Germany pushes Greece to the brink in dangerous brinkmanship

[Hawkowl]

"...German finance minister Wolfgang Schauble said there will be no more money until Grecce "actually does" what it agreed to do. "I understand that there is resistance among the Greek population to austerity measures. But in the end it is up to Greece whether it can fulfil the conditions necessary for membership of the common currency. We offer no discounts," he told Deutschlandfunk. The wording has been taken as a threat to eject Greece from EMU, though is there no legal mechanism for such drastic action.

Dutch finance minister Jan Kees de Jager said the Netherlands "will not participate" in further payments to Greece unless it secures the go-ahead from the EU-IMF Troika, which left Athens abruptly last week after talks broke down....

Harvinder Sian from RBS said the sovereign humiliation of Greece by EU creditor states smacks of colonialism and can expect to meet fierce resistance. It may be tempting for Greece to precipitate a "hard default" before the second rescue package comes into force and switches a large stock of debt contracts from Greek law to English law, he said. "




http://www.telegraph.co.uk/finance/financialcrisis/8751180/Germany-pushes-Greece-to-the-brink-in-dangerous-brinkmanship.html

[xchrom]

1. Invisible rec. Nt

[Hawkowl]

2. People just don't realize

IMO, this is the BIGGEST immediate problem in the world right now. If Greece defaults and the EU comes apart, we immediately see Great Depression II and destabilization of most of the Western Democracies, which would also destabilize China, etc. etc. A hard Greek default will take down many western banks (including the US). The recent riots in Europe and the Middle East are just an itty-bitty preview of things to come.

The bond yields on Greek bonds indicate that a Greek default is almost 100% certain. It is just a question of how soon, and how to manage the damage. It is an economic time bomb and no one knows how to defuse it.

[TexasTowelie]

3. There are a few people that get it.

The domino effect of a default will affect the entire EU since France, England and Germany hold hundreds of billions in Greek debt. The banking structures in France and England are already stressed and could topple if they write-off the debt.

I'm surprised that riots haven't occurred in the US already. With the growing disparities in wealth, the upper class needs to realize that the social safety net programs appease the demands of those less fortunate. This concession to fund the safety net programs has the effect of keeping the upper class entrenched in its power base.

[no_hypocrisy]

4. Germany was strong-armed after the First World War to repay England and France

(who then repaid American investment banks) and the shoe is now on the other foot with Germany treating Greece like the Weimar Republic. Same game, different players.

[Yavin4]

5. And That's Why I Own Gold

Bubble. Schmubble.

[golfguru]

6. Why should Germans send good money to rescue a basket case Greece?

Greece has borrowed and borrowed and spent itself into dire straits.
Bankruptcy is inevitable. Why blame the Germans for not lending more
money to the bankrupt Greeks?

[Hawkowl]

8. Not blaming the Germans

The Euro has worked out well for Germany. They get to loan money to the Mediterranean countries so they can buy German goods. This kept Germany at full employment and generated a healthy trade surplus. Unfortunately, Germany and other wealthy Northern European countries appeared to get greedy and loaned too much money to generate ever more profits for their domestic industry.

Before the Euro, Greece's currency, the Drachma, would have depreciated making all those Northern European goods too expensive, and Greece wouldn't have been able to afford to continue to borrow. Germany and others would have done what the Japanese did to the US, i.e; constructed manufacturing plants in Greece to make the goods affordable to the Greeks.

However, with no balancing mechanism of floating currencies....not only are the Greeks going bankrupt, but the rest of Europe will go into recession because Greece can't buy their stuff anymore, and they are going to have to write off about 70% of the loans to Greece. Banks are going to go bust and not lend money to ANYONE to buy ANYTHING (hmmm, that sounds familiar?)

In order to solve the problem, Greece is probably going to have to leave the Euro so they can devalue their currency to where it belongs to generate investment and trade.

Of course, this is going to bust some US banks, which means......!

[barb162]

7. Greece pushed Greece to this point.