Are eurozone leaders using phony crisis in attempt to sell Greeks and others down the river?
No 324 Posted by fw, November 3, 2011
Abid Ali
“We had a deal of sorts from the eurozone leader, but it was a terrible deal for Greece. Now it seems the Greek Prime Minister George Papandreou has flown back to Athens, and in the cold light of the day, realized he and his people had been sold down the river. Hence a referendum. . . . The German nation doesn’t want to bailout anyone. By coming forward with an incomplete deal the pressure is on Italy, Spain and France to find more austerity measures. It’s the German way of keeping the house it built in check, let the markets (bond investors) demand more interest of new bonds sold.” —Abid Ali
Abid Ali, business editor for Al Jazeera, alleges that eurozone leaders are strong-arming the Greeks to accept a deal that would effectively sell them down the river. You won’t soon find Ali’s critical analysis of the deal in many mainstream EU or North American media outlets, which is precisely why it has found its way onto this blog. Ali’s article appears below with my minor formatting changes, added subheadings and text highlighting. To read the original piece click on the title below.
A bad deal for Greece, a bad deal for China by Abid Ali, Al Jazeera, Nov, 1, 2011
Papandreou eventually realized the eurozone leaders were selling Greece down the river
We had a deal of sorts from the eurozone leaders, but it was a terrible deal for Greece. Now it seems the Greek Prime Minister George Papandreou has flown back to Athens, and in the cold light of the day, realized he and his people had been sold down the river. Hence a referendum.
Merkel’s series of incomplete solutions keeps bond interest rates high and investors happy
You see, German Chancellor Angela Merkel wants to keep kicking the can down the road. There is no legal framework to stop eurozone nations spending beyond their means. And the German nation doesn’t want to bailout anyone. By coming forward with an incomplete deal the pressure is on Italy, Spain and France to find more austerity measures. It’s the German way of keeping the house it built in check, let the markets (bond investors) demand more interest of new bonds sold.
Greece’s overblown debt “crisis” is calculated to make us believe that it could topple global markets
Merkel and French President Nicholas Sarkozy may not want to read this: but can you believe the world’s biggest and richest trading block is begging China for money? Can you believe Greece — a nation that represents less than 2 percent of the eurozone economy, that has less than half the assets Lehman Brothers had when it collapsed, has the ability to trigger a global financial and economic crisis? This is a containable problem. Yet it would appear that Germany, one of the world’s richest nations, hasn’t the political will to say: we want the euro to succeed.
Germany as a nation has benefited from the euro. Its economy would have been dragged into recession if it still had the Deutschemark. It would have felt more pain than Switzerland and Japan are experiencing right now. Both nations have seen their currencies hit record highs against the dollar, both are seen as safe havens in these turbulent times.
The euros don’t add up and Merkel appears to be playing “gotcha” with Greek lives
Germany spent 1.3 trillion euros on reunification. And now it can’t find 150 billion euros to aid Greece, while Berlin is willing to guarantee 220 billion euros in the eurozone bailout funds. Merkel is willing to stand by as Greece faces rising suicide rates, hundreds of thousands losing their jobs, pensioners are being pushed into poverty, and rising homelessness.
Tales are spun while Greece’s simple debt problem remains wilfully unresolved
Meanwhile, countless jobs are on the hook in Switzerland and Japan as their currencies come under pressure. Millions of jobs in Asia could be lost as the global economy slows. All the while we’re being spun more tales as to why this simple problem can’t be resolved. Bottom line — extraordinary times call for extraordinary measures.
Maybe the eurozone should sue Goldman Sachs instead of persecuting ill-fated Greeks
Sarkozy was right – Greece should never have been allowed into the eurozone. Maybe the eurozone should sue Goldman Sachs – which helped hide the nation’s debts – for the cost of the bailout.
Western economies are making a self-serving mountain out of a Greek mole hill
The eurozone should stop perpetuating the idea that this is a global crisis. Sovereign debt is a North Atlantic problem. At least when Dubai realized it had a problem it put its hands up, sat down with its creditors and came up with a solution. Its economy is still in the process of throwing off the froth but the economy hasn’t missed a beat. But Western economies have made a mountain out of a mole hill. The US debt-ceiling was a manufactured crisis. The eurozone is aping that.
The eurozone has dragged in the banks to take 50 per cent of losses. Astonishing, as this barely cuts 50 billion euros of Greece’s 350 billion euro debt. Greece will be in recession for the rest of this decade, and officials at the eurozone believe Athens debt-to-GDP ratio will hit 120 per cent by 2020! Not likely, more like 160 per cent. Athens will default. It has no choice.
It’s telling that the IMF and European Central Bank will be spared while China and others are being blackmailed to ante up or face the consequences
It can only get better for some. The International Monetary Fund and the European Central Bank won’t take losses on their Greek debt. But some institutions are more equal than others. Eurozone leaders didn’t present a solution. Instead they sent an uncompromising message to China and other emerging markets: pay for our troubles of else we’ll bring the global economy to its knees.
The solution to this phony crisis is simple, yet ignored
You want a solution: Berlin takes on 150 billion euros of Greek debt. Italy’s cost of borrowing will fall as it tackles it debt, since Rome’s finances are in a better position than most. France won’t lose its AAA rating if it needs to bailout its banks. And no need for Europe to depend on China to fix its economic mess.
About Abid Ali – He has more than a decade of experience covering global business. Before joining Al Jazeera as business editor in 2008, he edited and copyedited business news at CNN – both on air and online. He has also covered markets and big industry as a reporter for Bloomberg News.
