Sunday, January 29, 2012

Greece Elects to Stay Independent

These talks are insane. Greece rejects call for eurozone to control its budget -

The Greeks and the IMF are still trying to convince private creditors that 50% = 70%. Needless to say, the investors who hold Greek debt can do math at least well enough to pass on that.

Now, the EU (and the IMF) want Greece to hand its budgetary functions over to Brussels.
The Greek finance minister has lashed out against a German proposal for its budget to be controlled by a eurozone commissioner as a condition for receiving a second €130bn bail-out
This "commissioner" (I think better name might be "Viceroy") would be able to veto Greek legislation involving spending. Needless to say, the Greeks aren't too keen on that idea.

Of course the Greeks have to bear some of the blame.
Greece’s failure over the past 18 months to implement structural reforms agreed with its partners has made creditors doubt whether Athens can make progress without “hands-on” international assistance.
If this really a condition of Greece getting the next 130 billion Euros, then I think the end is near. For the Eurozone, anyway.

And then of course, the Greeks need to deal with the fact that their economy is basically uncompetitive with the rest of Europe.
One main sticking point has been demands by EU and International Monetary Fund negotiators for a 25 per cent cut in the €750 minimum monthly wage and the abolition of an annual bonus paid as 13th and 14th salaries – measures that would improve competitiveness and bring Greece in line with minimum wages in Spain and Portugal.
Don't expect to see that change.

This mess could have been more than half over, if the brain-trust know and the EU had just let Greece back out of everything gracefully. It would have been painful (as if it isn't already - they are in the 5th year of recession, with things getting worse.) They could have devalued their currency just enough to make summer vacations in the Greek Isles all the rage. Which would have been a boost to their economy not a drain on it.

But the brain-trust is incapable of admitting that they made a mistake with Greece. And Greece is incapable of owning up to the mistakes. (Indeed, they are prosecuting the guy from their statistics office who told the truth.)

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