EXCLUSIVE: Merkel ‘told Hollande of plans to keep Greece in eurozone at all costs’

A tangled web in Berlin, Brussels, Athens and Washington as the Surgeons take on the Physicians

Spanish auction costs rise dramatically as cash withdrawals hit Iberia as well as Greece

I try as much as possible in writing The Slog to stick to the commonsense ‘PAC’ principle of listening to sources in the light of events taking place. The acronym stands for Provenance (Who are these people and can they be trusted?) Agenda (Why are they telling me this and what are their aims?) and Corroboration (Who else agrees and do events confirm the allegation?)

The Greek crisis within the eurozone is a brain-hurting nightmare at the moment for anyone trying to stick to this approach. First off it isn’t a crisis within the eurozone, it’s a cultural question mark against the entire EU project, with potentially disastrous consequences for the West as a whole. And second, most of the national players directly involved have their own serious splits on the issue. And finally, powerful influences outside government – ranging from Hedge Funds to global sovereign credit players – are exerting what is at times a bewildering array of influences to get this, that or the other result.

So when first told by my Bankfurt Maulwurf yesterday that “Merkel has decided to go all out for her Fiskal Pakt and keep France on board by bribing Greece to vote yes to the eurozone and the Troika”, I was both knocked out (it’s a potentially huge story) and sceptical (he would like to get Merkel out of the Chancellery, and Germany out of its increasingly alarming debt obligations in the eurozone).

However, first indications from usually reliable sources in Paris were that the subject had indeed been frankly discussed by Hollande and Merkel at their first meeting earlier in the week. One informant specifically suggested that Merkel (who is inflexible, but not stupid) tried to take the wind completely out of Hollande’s sails “by appraising him of her Grand Plan to keep Greece in the eurozone FiskalPakt group come what may”. Another said, “I get the impression that she more or less told him ‘In the end we will save face but give the Greeks what they want’ because to do otherwise would be a bad idea from every possible angle.”

Much as I find it difficult to put any praise at all in the German Chancellor’s direction, to be fair she has stuck firmly to precisely the public position (Greece stays) right from the start. The question is, does she really mean it?

I’ve been of the opinion for some months now that Angela Merkel’s position in Germany is far more precarious than most observers realise. And I think events have proved me right: the Bundesbank director Jens Weidmann’s perpetual off-message jibes, the Karlsruhe Court judgements, poor midterm election results, the FP taking her on about not appointing Joachim Gauck President, and the truculent alarm expressed about German debt exposure by Bankfurt as a whole all bear witness to the truth of it. So as often as not, it is less a question of whether Merkel means it (I think, sadly, that she probably does) as to whether she could ever get away with it in the German cultural context.

When it comes to Greece, Angela Merkel is a sort of deranged physician: she hopes that administering pills to create Germanist ways in Greece can solve the problems there in the medium term. As usual with the Fuhrerin, none of the cultural realities support her view: the Hellenic economic ministry observes that the annual cost of graft in Greece exceeds the measures adopted for 2012 for cuts in pensions and salaries, according to recent official figures and reports.  The total illegal economy (tax evasion and bribes) is worth  €65 billion, and a further €4-7 billion is involved in kickbacks demanded by everyone from councillors and lawyers to ministers and bankers to any private business trying to expand or start up.

Set against this Alchemy approach is that of the Surgeons: that Greece must be amputated, and thus help keep any and all actual or perceived contagion away from the eurozone. Those holding this view have thus far included Washington, Holland and the northern members, Frankfurt’s private banking community, the Bundesbank, and some (although not all) elements within the German Finance Ministry.

So we see, for example, Andreas Schmitz  telling Reuters yesterday, “More than two years after the first aid package for Greece it is hard to imagine how the country will escape its unfortunate situation. It is therefore right to think about alternatives and particularly whether Greece would not be better able to solve its problems using its own currency, supported by a ‘Marshall Plan’ from the European Union.” (Schmitz represents the Bankfurt view also held by the Slog’s Maulwurf there.)

Schmitz’s remarks also take note in turn of the growing view among the Surgeons that Greece could be just as dangerous outside the tent as in it, and thus is still going  to need help as an EU member. This line was also planted in Der Spiegel yesterday, which not only expects and supports a Greek exit from the eurozone, but also sticks to the Party line that Greece would continue to get aid just like every other member state.

