The Economissed: From now on Greece will be known as… South Rhine-West’s Failure
Much in the same was as Eastern Germany was swallowed up by their Western counterparts it is increasingly clear that Greece will default and Germany will have to pick up the pieces. The only difference between a bankrupt E. Germany and a bankrupt Greece is the willingness of the German electorate to pay. After all, we have heard repeatedly that in order for the Euro to exist the price is worth paying, whatever that price – and as such the rest is pure semantics.
As Europe evolves – the greatest threat of failure will be the willingness of the Greeks, Irish and Portuguese to actually go to find employment in a healthier part of the region. Europeans should no longer think of themselves as Nationalists but Federalists (whilst the Governments can be thought of as Eco-Fascists). As Greece defaults a myriad of things start to look better immediately – just look at how the Greek national football team would look for instance:
On the plus side the new Greek football team is looking pretty good
JCT and the rest of the Buba led inflation fighting hawks at the ECB are poles apart from the Depression studying Ben….Monetary Unification of Greece is now in principle the same thing as Unification of Germany – but on a much larger scale. If East Germany had been able to use the German Credit rating and gone to the market and borrowed way over what they should have – with no Fiscal Policy of their own and a low interest rate provided by Germany herself – well, the market would have screamed blue murder….what was the difference wrt Greece? The difference was that not many Greeks (Portuguese or Irish) would have ever said YES without the sweetener. As I mentioned yesterday – Europe as a whole is fine – so this boils down to speed of migration of the work force now.
In terms of Monetary Policy we have been suggesting upside in Euribor (for lower short term rates) and a reversal of Trichetʼs last hike – see p2 for Paulʼs update – but emphasise that 4 or 5 to 1 shots the way to go here given current Draghi speak wrt rates (Europeans need to earn lower rates etc…) – obviously the ECB think that being a credible hawk outweighs being a credible deflation/ depression expert…theyʼll continue to learn that lesson we assume.
As the market remains a binary headline driven bet weʼve suggested many option plays over the last couple of weeks and are nicely positioned we feel…
Otherwise expect more of the same and as such today kicks off with the usual warnings to Merkozy and Obama with regard to running out of time….not that that’s made a difference to date but hey…..the FT:
Pressure mounted on Angela Merkel, the German chancellor, to make a quick decision on how to get private bondholders to pay part of a new €115bn Greek bail-out, with senior Italian officials and the IMF warning that continued uncertainty risked undermining the eurozone.
Or how about this from the WSJ – “Fear Guage” creeps up:
Suitably frightened? I suggest a weekend of good old fashioned British links golf at it’s best.tgif! – enjoy the w/end
Related posts:
- The Economissed: What next for Greece?
- Concerns Over Greece Pushes Gold Up
- The Economissed: Even a Blind Squirrel finds ! occasional nut…
- Q: Define stupidity A: The 4th review mission to Greece
- The Economissed: The good ship QEIII
Link to this article: : http://www.goldmadesimplenews.com/markets/the-economissed-from-now-on-greece-will-be-known-as-south-rhine-west%e2%80%99s-failure-4597/
Posted by Paul Wiggins on Jul 15 2011. Filed under Analysis, Markets.
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