2 responses to “Greece on Fire: Political Action – 5-14-2010”

  1. Sam Rose

    Mike Skory wrote on facebook:

    “I think the Greek collapse was do to this complicated concept: THEY SPENT MORE THAN THEY TOOK IN”

    THERE’S MORE TO IT THAN THAT

    It is true that their are many in Greece who never even pay their taxes. Yet, there is evidence that there were also some companies active in Greece that were treating the economy like a casino, and who are now sitting in top of a bunch of money they did not used to have, that used to be in the greek economy.

    Eurozone regulations have allowed this to happen:

    http://finance.yahoo.com/tech-ticker/article/476698/Blame-Germany-for-Greek-Drama,-Galbraith-Says:-“Extreme-Brinkmanship”-Cripples-Europe

    quote:

    “A Critical Flaw: The bigger issue here is the Greek drama has exposed the “critical flaw” in the design of the euro zone, he says. Specifically, Germany’s reliance on exports (vs. internal consumption) makes it impossible for less-competitive nations like Greece and Portugal to export their way out of a recession, especially since all EU nations share a common currency and (restrictive) central bank.

    “As long as the Germans don’t admit responsibility for destabilizing the system…everyone else will be in an unstable situation from which they cannot escape,” Galbraith says. “There’s a tendency to weaken the [euro zone] economy by imposing deflationary policies.”

    In sum, the Greek bailout may alleviate the immediate crisis but is far from a “permanent solution,” the economist says. European officials will be “fighting fires continuously until they address the constitutional problem” of the EU.”

    (endquote)

    The laws of EU are set up to make Spain, Portugal, Greece the export markets of Germany. This very likely came about because of companies in Germany influencing the construction of these rules (EU has allowed lots of corporate infiltration into all sectors over the last 5-7 years and is now working to undo it).

    There’s also the problem of Credit Default Swaps originating in France and Germany capitalizing on people in Greece, Spain and other EU countries (I am sure this sounds familiar to Amerians…)

    What do you think is going to happen when Greeks realize that the rules have been stacked against them in EU trade regulations?

  2. Bonnie Bucqueroux

    Thanks for that, Sam. It makes the role of Germany more comprehensible. I have wondered about trying to tie such disparate economies under one currency (it reminds of when we were admitting countries into NATO even though I could see no reason for it). I saw the explanation the other day that, even though Michigan cannot float a separate currency when it falls into recession, it has the full faith and more importantly the credit of the U.S. behind it. Not necessarily so for the members of the EU. There is an interesting interview with Trichet, the head of the European Central Bank, in Spiegel today – http://www.spiegel.de/international/europe/0,1518,694960,00.html Let’s see if the EU can survive this current crisis. I am only surprised there is not more fury at the US for leading the western economies down the derivative path.

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