The vast majority of German newspapers and websites  now take the view that June’s Election II in Greece will really be a referendum on whether the country should remain in the euro zone. This too, I suspect, is orchestrated by those with an interest in kicking out the Hellenic Republic, because such a conclusion flies in the face of the facts: there is an overwhelming anti-Troika majority among the Greeks, but even Alexis Tsipras the leader of Syriza has made it clear that the goal remains to stay in the eurozone. The objective of German media spin, by contrast, is to equate a win for Syriza (now very much on the cards) as the Greeks giving Berlin-am-Brussels ‘permission’ to boot them back to the drachma.

At the same time, there is another more geopolitical reason why the  ‘support for Greece post exit’ school is gaining ground: it is increasingly dawning on the uncommercial dullards in Brussels that Greece is sitting on a mountain of raw materials – and in a place, what’s more, that is strategically vital for the defence of the Middle East against Turkey in particular, and Islamism as a whole…..aka, maintaining access to oil. Here, obviously, the American agenda comes into play.

Since the abortive, stillborn attempt by Geithner, Wall Street and the White House to engineer a Greek amputation via default during March, there’s been much rethinking of strategy in the States. Although the decision to ‘bet the farm on Germany’ in US foreign policy was a good call given the election of Francois Hollande, some in Washington and at State now see the relative frailty of Merkel (and her growing megalomania) as potentially very destabilising for American interests in the region.

The Pentagon in particular would like to see Greece outside the eurozone without support – to maximise US military influence – but at the same time, it views the likely election of left-winger Alexis Tsipras as very bad news indeed. Wall Street remains sanguine about such things, and the Black Dude in the White House doesn’t care either way so long as the eurozone survives intact until end November. Secretary of State Hillary Clinton, meanwhile, is at pains to point out to Nodrama that the chances of that are getting slimmer by the day….and in this, she is being supported by Secretary Geithner.

The latter has been privately pessimistic about the eurozone’s chances since he departed the Polish debacle. So at the moment, the prevailing view in Washington is that the eurozone is more likely to go bang as a result of Iberian and Italian meltdown than because of events within the Greek soap opera. The President apparently also finds it impossible to envisage the circumstances in which Mitt the Mormon Moron might give him a run for his money. There is much policy muddle, but perhaps because of this the presence of US agents on the ground in Greece and Berlin has been upped. The possibilities for SNAFU are thus almost infinite.

Sitting slap bang in the middle between the Physicians and the Surgeons is Mario Draghi, doing his best as ever to keep in with everyone. Given that Goldman Sachs is his almer mater, his country Italy is being harmed by the Greek melee, and his bank is running out of ways to keep bond shoppers buying, Draghi was always likely to hedge his bets. He looks like a surgeon when (as he did this morning) Mario says that the European Central Bank will temporarily stop lending to some Greek banks, in order to limit its risk. But he also sounds like a physician when he says that growth plans must now take an equal place alongside austerity in any future treatment of Greece. And then he sounds like a surgeon again when he admits that  Greek euroexit is now a very real possibility.

As to growth, by the way, it says pretty much everything you need to know about the Brussels mindset that, while talking to the media about “growth projects” yesterday, Herman Van Rompuy’s grab-bag consisted entirely of public works, roads going to nowhere, and “community development projects”. Not once did even ideas like subsidising subaqua exploration or retraining in hitech pass his lips. None of these wombats have the first clue what they’re about.

Is there a clear direction in this story? Not really, no: there can’t be until Berlin and Brussels make some kind of clear statement of intent – which they won’t do until the very last moment. What the Greeks do will depend on who wins the election, what the Americans do will depend on further lunacy from Recep Erdogan or his chums in Tehran, what Merkel does will depend on opinion polls and Frankfurt demands, what Hollande might do is anyone’s guess, and the Sprouts in Belgium – having no idea at all what to do – will await orders that are highly unlikely to arrive.

The only way I would choose a balance tip one way or the other at the moment might be (1) if Mario Draghi, for instance, followed his namesake and countryman Monti by advising that money intended for Greece should be used instead to save the larger ClubMeds, or (2) Germany – in the shape of the increasingly invisible Wolfgang Schäuble with Merkel’s approval – made a major suprise move. But for the time being, I can’t see either happening.

