I never thought the Euro made sense over the very long term, though surely people have made money trading it over the recent years. I have no idea if the Greece debt crisis, or the problems in Portugal, Italy and Spain, spell the absolute end or not. Probably not. As Niall Ferguson said on Kudlow's CNBC show Friday night, I wouldn't want to be a German taxpayer right now.
John Dizard's weekly Financial Times column is about Greece. A couple of good parts:
The history of foreigners providing advice and supervision to the Greeks, or even appearing to do so, is not a happy one. The German military government of Greece during the war repeatedly attempted to stabilise the Greek drachma, in large part because its soldiers were paid in the local currency. Even though large amounts of criminally obtained gold were used for the purpose, by the end of the occupation hyperinflation had destroyed the drachma. Five years of civil war followed.
On the current mess:
I had a word with a friend who led IMF missions to Argentina in the 1980s, and then did sovereign debt analysis on Wall Street. He says: “If I were at the European Commission or the IMF I wouldn’t want to touch the Greek problem. You will be associated with deflation and depression.”
There is no good solution here. The best Brussels can do is limit the economic and political damage by adopting the lowest possible profile.
Read it in its entirety if you can.
"You will be associated with deflation and depression."
Why is that? I am not sure if I understood the article well. Please kindly explain.
Posted by: NL | February 09, 2010 at 12:35 PM
I agree that Greece should be allowed to default.
Living beyond you means in not sustainable and why should someone that has managed his finances better have to come to the rescue.
Greece is 2.5% of EU GDP, much less than California's part of US GDP and no one talked of a USD problem when California had credit problems.
I got so worked up about this I wrote this
Would you let your brother declare bankruptcy - Greece in the EU
http://www.eurosharelab.com/section-blog/214-economy/345-would-you-let-your-brother-declare-bankruptcy-greece-in-the-eu
Posted by: Tim | February 10, 2010 at 10:14 AM