Greece warns that it may be broke shortly after its elections -- shock, right? It appears decision time is near, so here's the multiple level political test (and a chance to show political courage through leadership):
Level 1: If the "troika" (ECB, EC and IMF) do not provide any additional loans then Greece, then they have to proceed with the conservative theory of pure austerity where one can not spend no more than one takes in, or exit the Euro. With less than two weeks before Greek elections (again), the troika has not yet come up with an alternative to austerity -- will they?
Level 2: Greeks don't want to leave the Euro, but others within the Euro want them to leave. It never gets old that humans show a propensity to state that they wish to have their cake and eat it too. It's either that or they're all confused about what would happen if Greece exits the Euro -- something no doubt the popular media might be to blame for. Greek and Eurozone politicians have to decide which lead to follow: the voice of the people or the intention of the people.
Level 3: There was just a hint of a compromise solution the other week, when the idea of a local-level Euro currency - the nicknamed Geuro - was floated. It's the most common sense approach if the Greeks really want to stay within the Eurozone, but so far no one has bitten on the lure. If something this sensible cannot gain traction, what exactly do Euro leaders have in mind -- same old, same old, cross your fingers and hope for the best?
I vote no confidence in leadership -- I expect same old, same old, cross your fingers and hope for the best. They will settle for Eurozone bonds, which does nothing to solve the underlying problem of the labor, real estate and commodity price mismatch that has led to the BoP regression for Greeks, Spaniards, Italians, Irish, Portuguese and others.
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