74 thoughts on “EXCLUSIVE: Merkel ‘told Hollande of plans to keep Greece in eurozone at all costs’

  1. JW, you are bang on, bang up to date and way, way ahead of anyone else in the media. In fact you have created some very welcome ‘uncommon sense’ as opposed to that highly illegal and politically intolerable thinking, that one time went under the title ‘common sense.’

  2. Excellent analysis….
    Only pooling the debt, Eurobond finance, Fiscal and Political union -
    will save this situation – if it’s worth saving, which is a matter of opinion.

    • Which has been the Brussels/Europhile hope all along, the beneficial crisis that ultimately forces political union. I suspect the EU crystal balls foresaw a financially teetering ClubMed, or possibly France, driving the politicians to accept there was no choice but to complete the Federal project, back in 1999, indeed I have little doubt les éminence grises were whispering exactly that two years ago, but the politicians didn’t bite. Now there is too much debt for them to get away with it, that and keep their skin. So what will happen? Could the EU survive a disintegration of the Eurozone? For sure it isn’t going to go quietly, much as many would like to hope, there is simply too much integration and interdependence already in place for that to happen. Consider, there is currently around €120 bn of EU spending on infrastructure and subsides each year, most of which comes from Germany, France, the Netherlands and the UK. That represents a lot of unfinished motorways and unpaid agri-subsidies should it all hit the fan.

      I find it enlightening that Cameron is now banging the Federal drum for the EZ, carefully not mentioning where he thinks that might leave the UK, in, out, up the creek or what. Of course, the evidence is he doesn’t actually think, only reacts, so I suppose I shouldn’t be surprised.

  3. Hollande has chosen as his Prime Minister, a Mr.Ayrault,(can’t think of his first name), who apparently was convicted 15 yrs ago, when Mayor of Nantes of corruption when awarding contracts. He received a ‘surci’ (suspended sentence). In France, after a certain number of years, the record is wiped clean.
    I cannot think of any British Prime Minister who has committed a similar offence no matter how long ago in the past, who could still have gone on to become Prime Minister. Perhaps someone out there can? Not just suspicions, but outright convictions?
    François Bayrou, who I have hitherto held in respect, said on the radio this morning that “He didn’t see why this(the conviction) should be held against him (Ayrault), or prevent him from doing his job well.”
    Can a leopard ever really change his spots – if given enough temptation?

  4. They have pushed the common currency to its liimits and are finding that in practice it cannot work. True to the continental tradition they are still trying to prove that can work in theory.

    • And why should you? Politicians say what is expedient at the time, sometimes it is also the truth, even honest, most times it is not and only time will tell which was which.

  5. Perhaps now would be a good time for Greece to consider how Iceland has been (quietly) getting on recently.

    http://www.dailykos.com/story/2011/08/01/1001662/-Iceland-s-On-going-Revolution

    I know that the two countries are not entirely similar (one is sunny and one has far less corruption than the other) but one important similarity is how their peoples are regarded by the criminal financiers and politicians. Iceland told them to f**k off .. v. effectively too .. and continues to hold them at bay. Greece has this opportunity to stop hanging on to nurse (for fear of something worse) to tell its colonial masters to swivel as well.

  6. Pingback: John Ward – Exclusive : Merkel ‘Told Hollande Of Plans To Keep Greece In Eurozone At All Costs’ – 17 May 2012 | Lucas 2012 Infos

  7. As long as the idiots in Westminster do not throw any money into a rescue fund for the Eurozone.

    They have never once lifted their fingers or opened thier wallets for us

    Let the French and German banks take the hit as they should have two years ago and perhaps even the EU might tumble too

    • I seem to remember something about a Black Wednesday around 20 years ago, in which certain individuals made a huge fortune, and the UK paid around £3.5bn for the privilege of being chucked out of the ERM. That was before ‘ever closer union’ was fashionable. Now people can’t be thrown out, even when they clearly deserve it, because of the intertwined nature of our economies, greatly amplified by idiot bankers.

  8. 33% chance of GR saying we are leaving, a bulls by the horn moment.
    33% chance of GR by default leaving as a result of political confusion.
    33% chance of GR staying for the time being pending other alternatives.

