By John Galt
September 11, 2011 – 23:35 ET
Ambrose Evans-Pritchard unloads another masterpiece as the European Union is on the eve of destruction. From the UK Telegraph print edition in the morning:
First we learn from planted leaks that Germany is activating “Plan B”, telling banks and insurance companies to prepare for 50pc haircuts on Greek debt; then that Germany is “studying” options that include Greece’s return to the drachma.
German finance minister Wolfgang Schauble has chosen to do this at a moment when the global economy is already flirting with double-dip recession, bank shares are crashing, and global credit strains are testing Lehman levels. The recklessness is breath-taking.
Woah, woah, woah…wait a second….
This is not what the US financial nor mainstream media is reporting (well, I have been with a few others).
It only gets worse:
If it is a pressure tactic to force Greece to submit to EU-IMF demands of yet further austerity, it may instead bring mutual assured destruction.
“Whoever thinks that Greece is an easy scapegoat, will find that this eventually turns against them, against the hard core of the eurozone,” said Greek finance minister Evangelos Venizelos.
Greece can, if provoked, pull the pin on the European banking system and inflict huge damage on Germany itself, and Greece has certainly been provoked.
No, Greece can not, and with all due respect, this is where I must disagree with the esteemed reporter. Greece is not the proverbial pin in the grenade; the bondholders in Germany and world financiers are. THEY are the deciding factor, not the insolent Greek government.
Some of the statements from the piece and other sources though, are somewhat disturbing:
Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been “Unconditional Capitulation”, and “Terrorization of Greeks”, and even “Fourth Reich”.
Duh. I’ve said the Germans would have saved millions of lives during the 1930′s and 1940′s had they used banksters instead of Stormtroopers. The sad part of that sarcastic statement is that it is factual in hindsight.
Let us be clear, the chief reason why Greece cannot meet its deficit targets is because the EU has imposed the most violent fiscal deflation ever inflicted on a modern developed economy – 16pc of GDP of net tightening in three years – without offsetting monetary stimulus, debt relief, or devaluation.
This has sent the economy into a self-feeding downward spiral, crushing tax revenues. The policy is obscurantist, a replay of the Gold Standard in 1931. It has self-evidently failed. As the Greek parliament said, the debt dynamic is “out of control”.
We all know that Greece behaved badly for a decade. The time for tough love was long ago, when the mistakes were made and all sides were seduced by the allure of EMU.
Even if the Papandreou government met every Troika demand at this point, it would not make any material difference. Greek citizens already understand this, and they understand that EU loan packages are merely being recycled to northern banks.
These excerpts only hint as to the final conclusion which I reached many years ago:
The European Union and all other fiat currency based systems are eventually doomed, some sooner than others.
God help us during the next 7 years.
Click on the title above to read the rest of the article.