dimanche 22 mars 2015

GREECE versus Eurogroup - The Plot Thickens

Posted on 04:36 by nice news

ANGELA MERKEL WAS OVERHEARD SAYING


“MARIO, PASS ME THAT BOTTLE OF OUZO AND JEROEN STOP PIGGING ON THE TZATZIKI”




Yes, you guessed it – Mr. Casual aka Alexis Tsipras the Greece prime minister was back in Brussels having “off-site” emergency talks with the Eurogroup regarding the Greek bailout.



This long running saga is really like a west-end farce, in fact it’s now so long running i think that it challenges Agatha Christies “the mousetrap” that had a phenomenal continuous run in the London theatre. I cannot remember how many weeks it ran for but the Greek story, god love them, is starting to wear me down. Is it any wonder that Mario Draghi is consuming raki, ouzo and retsina faster than Jeroen Dijsselbloem can say his own surname!



Enough is enough.



I firmly believe that the only reason that the Eurogroup is entertaining “no tie” is because they want to ensure an orderly Grexit from the single currency. A disorderly Grexit would place a massive stress on the ECB and the Bundesbank.



In an interesting twist however, on Friday the EU commission president, Jean-Claude Junker released €2 billion on humanitarian grounds to help the Greek government deal with the crisis in the country that is affecting the poor and the hardest hit by the financial crisis.



Wouldn’t you just think…



Austerity did not work; it is still not working and refinancing the Greek debt is just avoiding a default. No matter what is done, the Eurogroup policy on Greece, with or without the IMF (international monetary fund) hooked into the deal along with the ECB to form the Trioka to make it look like a wider base of support and aid was going to fail before it even started.



The Germans are at fault in my opinion. Schauble is a loose cannon that fires up high emotions. Culturally, the Germans and the Greek peoples are worlds apart.



The bartering process that “no tie” is in at the moment is a normal Mediterranean way of negotiation, and, whether you believe he has no bargaining chips at all it is totally irrelevant. To Northern Europeans, like Merkel, Hollande, Diijsselbloem and Donald Tusk from Poland who chairs the Eurogroup summits who quite frankly cannot understand why “no tie” will not move his position, it causes them to become exasperated and dig in their heels. They believe and maybe quite rightly in their eyes that enough is enough and its our way or the highway. This is pure and simple cultural divergence.



Tsipras (no tie), knows that the Eurozone banks, many of them German and French have lots of €€€€€€ hanging around the Greece financial sector. This is the backdrop and sword of Damocles hanging over the negotiations. “no tie” fully knows the fragile economy that exists across the Eurozone would be thrown into turmoil if a disorderly Grexit were to happen. In the background there is the fear of the Greek government running out of money, but would it actually happen?



Think outside the box. Both Russia and China would love to get a foothold in the area for many reasons, not just political. Humanitarian grounds would be the sales pitch should either of these nations offer emergency financing.



Greece needs debt relief.



The Eurogroup needs to suck it up and provide a “cash back” deal to Portugal, Ireland, Cyprus etc. In fact, any country that has effectively had a bailout of one sort or another from the Eurogroup since the 2008-9 crash.



It is so straightforward – if they do nothing they risk another financial crash, another run on the banks, negative growth deflation….. This list can go on for pages.



Suck it up….



For once; do not kick yet another can down the road.



Whatever words are written on a Greek blueprint for economic reforms moving forward may as well be on paper supplied by tom cruise’s bosses in mission impossible, it will self destruct 30 minutes after signature and the monies are transferred. If the Greeks could not reform before, gather taxes before, or manage the books before on the previous two bailouts why is it going to work this time. They are more in debt now than when they first came to the table looking for help years ago. It is so sad for Greece that they were sold a lemon.



Austerity was not the way. It has not worked, and for Germany to continue down this road with the same old same old is complete and utter bollo**s. There are 19 countries using the single currency, 19 vastly different cultures that approach all aspects of life and business from a different perspective. One size does not fit all.



These are high stakes. It has taken Mario Draghi at the ECB years to create some stability. This is the ultimate risk. The credibility of the German approach, i would say stubborn approach. They appear totally intransigent to an alternative.



I am not saying that the U.S. approach was brilliant, quite frankly it made fat cats fatter and moved wall street poles apart from main street. The poor are poorer and the rich are richer as result of the fed approach in the USA. Poverty is simply swept under the carpet. However, the Ben Bernanke approach was so supportive to the financial markets (ex. Lehman brothers) that stability and credibility were restored in very good time. Granted, it is still a fragile economy and the economic data shows this. If everything in the garden was “peachy”, interest rates in the U.S. would be at 0.5% by now… they are not.



By comparison, and it is hard to compare, as many American commentators some who have been around for years, such as Joe Kernan on CNBC, simply do not understand that the Eurozone area consists of 28 countries, 19 of these use the € (single currency) plus there are a number of principalities that have monetary agreements like Andorra and Monaco.



The USA despite its dysfunctionality is one country. The Eurozone is not. It is like comparing apples and pears.



The fed has an easier job than the ECB - these are basic facts, clear and unambiguous and should be noted when a glib comment is made on U.S. TV by some commentator, pundit or analyst who probably couldn’t even tell you where Greece is on a map.



I digress….



The stakes are incredibly high and reputations are on the line in Brussels. My fear is that the “can” is being prepared as i type.



I fear that if a fudged solution is found we will definitely be back at point zero again within a year, with the same issues, same problems, maybe different players around the table.



For once… can the Eurogroup just suck it up and move on doing what is right for the Greek people not the damn politicians. If business people were managing this from day one we would not be in this mess now.







GREECE versus Eurogroup - The Plot Thickens
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