    Thus 66% leaving in the next month BUT 33% of staying, which in the state of play of things is still a big number.

    I suppose in GRs case it is really the truth of the old saying owe the bank a 1000 and its your problem, owe a few hundred billion and its theirs. My hunch is they will still be in the Euro on Oct 1st, but yes I accept the odds are against.

    • Germany likes things as they are. It suits them to have an ‘uber-strong’ currency. Via its duplicitous banks, the Ange/Franc duopoly has a truly gigantic exposure to southern Europe, housing bubbles, monstrous annual deficits, desperate corruption and all. They will go to extreme lengths to maintain the subservience that they would impose on the southern EZ countries, even to the extent of dragging in contributors who are EU members but outside the EZ. But therein lies the ultimate flaw, that it costs a hell of a lot to keep a struggling herd of low productivity countries in the manner to which they have been (undeservedly) accustomed. The bill will be too big, even if somehow the EU manages to get some of that magic growth hormone working. But the flaw can be hidden for a while, and that is just what the key politicians want – time to create the Federal structure that they see as their mid-term destiny. My guess is that they need 2 years, during which they plan to prevaricate while changing opinions.

  9. It’s the end of fractional reserve banking.
    Not only that it’s the end of an unrealistic economic model as well.
    Plus the current political system ,crony capitalism if you like, goes down the tubes with it.
    The death of Keynsian economics with a splat!
    All these systems have created too much public sector debt.
    The results we are all about to witness first hand.
    Still I suppose the left will just stick their fingers in their ears, blame everyone else .
    Then riot.

    • This crisis was caused by unregulated banking systems, not Keynsian economics. If the Austrian school was correct we’d never have had a crisis, as markets are supposedly rational and best left to their own devices.

      • yeh because there’s been no intervention in the financial markets by governments has there – thereby completely disproving the ideas of the austrian school

      • Governments intervened to save the entire financial sector the world over from destruction a few years back, yes According to Hayek et all, that shouldn’t have been neccesary, because markets always price risk correctly..

      • Austrian school does not agree with EMH, nope i am not an Austrian neither. BUT the fact is they were the ones who got it most right in the run up to the crash. lew rockwell ect from about 2002 as i remember.

        http://mises.org/daily/4904

        As for regulation, again no the issue is governance. Its always better to have 100 rules that work, are understood and enforced than a 1000 the lawyers run rings around.

      • A handful of Austrians may have called the crash right, as did a slightly larger handful of Keynsians.
        The best record belongs to people like Steve Keen, who’s a follower of Hyman Minsky.

      • ?? So before the crash we were living in a world with complete free markets? Then they suddenly went wrong through misalocation of recourses and thats when governments need to step in. Yes thats the line the government spins.

        Yet the government control the money supply, determine what we can use as money, interest rates, taxes, and regulations…

      • The idea that govts only stepped in when free markets fell to pieces is very wrong. For the last ~50 years govts have been manipulating and interfering in the markets through misguided Keynesianism. And a major reason for that – apart from political dogma – is because monkeys go into politics to do stuff, and allowing the economy to manage itself armed only with effective regulation to ensure honesty, competition etc is anathema.
        That is why it’s all fallen to pieces. And how do the political monkeys respond to the problem of their making? Why yes, by more interference.

        Putting it simply: government is the cause of the problem, not the solution.
        IME that is almost always true.

    • Exactly correct.All other paper assets connected
      to the Ponzi system to burn with it.
      I am truly amazed that they have managed to hold it
      together this long.
      It’s the Wily E Coyote meets gravity moment.

  10. JW – your best and most balanced analysis yet. The tentative opinion as to which Merkel et al will tip the balance adds hugely to your credibility.
    You describe Merkel as obstinate but not stupid. Yes, she is obstinate as long as she can be. But even a deranged physician (they are concentrated above all in Bankfurt) will change her mind faced with the otherwise inevitable collapse and death of the EU patient.
    My prediction on balance: she will try to find a way of working with Tsiprias in Athens (Hollande as emissary?). I think the political pressure in Berlin (where power resides, whatever Weidmann may think) will overcome the pressures from Bankfurt. She may need votes from the SPD and greens to replace some of her own parliamentarians and the FDP) which could be forthcoming on Hollandesque terms.
    Balance? – all is not YET lost for the Euro, whether you think that is good or bad as an idea.

