The polls are of very little value. I’ve seen recent polls in Greece with 70% in favour of the Euro.
The only funny thing is the comparative high popularity of the Euro in Germany .- the Euro is definitely not a German idea. Giving up the D-mark was part of the ransom for German reunification (East + West Germany).
If the Greeks reinstates the Drachme – which they are very welcome to do. What will change?
a) Greece is running a deficit, so they need to issue sovereign bonds to cover that deficit.
b) Who on earth are going to invest in those bonds? Insane Russian billionaires are few and far between. No sane investor will believe they will see any of their money again – let alone the promised exorbitant interest.
c) Greece will have to devalue the drachme on a day to day basis. Any exporter to Greece will demand being paid up front – and not in monopoly money. The Greek economy will not only slow down further – it will come to a screeching halt.
d) The Euro that has run out of the country will be smuggled in and changed into Drachme – or they can’t be used in Greece.
e) Every pensioner and public employee will be paid in worthless drachme. What can they buy for the Drachme? Nothing? Olive oil and feta cheese – an the occasional clove of garlic. Gas for the car? Are You out of your mind? Who will part with precious petrol for drachme?
No, by de facto defaulting their debt with a haircut of 75-90% (depending how you recon) they have cut themselves off from the international money market. What do You think will happen to an american pension fund manager that invested the money entrusted to him even at a monthly interest rate of 10% – execution methods from the indian wars would get a renaissance. Greece can only get the absolute minimum of credit from ECB – or rather the EFSF – but that supposes they stay in the Euro.
Greece is out of options.
Furthermore tracking any of that money that has fled Greece will demand the fullest cooperation of not only the ECB, but all the European CB. That will be given, as that is the only chance for Greece to tax these money properly.
Debasing your currency is not a good idea, if you don’t think you can export more. For a net importer debasing your currency will only lead to rampant inflation (as the one China is on the verge of).
I saw in “Die Welt” today, that German vacationers are advised to stock up on Euroes.
Jörg Asmussen of the ECB may say all he want that it is in the hands of the Greeks if they want to remain in the Euro-zone. But he knows better than I do, that would be the worst solution for Greece. Give them a couple of months of utter chaos and they will come crawling and beg for a German administration to be put in place in Athens. Already they can’t pay pensions and public salaries at the end of June – The ECB loans are only doled out if there is proof of performance.
The European resistance to the EU and the Euro comes mainly from three fronts:
1) The old communists and their nut-case dreamers that fear for their well stolen privileges.
2) Semi- and total fascist right wing immigrant haters that want their “RIGHTS” respected.
3) Bank muppets that call for free roaming of the banks.
These groups might get some influence in PIGS, but otherwise?
Today in Denmark the Prime Minister is supposed to have presented a plan – a plan that has no a priori majority. The only way it will get a majority is for the government to link up with the Liberals. As the Liberals have no particular wish to save the government, any compromise will be bought dearly – perhaps so dearly that the government will split. We’ve had out of turn elections before – elections the Social Democrats are standing to lose – big time.
You should really note what Lagarde said about the split between France and Germany: There isn’t any – ok Hollande will have to run from any promises he made during the campaign; but that has been seen before. Just the same in Denmark: Helle Thorning-Schmidt hasn’t delivered on anything.
The only ones to gain on this is the ECB that will buy the Spanish Bonds at a discount.
