The EU Bailout!
German Chancellor Angela Merkel has questioned whether Greece should have been allowed into the eurozone in the first place.
She said the decision “may not have been scrutinised closely enough”.
Indeed, Angela. Indeed it may not, especially as Goldman Sachs organised some “credit swaps” (now illegal) that helped Greece disguise the size of its deficit.
Perhaps something is lost in translation, but why the “may”? Why can’t people bring themselves to call a spade a spade? The “may” is totally misplaced, isn’t it? So why say it?
See also this recent piece on the BBC.
By Chris Snuggs
Learning from Dogs 
Some spades are of course harder to call spades than others and if Angela Merkel finds it hard think about the difficulties of Sarkozy who I believe has not informed France yet, but which was disclosed yesterday in FT, that their current exposure to Greece (50bn€) is even larger than that of Germany (28bn€) primarily because their insurance companies stocked up on 14bn€ more of Greek debt.
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As I said all along, the French were more exposed. Everybody not in the USA knew it all along: the numbers have been out there.
Angela is also carefully disingenuous. People knew about Greece all along, even well before it got in. But Greece is a symbol, etc… And then there was the Olympic Games, etc. At the time of Greece’s entry everybody could see that the conversion rate was wrong, and that it would cost dearly to Greece.
Anyway, civil servants are paid a 13th and 14th month, and that is on the way out…
What people did not know, was Goldman Sachs…
Complaints about Greece are disingenuous, on the European side, and on the American side. Americans are petrified that the euro is coming down to earth to wage battle. And many Americans are just plain anti-european, besides knowing no history, as I explained in a post on my blog, last night,http://patriceayme.wordpress.com/2010/04/30/the-euro-is-a-trap-for-american-supremacy/, having been infuriated by Paul Krugman’s lack of sophistication,http://www.nytimes.com/2010/04/30/opinion/30krugman.html …
Belgium and the burka, the Gulf of Mexico, and its sea of oil, on the surface, are much more important subjects. It will be interesting to find out if hurricanes become endangered too, as they strive through all that oil… The USA has risen above a sea of oil, but it is harder to swim in it…
PA
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I hope you are not arguing that Europe´s distress has been caused by Goldman Sachs. Very much more guilty were those bank-regulators who allowed banks to stock up on sovereign debts without requiring them to hold any significant capital.
I at least would wish for the Euro to hang around… why not? But the fact is that the Euro was a back-door strategy to bring on more political integration in Europe that has now gone very wrong and if not handled with care might explode. And so I would pose the question differently… What should Europe focus most on… to keep the Euro or to keep the EU?
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Hello Per
Well, the main blame is the Greeks themselves, and by “Greeks”, I do not include the young, who have every right to be absolutely furious with the greed and stupidity of their elders.
However, this site is all about integrity. I vastly respect your superior learning and wisdom on economics, but it seems to me like this: The Greeks knew (as did everyone else in fact, and Brussels leaders have only themselves to blame if all this is unravelling) that their economy was no way on or under the required 3% deficit level demanded by the rigorous Germans for entry to the euro. They therefore cooked the books, part of which wqas arranging this infamous “credit swaps” with the help of GS. This was (pls correct me if wrong) an attempt to massage the figures. That’s a kind way to say it, but I no longer feel kind. The right way to express this is that they defrauded the rest of Europe. And it defies belief that GS in arranging these “credit swaps” didn’t know what was going on. I assume they didn’t do it for nothing so they in fact conspired in fraud.
Or how do you see it?
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I would agree but only in the case that the Greeks knew that the cooking of the books was in actual violations of the rules and not part of normality… and of this I am not sure.
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Good try Sarko. Get Germany to bail out Greece thus giving France some chance of getting back its vast investment in the latter. Brilliant. If you can always get someone else to take the risk and pain then you are laughing, as indeed the Greeks have been doing until the gravy train has now hit the buffers.
Having lived in France for ten years I only know that – as in Britain – the government wastes far too much money in a multitude of ways and is no respecter of the old-fashioned principle of balancing the budget.
Public opinionin Germany seems very much against any kind of bailout. I am not sure what is happening in France. Are they as well informed about Greek corruption and total undeservedness of help?
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