  11. We really are all in this together.
    Credit default swaps and bankruptcy laws which prioritise derivative counter parties have ensured that, unfortunatelly.

    • I wouldn’t be too concerned about CDS liabilities Paul – there isn’t an event yet invented that could trigger them, even God’s given up trying to get in on the act.

      Bankruptcy’s no more than a rapped knuckle these days, especially since responsibility for ones own actions was consigned to history and now that we have grown into being a creditors worst nightmare, the question we should be asking is :-

      Do we stop the world because we want to get off or should we stay and busily make hay while the sun shines down on our laughable safe haven status knowing we will print and be dammed any time soon anyway?

  12. Great diagnosis of the rotten ins and outs of the EU and especially the psychology of Merkel. On politics, though, Europeans are invariably wrong. Carter was some hick farmer. Reagan was an actor. Bush I would definitely lose, Gore would defeat Bush (as would Kerry), etc. Romney may be a Mormon (where did that come from?); he may be boring; he may even be disliked. But he will win because of his opponent is Obama. The wild media support, goofy Euro praise, peace prizes and speeches cannot combat the reality of the last four years.

    Most often heard phrase in the US: “Jesus, I can’t believe I voted for that guy”

    • Europeans frequently make the mistake, when commenting on US politics, of over-estimating American voters’ intelligence. We forget just how many vote against their own economic-self interest, and the wild popularity of rightwing moonbattery.
      I agree with you on the Mormon though. He’s an asset stripping, job exporting, war promising wingnut, but Obama hasn’t walked on water like his supporters thought he promised, so he’ll probably win.

    • And your point is? obama will win or lose. For my money he will win ex some 911 type event. He is still running 58.4 per cent on intrade and has 253 electoral votes ‘locked in’ on electoral-vote.com with a further 32 votes leaning his way and 73 weakly leaning – he only needs 270 to win. Demographics increasingly point to a Democrat lock whilst the Republicans confined to the plutocracy and the white working class are being marginalised.

      • I’m seeing quite a large segment of people, people who I’d never have expected actually if I’d gone with the between term hype, getting behind Obama now that they are coming to realize what’s up. Speaking of the people I know in the US — a broad cross-section of highly educated professionals and well-placed.

  13. Thank you for what is as usual a deliciously crafted piece of nonsense deconstruction.
    It seems to me that the sole purpose of the EU is to provide vain arrogant & certainly in some cases corrupt politicians that wilfully mishandled their respective economy’s, with a larger tax payer base to supply them with a financial “get out of jail free” card.

    Quite how anyone expected nations that have seen “revenue collection” as a “nice to have” due to the negative impact enforcing it would be likely to have upon economy’s that rely so heavily on low paid “black economy” employees in the tourism, hotel and catering sectors; to suddenly become models of Germany efficiency in the area of tax collection, after centuries of doing the very opposite!

    They lied their way into the Euro, we should ensure the harsh truth becomes their way out of it because they are currently off to Hell in a handcart (providing they can get a loan to by one)

  14. Forget Merkel, Hollande and the various alumni of Giant Squid running Europe into the ground.For once,the FT has called it right this morning,’Spain calls in valuers over real estate loans’.Greece is gone,and the cost to Germany is huge but bearable(think Jamie Dimon at JPMorgan,as he discovered that a French whale living 5 days a week in London had made a small dent in the equity).Spain is a different matter.Their government knows they have so little credibility in the market that they must call in foreigners to appraise the true extent of the sh t in their banks( hello, auditors , where were you?).Blackrock? You couldn’t make this story up.So,the European banks are bust (Barclays as well, for all I know),and that means most governments in Europe are going to find that the normal mechanism for financing central governmemt borrowing requirements is shot to pieces.Imagine the world is a game of Monopoly,with the US and China already holding the best properties,and the latter keen to buy into Africa,and the former retreating from unaffordable military gambits.Who is going to prop up Europe and the UK,for that matter, as their debt bubbles explode?Cash is king and so is Norway.

