November 2, 2011
After all that, €1 trillion euros buys a Greek referendum? Is that really the breathing space the world was hoping for?
It seems difficult to describe this as anything less than a calamity for the EU, the Euro and especially for Greece.
What sort of question should be put to the Greek voters?
Do you want:
a) grinding national poverty for a poorly defined number of years and continued national further humiliation?
b) bankruptcy, ejection from the Euro and to send the new currency into a hyperinflation and debt crisis. Plus the possibility of sending the Euro into a further, deeper and faster tailspin than it was already in, including very possible and very serious ramifications for Italy and Spain?
It actually strikes me as being very similar to the ‘Bunga Bunga or death?’ joke. Not at all nice. Sickening really.
I would presume that anyone currently in Greece that has any money is now desparately looking for ways to get it out of the country before mid-January. This could become a smuggling currency crisis…
But what of the government?
What sort of pressure must there be to offer a referendum at a time like this? It is political suicide for everyone involved and they must be reliant on blind-luck at this stage. If the referenda is passed and the austerity measures stay – which seems unlikely – the population will hate you forever. If it fails and the proposals are rejected, you are forced to declare bankruptcy almost immediately, probably be kicked out of the Euro, put your country’s EU membership status in peril and possibly worse that I dare not even think, let alone write.
And for there to be that much pressure, who is applying it? I think we can guess. But at what cost to the country and European economy this short-term party and personal advantage? A vote of no confidence would likely follow a no vote, causing a general election and a change of government.
Does Greece, the Euro, Europe and the world have to go through all this so that a few men can take power? This is surely too high a price to pay.
Poor Mr Papandreou has been stabbed in the front with the world looking on.
As for the rest of Europe, I have written many times on this blog that borrowing is all about confidence. What does a move like this do to confidence in the Euro, to other Member States or to the ability of Greece to borrow?
If I were Angela Merkel, after what she has had to go through in the last few months (at home and in Brussels), I would probably have my ambassador to Greece hand deliver a letter asking them to ‘consider their position within Europe‘ and ask them to jump before they fall.
Here are a few thoughts on the risks being taken by the EU to save the Greeks:
Gary Finnegan’s well thought through analysis: What China wants in return for EU bailout
My thoughts in May: Who Will Benefit The Most When Greece Exits The Eurozone?financialguy