It is is crunch time for Europe. It also crunch time for the ECB and Greece. Time is running out not just for Greece and the March bond maturity but for Europe too. There are plenty of signs that many European governments are having second thoughts about the PSI and the second rescue package for Greece. This is not entirely surprising. The attitude of the Greek government was not exactly encouraging for Europe. Watching the live debate one could not help but despair. Speaker after speaker, minister after minister spoke of how bad the new MOU is for Greece. They only vote for it to get the money and avoid exit from Europe. Even the finance minister Mr Venizelos called it a choice between a bad and something worse. It was left to the PM Papademos to carry the burden of defending the positive aspects of it, which Greece needs to reform in order to survive. One can be cynical and say that this is just political posturing and that once they get re-elected they will follow Troika’s orders. This is not how democracy is supposed to work. This is exactly the kind of attitude that brought Greece to the brink of collapse. It does not instil confidence to the political system.
As such many European governments are coming to the conclusion that they should let Greece go.
- Parliaments must vote for the funds needed to execute the PSI
- Europe must relieve ECB from their GGB bonds
Many ask the question, is the 130billion enough? Can Greece achieve the targets of 120% debt to GDP by 2020? Even if they succeed would that mean another bailout later on? One cannot know the answer to this unless it happens. Truth is that it would be very hard to achieve these targets unless the reforms kick in fast. The alternative of not giving the money and producing a failed state in Europe however is not ideal either. Proponents of this scenario should know that history does not move according to plans and conspiracies.
Some time ago we proposed an improved version of the PSI that would give Greece and Europe a better fighting chance. We proposed that:
- Greece is given a loan to buy out the ECB at COST
- Then add to the PSI bond swap the option to cash out at around 30cents.
It is not news to say that anti-European forces are on the rise both in Greece and in other countries. We also witness anti-Greek feelings to be on the rise. Already we see the worse kind of yellow press from a variety of Greek and European trash papers. Germans depicted as Nazi’s and Greeks as lazy pests. The descendants of Joseph Goebbels are in full swing. Many European leaders are sensing the mood and are silently encouraging it. Europe must put an end to this. It poisons Europe and endangers the future.