    • Yes, the Spanish situation is very serious. As I have been saying for a couple of years, the banks’ (and especially the cajas’) balance sheets are utterly deceitful works of political fiction. Mergers of banks (fusiones) are simply another obfuscation, though one that mercifully comes with reduced headcount. So Rajoy has bitten the bullet and gone for a foreign review. He might as well, before he is tainted by making decisions of his own.

      But do we really think that the so-called independent experts will have the nerve to release the full truth about Spanish banking’s asset values? Will Rajoy let them? Perhaps not, it will be too awful, certainly above €100bn, and maybe €200bn. What then? Another German bailout? And if they do, where will they be called in next? We need to be wary about this because a foreign review of UK banks could be very revealing, especially given all the ‘forbearance’ in the mortgage field that is being used a the moment to disguise the reality that many UK mortgages are secured by assets that are hugely overvalued.

      • “This is ground control to Major Thom, …”

        “Yes, Major Thom here Ground Control…”

        “Will be resolved shortly Major, carry on…”

        “Roger that.”

  15. The crusader coalition is absolutely terrified that not only Russia will retain it’s Mediterranean port but that China will gain it’s first European dependency. The Greeks will appoint Chinese exploration companies. The Syrians, Lebanese and Palestinians will follow suit. The whole energy strategy of the crusader coalition will be in tatters.

    Turkey, after being rejected by the EU, will sign up to the BRICS agenda and the whole of the eastern med. will become a BRICS lake. Russia ends up holding the trump card of the only supplier of energy to the EU.

    • After the last three weeks in Beijing, I can enlighten readers, that China will only move when the dust is settling.
      They may invest to bring about one of Europes largest ports, but only when the currency, labor laws/practices are reformed.

  16. Greece cannot actually be kicked out of the Euro-zone anymore than the US could tell the Argentines “oi, stop using our $ as if it was your own!”, back in the days when the Argentine Peso was pegged 1:1 to the $.

    If the Greeks want to use an internationally traded currency like the Euro as if it was their own then nobody can stop them. However, it is ever more likely that the Greeks might realise the folly of remaining pegged to the Euro.

    • They can use whatever they want however if they wish to borrow then they will be subject to market forces and I expect they will literally not be able to borrow a penny after the way the bondholders were treated.

      Greece will be the first western nation to drop back into mass poverty.

  17. Why would Merkel want Greece in the Euro? It is a financial disaster area which is getting worse. Nothing that I have read or seen over the last two years gives me any confidence that Greece will have an economic recovery. The instability and risk of contagion will continue, as will the endless largely German funded bail outs – either directly or through Target2.

    The only reason that I can see that Merkel would want to keep Greece in is that all other alternatives are worse. So it does look like the can kicking has had a purpose – but it has made a bad situation worse and enmeshed Germany in horrific liabilities which increase as time passes.

    Option 1 Surgery on Greece – very dangerous and risky – relies on Greece to manage the exit
    Option 2 Germany exits – crystallises losses and destroys 50 years of pan-Europeanism
    Option 3 Carry on with current policies – which can’t work. Will eventually lead to fiscal and political union – but it will be born of a crisis

    Looks to me like Merkel may be going for Option 3 – and Germany’s on the hook for the next 50 years. Maybe it is too late now for Option 2?

    • Yes, option 3 looks likely.
      If the European project which tied France to Germany fails then the new order which may emerge will change the european landscape. Russian energy, chinese goods, german goods made in China. The UK a small bit player heavily into industrial musuem tourism.

    • @marcjf: Yep, I think Merky would prefer Option 3. But her other motive may be that she wants to retain EU control/influence over Greece’s reported fossil fuel/mineral reserves to keep them out of the hands of others. Even she understands Peak Oil…and Germany uses a lot of gas!

  18. Good article. The Euro is, I believe, doomed, but it was doomed from birth. They should kill it before it begins to kill all of us. Greece should and must leave the Euro, but if old bossy boots in Berlin wants to keep her in the damn thing then my message is simple – ‘open your own cheque book and pay up’.

    As to the UK sooner we leave the EU the better.

  19. When (if) the Brussels sprouts get their way and Europe is conned into the fiscal/political option, presumably the MEPs eventually get to run the show (yes I know), or maybe they just keep the Commissioners forever. At that point, the biggest voting block just always wins.
    So who in a small country would ever expect that to work in their favour?

