I follow the Greek tragedy like a lot of people on television watching the verbal conflict of politicians and the Molotov cocktails as violence erupts on the streets, to a certain extent I understand that, people from different sectors of society expressing their views in the only way they understand or how to get the media’s attention, violence always grabs the media.
What I do not understand is the ECB and the Euro zone and how it works especially in relation to individual countries. I believed that all the rules and actions of these institutions should operate and apply equally to all countries irrespective, but it doesn’t seem to work like that, its more like a club where an all-powerful clique at the top table decides who gets what, for instance quantitative easing to help economic growth this applies to all the large successful economies but does not apply to Greece and Latvia, surely if you want to help economic growth these are the countries you should be helping not Germany they don’t need any help and as a consequence German Bunds are at historical lows, minus .25% while Greek bonds are at 25%, it doesn’t make any economic sense, surely the rules apply to everyone Germany has been running a huge current account surplus for the entire existence of the Euro, nobody complains about that, how do they square that in the stability pact.
I know for the last six years politicians in Greece have been playing fast and loose with Europe’s money with IMF money and with anyone else’s they could get their hands on but that is not the fault of the Greek people, that is just bad governance and these are the same people the ECB want to get back in power, the very people who wasted the last six years while other countries sorted out their economies.
The Greek people need good governance but they have to play their part a strong economy is where everyone puts something in, they pay their taxes and consequently get good services in return, I heard an analyst say the other day that Greek debt was 320 billion but that is way understated, it is between 5+600 billion around about three times the GDP of that country, it is just going to die, suffocate from lack of money.
The Euro is a political creature it has very little to do with real economics because the structures do not support it, there is no centre economic core, without taxation from Brussels it will always be fragile, two or three strong countries does not an economic entity make, there are too many hangers-on hoping for crumbs from the table, either fix the basic problem direct taxation or scrap the whole idea.
The Euro was invented Fifty years to soon the countries were not ready for it, France likes it they can spend all that German money and not pay taxes and reorganise their economy, as I said like a club for the rich and famous.
(c) Michael Douglas Bosc