasy to believe that the Greeks would democratically choose to destroy their economy for the better part of a decade in order to pay foreign creditors.

The fact is that Greece never was a suitable member of the eurozone. That the Greek economy was extremely inefficient, that corruption was rife, that the government budgets were perpetually out of control, and that the official statistics were not to be believed were widely known. But, as in many marriages, Greece's entry into the euro was a triumph of sentimentality and wilful blindness over realism.

The pity – in addition to the actual damage already inflicted on millions of Greeks – of this debacle is that it was never clear, and still isn't clear, that other countries, like Spain, will also be inexorably forced out. For the adjustment that Spain needs to make in order to stay in the euro was never as drastic as it was for Greece. While undoubtedly painful, it is probably still do-able.

The euro exit is a bluff

As speculation rages about a Greek exit from the eurozone, we must grasp that the country cannot survive without the single currency and that Europe cannot afford to let it leave. That's why everyone should put their cards openly on the table.

ΠΗΓΗ: La Stampa
Stefano Lepri

The voters' verdict is already in across several countries and regions: the cure based strictly on austerity within the eurozone has failed. What needs to be done now is to take that reality on board and to start negotiations that promise to be trying and that may lead to awkward compromises.

Greece, though, must be ready for anything. And it must distinguish between the reality and the threats and blackmail that are flying about at the moment.

Return of the drachma
Point one. Greece cannot survive on its own. Without the aid from Europe and the International Monetary Fund (IMF), it will very soon run out of money to pay its civil servants' salaries and to import what it needs for survival, starting with food and oil.

Is Germany bluffing on Greece?

ΠΗΓΗ: Bruegel
By Philine Schuseil on 15th May 2012

After the recent elections in Greece, German officials seem to seriously consider a Greek Euro area exit – at least this is what official statements from policymakers indicate.  Are these statements serious or is Germany bluffing on Greece?

We want to summarize their statements and compare them to what is being said in the German National Press and blogosphere, both of which appear much more skeptical about the possibility of a Greek exit.

The German minister of Finance, Wolfgang Schäuble, stated in an interview with the “Rheinische Post” on 11 May 2012 that Europe has the capacities to cope with a Greek Euro area exit. He said that Germany and its partners had learned a lot during the last two years and have put in place several protection mechanisms. Moreover, the risk of contagion to other countries has declined in the euro-zone and it has become as a whole more resilient. There is no other, easier way for Greece to remain in the euro-zone than implementing the reforms on which the member states agreed. 
According to Spiegel online, he declared recently that Greece cannot have the one (stable government) without the other (meeting their obligations). Moreover, he  said on Sunday 13 May 2012, that Germany would be a strange government, if it was not prepared for all possible scenarios in order to cope with them.

Μεταξύ τραγικού και γελοίου

Του Σταύρου Χριστακόπουλου

Όλο το απίστευτο παζάρι των τελευταίων ημερών για τον σχηματισμό κυβέρνησης κινείται ανάμεσα στα όρια του τραγικού και του γελοίου. Το τραγικό έγκειται στην κατάσταση της χώρας, η οποία ωστόσο δεν συνιστά είδηση – μήνες τώρα μιλούσαμε για κατάρρευση όταν οι εταίροι της συγκυβέρνησης μιλούσαν για σωτηρία. Το γελοίο θα το βρούμε σε όλο το εύρος των αποπειρών σχηματισμού κυβέρνησης.

Από τη νύχτα κιόλας των εκλογών γράφαμε ότι το πρόβλημα, ύστερα από το αποτέλεσμα, ήταν «Ποιος θα πάρει τον μουντζούρη».

● Προειδοποίηση πρώτη, η οποία αποδείχθηκε απολύτως ρεαλιστική, παρότι διατυπώθηκε εν θερμώ και πριν αρχίσει οποιαδήποτε διαπραγμάτευση: «Καμιά κυβέρνηση αυτή την ώρα δεν μπορεί να σχηματιστεί χωρίς μια ξεκάθαρη πολιτική συμφωνία». Και αν ακόμη σχηματιστεί, δεν θα καταφέρει να σταθεί.

● Προειδοποίηση δεύτερη, εξ ίσου σημαντική, η οποία φαίνεται να επιβεβαιώνεται ποικιλοτρόπως: «Κατά τα φαινόμενα, τις επόμενες μέρες, αν δεν έχουμε κάποια πολιτική έκπληξη, θα δούμε να εκτυλίσσεται ένα παιχνίδι εντυπώσεων με στόχο να μην πάρει κανείς πάνω του τον “μουντζούρη” της διαγραφόμενης αδυναμίας σχηματισμού κυβέρνησης και της ενδεχόμενης προσφυγής σε νέες εκλογές».

Eurozone crisis: what if … Greece leaves the single currency


Europe ruling elite is now openly talking about whether Greece might leave the euro, breaking a two and a half year taboo. German chancellor Angela Merkel and EU president José Manuel Barroso were among those saying that if Athens could not abide by the rules, Greece would have to leave. We asked three experts to analyse the potential consequences

Nick Parsons, head of strategy at National Australia Bank

The choices facing Greece and its people are deeply unattractive. On a three- to five-year time horizon, there is no policy option that will turn a bad situation into a better one, and the likelihood is that it will become even worse for many of its people. If Greece stays in the euro it faces a long, slow depression in an effort to remain solvent. If it exits, it could see the collapse of the domestic banking system, the decimation of private savings and a crippling increase in the cost of imported goods and energy.

Greece could claw back some competitiveness through devaluation, making its exports much cheaper than they are currently. But the markets would demand devaluation, and then some. The drachma was fixed at 340 to the euro when Greece joined the single currency. But if a new drachma is introduced at parity with the old currency, then €1 would quickly buy about 1,000 drachma, or possibly even more.