  20. here’s funny thing Draghi’s ECB stated recently:

    http://www.businessweek.com/news/2012-05-16/ecb-stops-lending-to-some-banks-as-draghi-talks-exit

    European Central Bank said it will temporarily stop lending to some Greek banks

    ECB said yesterday it will push the responsibility for lending to some Greek financial institutions onto the Greek central bank until they have sufficiently boosted their capital.

    1. Greek banks experience run at the moment
    2. some Greek banks are actually French banks located in Greece
    3. ECB prints money by ordering national banks to do actual printing. how is that “pushing the responsibility for lending onto Greek central bank” different from ECB’s normal mode of printing?! the guy is marvelous liar: they’re boldly printing and assuring no more “operations” on schedule!

  21. Cameron said today….
    “We all need to address Europe’s overall low productivity and lack of economic dynamism, which remains its Achilles Heel,” he said. “Most EU member states are becoming less competitive compared to the rest of the world, not more.”

    Too much costly unqualified government and regulation leaves entrepeneurs handcuffed and in a straightjacket.

  22. Hmmm …

    No mention of energy. Analyzing Europe and other modern economies without mentioning energy is like Baptists not mentioning Jesus or Nascar drivers not discussing tires (tyres to you Brits).

    Greece is broke because it cannot borrow to buy Middle Eastern crude oil. It cannot borrow b/c driving a car — or even owning one — does not earn a return.

    Times the millions across Europe and the tens of millions around the world there is a reason for a) massive unpayable debts, and b) energy shortage. There is an energy shortage because oil prices have risen 10x since 1998 while fuel output has increased on 20%. OUCH!

    Take the time to read Irving Fisher’s paper on debt deflation because what I am going to say next is very important: what is underway is energy-deflation. We have an ‘energy debt’ that we cannot repay as the ‘services’ and assets bought with the energy are completely worthless. We cannot repay and we have little to use as collateral to borrow. What it is we offer is the waste of what little capital remains. There is nothing that Geithner, Merkel, Hollande, Syriza, Obama or the rest can do to bring the ongoing energy deflation process to an end.

    Greece has fallen, the game there is done. Spain is next then France or Italy. After than comes Germany, Japan and China: yes indeed, China is as vulnerable as Greece and as mis-managed.

  23. Pingback: In or out? | Klein Verzet

  24. There was a time, not so long ago, when the local midwife attending a birth would immediately identify that the offspring was deformed in some significant way and quietly, without any fuss, would put the weak infant to one side, tending to the mother and leaving the unfortunate infant to expire naturally. This was considered a kindness to all involved, not only to avoid immediate suffering, but to eliminate a potential lifetime of care for no real productive purpose.

    When the Euro was conceived (by political IVF, apparently), the midwife was so blindly delighted to see any outcome at all that she chose not to notice its fatal flaws, deciding from the outset to apply whatever treatment was avalable, affordable or not, to ensure that the ever-so-delicate creature was swaddled with care, attention and support, ignoring the cost of that care or the consequences on the wider family unit. As the cossetted child eventually approached puberty, the hormonal strains became so bad that its behaviour threatened not only its close family but the whole neighbourhood too, although that still didn’t stop the Fertility Support Team continuing to apply extreme measures in a futile attempt to justify their whole project. And so it continues.

    But sometimes it is better to leave nature to sort out what should be born and what shouldn’t, what should survive and what shouldn’t – interfering with this process, akin to playing God rather than that wise old midwife, is generally not recommended.

    Perhaps Frau Merkel should meet up with some elderly ex-midwives and learn how it should be done from those who, in the not-so-distant past, managed such difficult situations so quietly, professionally and successfully.

  25. I read today that the International Standards Organisation encoded the Drachma as GRD as the international trading standard, when Greece joined the euro,- they also gave it the numeric code ’300′. Oh the irony…

    Molon Labe!

  26. The major problem continues to be the EZ banks. Their position is worsening. A torrent of liquidity wil be needed to keep them afloat. The departure (sacrifice?) of Greece may be the excuse needed to open the spigots. One way or another the spigots will have to be opened if the banks are not to topple like dominoes, turning the lights out across Europe.

    Long term Steve in Virginia has it. We discover new sources of energy or the game is up.

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