Greece again?

Par Robert Elman le 18 mai 2012

It has been two years and a snit, since I wrote about Greece, and the rest of the PIIGS.

Well it’s difficult to leave well enough alone.

Question: How can a five foot 7 inch Greek exit from a six ft deep hole that is built on quicksand? Answer: You can’t.

This hole with quicksand is the Greek living under the austerity rules of the ECB.

You get out of the hole by growing taller. Only through economic expansion can the impossible become the possible.

But how do you teach those who love to dig holes, that you won’t any longer put a shovel in their hand. Aye! That’s the rub

Europe is faced with a dilemma of massive proportions.

Turn off the monetary tap and Greece will have no choice but to begin printing Drachmas. Devaluation will occur immediately and the savings willdisappear, prices will skyrocket and the salaries will have to increaseddramatically to compensate for the loss of purchasing power etc, etc,

Greece, which will owe the ECB about $400 bln. Euros will be unable to pay or will have to pay in newly printed Drachmas. Ka ching.

Other European nations fearing the worst will experience a run on theirbanks, which may be forced to close, for some period. This will only heighten the tension and the ensuing chaos.

There will be an election in June and, it seems almost for certain that the leftists will win hands down, as they challenge the might and will of Merkel and the rest of the ECB gang.

They will win because, to give in to the austere measures imposed upon them, in order to obtain funding, only deepens the hole, and destroys the already thin fabric of hope.

So what can be done? ECB would love to stop enabling the Greeks, but are afraid of the contagion that might follow, so they will keep Greece around and will soften their stand. They will provide the necessary money and allow for some growth to enter the picture. But they will have to carry a big stick and a prayer book.


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