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Response to Tansy_Gold (Original post)

Wed Dec 5, 2012, 07:18 AM

18. The German bloc will have to take its bitter medicine in Greece OCTOBER

 

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100021059/the-german-bloc-will-have-to-take-its-bitter-medicine-in-greece/

...The cumulative error is colossal....The IMF simply lost its political way in Greece. It knew or should have known from dozens on rescue operations around the world that Greece would crash into a self-feeding spiral without a rapid debt restructuring and a devaluation. Both channels were blocked because of the sanctity of the EMU Project. (Though default would come later, in a capricious fashion, singling out pension funds, insurers, and private creditors only). The policy never had any chance of working for Greece. The IMF under Strauss-Kahn went along with the EMU agenda, pretending all was well, sacrificing the Greeks to gain time for the European financial system to build up safety buffers...

EVIDENTLY THEY NEVER HEARD THAT NO MAN IS AN ISLAND, AND NO NATION, EITHER

...creditor countries are trying to maintain a ridiculous illusion for their own internal political reasons. Greece cannot claw its way out of a 190pc of GDP debt load. The official haircut is coming sooner or later, and it will be an explosive political moment.

Chancellor Angela Merkel will have to account for direct losses to the Bundestag. A line will have to be written into the German budget covering the X billions of euros. Other line items may have to be cut. Welfare support for Germans, perhaps. Having insisted for over two years that German taxpayers face no risk of loss on the Club Med rescue packages and having indeed told them it generated a profit she will have to explain why this has gone horribly wrong.

No doubt she will try to delay this awful moment until after the German elections late next year. But the calendar of simmering revolt in Greece is not in her hands. One of the three parties in the pro-Memorandum coalition has already refused to go along with the budget plans. The Government majority is thinning fast. My guess is that Mrs Merkel will be forced to admit to the German nation that contingent liabilities are turning into real liabilities long before her elections.

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