On Grexit, war, lies, the future of Europe and other things that make you go hmmm
Another must read by Grant Williams and things that make you go hmm.
“I don’t envisage, not even for one second, Greece leaving. This is nonsense, this is propaganda.”
– JEAN-CLAUDE JUNCKER, Chairman EuroGroup FinMin Committee
“When it becomes serious, you have to lie.’’
– Jean-Claude Juncker, Same guy
“‘Exit would bring down the whole house of cards, with one state falling after another: it would reach Portugal, Spain, then Italy and France,’’
– Romano Prodi, Former EU Commission chief
As I have said repeatedly over the past year or so in these pages, it is only a matter of time before Greece is forced to leave the EU and abandon the euro in favour of a return to the Drachma. The rationale of trying so desperately to keep the Greeks inside the construct was flawed from the beginning as political desire was allowed to fog the simple mathematics of debt and a rigid belief that markets could be bent to the will of politicians subsumed the reality that those mar- kets care not for words, but only for numbers— numbers which have been growing ever more frightening by the day.
The only options now left for Europe are either for the ECB to assume the debts of Greece (and, once that were done, most likely Portugal, Ire- land, Italy, Spain and, one day, possibly even France), guarantee them and print the trillions of
euros necessary to underwrite them or, should that prove unpalatable to the German elector- ate elected heads of the continent, allow Greece to leave and risk the contagion that such a prec- edent would set—contagion which would mean the printing of trillions of euros needed in order to compensate for the massive imbalances in the Target2 payment system and stop the entire European banking system from imploding.
Either way, somebody, somewhere is going to have to come up with trillions of euros and ulti- mately it won’t matter what the German elector- ate might think about it as they don’t go to the polls until 2013.
Full must read Hmmm May 20 2012