Friday, 15 June 2012

A fresh Greek Election this Sunday

For the second time in a couple of months the Greek people go to the polls this Sunday.
Their country has three choices:
1. accept the austerity measures previous governments have agreed to,
2. default and exit the euro
3. or choose a new government, which will ditch the latest deal and demand yet more money from Germany and the rest of the Eurozone. No prizes for guessing what is the most likely outcome.
The tragic fact is that the Greeks do not want to leave the Euro, but do not want to pay for their debts incurred as part of the Euro = the ultimate having your cake, eating it, not paying for it ... and then asking for more ... on credit. People also forget that this would be the third time Greece has defaulted on its agreed bailout terms.

That Greece will eventually leave the Euro is inevitable even if many do not want this to happen. Greece is playing poker with a currency, their prosperity and so much more. They will lose. The currency and the bailout scheme is unsustainable in its present form.

Similar comments could be made about Spain's position - albeit I suspect that the demise of Greece would draw a line in the sand, not least because the Spanish economy is a big beast if it fell. Meanwhile in France, they have subsidiary elections on Sunday as well, and Mr Hollande, the new French President is embarking on a spending spree that is clearly beyond the French economy. Bear in mind that whilst the rest of the world accepts that people are living longer and the state cannot give pensions as they once did when we only lived "3 score years and 10", Monsieur Hollande's big step is to have the French retiring on a state pension at 60. This is a financially disastrous decision, however much some lucky French pensioners may like it.

Next week will be a very significant week for Eurozone politics.