Monday, June 20, 2011

Robert Peston back to his old self

Greece crisis: Not Europe's Lehman (it could be worse)

"However, if this eurozone brinkmanship nudges the Greek parliament to reject the further budget squeeze, we'll be closer than is remotely prudent or sensible to a 1930s-style financial and economic disaster. "

Posted by voiceofreason @ 10:50 AM (2175 views)
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11 thoughts on “Robert Peston back to his old self

  • When I saw the latest Brussels finger waving on the news this morning I was both incredulous – and amused.

    These people have become so detached from democratic accountability, they seem totally blind to the popular outrage in Athens, an outrage that has gone way beyond the ‘usual suspects’, and is now embracing the Greek population as a whole.

    If the Athens parliament bows down and passes the austerity measures demanded, there’s more than a passing chance that the parliament itself will be stormed by a lynch mob.

    The very act of making these demands in the way that they have, makes it virtually suicidal for Greek politicians to comply.

    One of the key weaknesses of the EU is that those in charge have no moral authority to rule. They were not voted into office, and they did not win support for their manifesto. They are not held in high regard by the populace.

    Consequently, they are in a poor position to reach out and appeal directly to the people of Greece.

    – But damningly, they have not made the slightest attempt to do so.

    The exit of Greece from the eurozone is not in itself a very big deal, but the market expectation of contagion would be almost impossible to suppress.

    At the end of the day, the euro was a mistake, and the administrative structures of the EU have morphed into a dragon that needs to be slain.

    The time has come for Europe’s national governments to restore their sovereignty, and take care of their own.

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  • Uncle Tom ,

    Absolutely agree with you .

    I was born something like a free man and am now a prisoner in a European superstate I don’t want and had no say in .

    Recently they’ve dropped all pretence of being legitimate and even admit they don’t bide by their own rules – in that bail outs contravene them .

    About time a few of our treacherous politicians were swinging from lamp posts too .

    This whole issue of contagian just goes to show how insane our financial systems are . A country like Greece defaulting on it’s debts should have not have that big an impact on the global or even European financial system .

    The fact that the aggregated net exposure is supposed to be greater than the default itself is evidence that what we are really taking about is insurance fraud – one which the taxpayer will be forced to underwrite – again without having any say in it .

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  • general congreve says:

    @1 – Well said. I am happy to volunteer the golden sword with which to slay the dragon.

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  • I wonder what odds William Hill are offering on a military coup in Greece.

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  • Peston talks about what happens if the Greeks etc. fail to comply with austerity/privatisation but we have to weigh the forces this would unleash against the cost of Greek/PIGS compliance with EU demands – years of debt deflation and unemployment, mass emigration of the young etc. – and more austerity down the line to pay for today’s bailouts. In the end, debts that can’t be paid won’t be paid, even if it takes popular uprisings to prove the point.

    History shows that when governments try to ignore popular outrage in order to meet their obligations to foreign creditors it’s usually the home team that wins, and the smart money (financial markets) tend to bet on that home win. For evidence of this see http://www.project-syndicate.org/commentary/rodrik57/English

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  • “debts that can’t be paid won’t be paid”

    Icarus – agree – and piling on more debt to stave off the inevitable is both stupid and irresponsible.

    And yes, the home team almost always wins, because unless you run tanks into a country and enslave the nation, it is their sovereign right to have the last word…

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  • All the politicians want to do is keep the gravy train going that little bit longer before all their limos have to go back, no politian wants to go down in history as the one who pulled the trigger and put the sorry beast out of it’s misery.

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  • Some Greek’s have made a documentary about the debt. Turns out it can’t be blamed on lazy tax dodging Greeks after all. Amazingly that point of view turn out to be lazy racism. Whodathunk. Shenanigans in high places seems to be the biggest problem. And they have a viable plan for dealing with the problem which might involve dis-inviting the IMF from the party. This is definitely worth watching.

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  • re fubar’s ‘shenanigans in high places’

    Nearly every country which has had big debt problems had strong ties between government, big business and foreign lenders while the bulk of the population were kept in the dark. If we’re kind and leave out the word ‘corruption’ we’d say that big business (‘oligarchs’) took big risks, investing in ambitious expansion plans, and foreign lenders financed the risky ventures knowing that the risk-takers had government and taxpayer backing. The oligarchs built huge empires on debt (‘creating employment’ – until the overborrowing ended badly) and the troika of oligarchs, banks (local as well as foreign) and government lackies cashed in on the upside. Guess who took the downside on the chin. And guess who is mad as hell and won’t take it any more.

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  • Notice that the veteran politicians who like to see themselves as bellwethers are speaking out now to say that it’s the end game for Greece’s membership the eurozone.

    These guys retain good contacts, and don’t like to be proven wrong.

    – Soon, I think..

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