Wolfgang Schäuble, the stalwart German finance minister is heroically standing up to Greek profligacy and slippery trickery by telling the Greeks they need to take a five year holiday outside the EZ.
The Finnish contingent are, quite rightly, standing their ground and do not think there is any merit to the Greeks staying in the eurozone.
The truth is, the Greeks overstepped the mark countless times and are completely untrustworthy.
The Greeks are now asking for 80 Billion euros on top of the 350 Billion euros they already owe, and with no guarantee they will reform their ways.
So who is right? Who is wrong? In this case, there is no doubt that thievery, lying, blackmail and underhand techniques by the Greeks have made their chances worse in negotiations.
The world has seen for itself what happens when greed took over Greece and they squandered all of the 350 Billion euros, with a population of only 11 million people.
The markets are confused, with a Grexit, they should be going up, not down, because the danger to the EU’s stability is eradicated when Greece is thrown out. Uncertainty, is obviously the factor for market jitters, but once concrete plans are unveiled they will resume their upward trajectory.
British anti-EU denizen, Ukip MEP, Nigel Farage supports the Greeks but he is only doing so because he is anti-EU. In truth, he knows that the Greeks have committed a grave financial sin, not only by reneging on debt liabilities but by squandering vast sums with cronyism, tax avoidance, nepotism and massive corruption. No country’s economy can exist in a healthy state with the levels of discrepancy and fiscal irresponsibility that Greece has shown.
The Greek contingent has been left with a choice, through their OXI votes, and slippery manoeuvres orchestrated by ousted former finance minister Varoufakis and naive PM Tsipras, whether to accept the new austerity deal where 50 Billion euros of Greek assets will be held by the EU as collateral also enduring heavily controlled austerity until 2057, or take the high road with effective expulsion from the EZ?
The numerous final, final, final meetings, the numerous final demands, and the numerous deathly scenarios eked out over the last five months of ridiculously time-consuming negotiation must come to an unholy end at some point.
Events move quickly in Euroland, one minute things are up, the next it’s all down.
CONCLUSION: Time for a Grexit, because without one, it would be time for a Eurexit. The EU and eurozone would be bolstered by Draghi’s QE and would limit contagion. The markets must see the strength with an EU stronger, leaner, losing the parasite sucking the very life blood out of its side.
If Greece stays in, the EU will die an unholy sorry death, eaten from the inside out.
These are the stark choices. Take it or leave it.
Talk of Finland leaving the EZ sooner rather than later has increased, with many in influential positions now reconsidering the costs and benefits of EZ membership and coming to the conclusion that a “Fixit” may be the country’s best option.
Consider the following factors. First, the other Nordic countries are outside the EZ and/or the EU and are doing fine economically and otherwise. Norway and Iceland have never joined the EU: The former has remained a success story as a resource-based economy; the latter suffered a severe financial crisis driven by the popping of a massive real estate bubble, but so did members of the EZ such as Ireland and Spain. Denmark opted out of EZ membership and is semi-pegging its currency—the Danish krona—to the euro. Sweden was supposed to join the EZ, but it never did and isn’t likely to join any time soon. Since none of the other Nordic economies are part of EMU, what are the benefits of Finland remaining a member?
Second, if Finland were to exit the EZ it might also be forced to exit the EU; however, it could keep most of the benefits of EZ and EU membership without any of the costs. Like Denmark, it could semi-peg its own new national currency to the euro (or to the deutschemark if the EZ were to eventually fall apart completely), thus benefiting from low exchange rate volatility, while keeping open the option of moving its currency up or down, if needed. It could even keep most of the benefits of free trade with the EU by establishing a free-trade agreement with the EU and/or with Germany, while not being subject to many of the other legislative and regulatory constraints that EU membership entails (even if access to EU markets requires being subject to many regulatory constraints). Or, it could try to negotiate remaining a member of the EU while quitting the EZ, as the EZ is now considering allowing member states to leave the EZ without surrendering their EU membership.
Third, by exiting, Finland could avoid the losses and costs that continued membership of the EZ would entail:
a) Finland would no longer need to contribute to the European Financial Stability Mechanism (EFSF) and European Stability Mechanism (ESM); after all, EU members that are not EZ members do not contribute to the two EZ rescue programs;
b) In the event of exit, Finland would also avoid potential losses deriving from the build-up of Target 2 balances in the core of the EZ, including Finland. Indeed, Finland’s Target 2 balances would be phased out upon exit;
c) Trade losses in the event of an EZ break up and the core sticking with the euro (which would sharply appreciate relative to the new currencies of exiting periphery countries) could also be reduced;
d) Since the EZ’s survival requires the core to take on even greater credit risk—via debt mutualization (i.e. Eurobonds), via a fiscal union (that may in part be a transfer union to poorer EZ members) and via an EZ-wide deposit insurance scheme—Finland could avoid these additional implicit liabilities by exiting before such risks are undertaken or materialize;
e) Finland’s potential GDP losses in the event of the EZ breaking up could also be lowered via the extra degree of currency and monetary policy flexibility implied by a return to a national currency; and
f) Some private unofficial estimates put the potential losses of Finland with continued EZ membership at between 10 and 15% of Finnish GDP.
Fourth, many social, business and political forces in Finland are skeptical of the euro and/or supportive of an exit. The most fervent euro-skeptic group is The Finns Party (formerly the “True Finns”). But even the broadly pro-euro National Coalition, the party of the current prime minister, contains opponents to the common currency, one of which is Finland’s President, Sauli Niinistö, who bemoans the fact that Finland bails out richer EZ members, yet is still pro-euro. Another party leader, Ben Zyskowicz, last week pointed out the EZ’s fundamental design flaws. For the time being, the forces formally supporting a “Fixit” are in the minority, but there is now significant internal debate on the pros and cons of membership. If Greece moves closer to exit and Italy and Spain end up on the verge of losing market access and requiring even more risky financial support from the EZ core, Finland may decide that the additional credit risk is not worth the benefit. Indeed, the country has already been the most vocal so far—in debates about the EFSF, the ESM and other aspects of the periphery bailouts—in requesting formal collateral or seniority for its contributions to the EZ periphery rescues.
For now, the ruling coalition is still firmly in support of EZ membership, but there are plenty in favor of an exit in the political opposition; even within the coalition, many are grumbling in private about the costs of EZ membership. A trigger to increase the chances of Fixit would be a decision by the EZ to increase the potential losses and credit risk of the core members—including Finland’s—via a fiscal and transfer union, debt mutualization and EZ-wide deposit insurance. At that point, the forces pushing for Fixit may get the upper hand.
Source: Economonitor
All nighter update—Greece now saying they dont want IMF involved. This means they plan to take the money and run. They dont want IMF breathing done their necks. lol scabs.
“Nigel Farage supports the Greeks but he is only doing so because he is anti-EU.” That is only part of the truth, he also likes democracy.