Someone must stop Germany...

Discussion in 'Every Day Debating' started by Anduil, Feb 13, 2012.

  1. ~Elladan~

    ~Elladan~ A Elbereth Gilthoniel

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    I think it's more a question of who will blink first and how badly the eurocrats want to keep their european dream alive.

    The majority of Greeks, if opinion polls are accurate, want to stay in the EU, keep the Euro but don't want to take the austerity medicine. The problem for those wanting to maintain a tough line is that the anti-austerity bandwagon is gathering pace throughout Europe, even in Merkel's backyard. Austerity is driving the EU/Eurozone growth to a standstill, toppling governments with pesky european electorates not playing ball. There's an obvious disconnect between voters acknowledging that governments cannot go on spending money they haven't got (ie accumulating debt) and the electorate actually accepting cuts to services, public service staff levels & other state benefits when it affects them personally.

    I think Tsipras is probably judging the situation correctly, the EZ/Troika will fold and fudge a softer landing for Greece because they're too frightened of the possible consequences of not doing so and letting the Euro & EU fragment. If they let Greece fold the pressure by the markets on the Euro and the flight of capital from other weak Euro members will reach epic proportions. Greece really has little to lose as all options currently on the table are grim with no obvious light at the end of the tunnel.

    The fudge will be Hollande's growth agenda although how they'll pay for it or implement any measures quickly is another issue. What the UK would love to see is European regulation which creates an necessary burden on particualrly small business ripped up That doesn't cost a lot apart from the loss of a small army of EU pen pushers but that's likely to be resisted as it's the dreaded 'Anglo-Saxon' market model and the EU would lose 'power' ;)

    Personally I think the Eurozone has boxed itself into a corner by dithering for so long and not throwing up an enormous firewall from Day1. They either fold with Eurozone taxpayers taking an even greater exposure to other member nation's debt or they bite the bullet, throw Greece out and slam up a multi trillion euro firewall and suspend the free movement of capital.
     
    Last edited: May 14, 2012
  2. Turambar

    Turambar Harebrained Staff Member

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    From the sort of sounds I've been hearing, this is no longer accurate.

    As far as the Greeks are concerned, I think you are correct. Of course, for the rest of the members, stability pact 2.0 is heavy to sustain for many if not all members. With Francois Hollande being the new president of France, I'm not too sure this line can be maintained and, as Barroso (or Draghi, I forgot) indicated, we might let loose of the 3% rule once more.

    I don't think this is in the hands of the Troika. The (forthcoming) elections will determine the course the Greeks will take, or so I feel. Certainly, the EU would probably prefer a limited haircut, to avoid further losses on their part. It makes sense that, with Syriza partaking in a coalition, the EU would have to renegotiate; the outcome would almost certainly be in favour of Greece. Unless, that is, if Greece decides to stay with the EMU.

    European regulation... are you sure? I was under the impression that London was fighting regulation from Brussels?

    Personally, I think that unless Draghi lets go of the Stability Pact again, France will have to walk in line, no if ands or buts. How Hollande would manage that is his problem. In theory, it's possible to create tax from economic growth and - but that all remains to be seen...

    Err. You still can't throw Greece out. It's not possible, unless they themselves decide to leave.

    Greece is going to cost the rest of the Eurozone money, so much is clear by now. Exactly how much depends on the solution Greece chooses. As to that respect, I think the EU has more to lose from an exit then it has from Greece being an Eurozone member, since the former means they pretty much lose all the money invested thusfar (somewhere around € 130 bln, I hear).

    What exactly that means for - say - Spain, is unclear. I think Spain is in a much better position than Greece. The current economic stress caused by the real estate market can be solved, of that I am convinced. Of course, some money will have to shift - probably from the existing EU emergency fund. Then, there need to be a few tweaks to labour legislation. With over 30% unemployment, I think that hurdle can be overcome pretty easily as well. Once that's done, there's really little to hold back all those citizens craving for work, mark my word.

    Other countries seem to be able to hold their own. Portugal might be in danger when the Eurozone goes into deep recession, but isn't big enough to drag the rest under. Ireland actually seems to manage. Italy lauched plans to reform their economy, which would mean they are in the clear as well.
     
  3. ~Elladan~

    ~Elladan~ A Elbereth Gilthoniel

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    I think you missed the 'EU regulation... ripped up' part :)
     
  4. bloodfiredeath

    bloodfiredeath Die by the Sword

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