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Beware of Greeks Bearing Gifts!

No sooner than the Eurozone crisis appears to be moving into calmer waters than another shock wave hits. Only a week ago it looked like Merkel and Sarkozy had agreed a deal to buy some time to ultimately solve the Eurozone crisis and now it looks like the whole thing is going to collapse. I know a week is a long time in politics but this is becoming ridiculous.

The French are concerned about how a continued crisis in Greece will impact the Eurozone and think that there is little choice other than to offer it support. The Germans however, doubt that throwing good money after bad will be anything other than a complete waste and the rest of the Eurozone States can hardly believe that this second bail out is anything more than a time buying exercise.

No long term solution to the Eurozone crisis was announced and for that reason the markets were not impressed for long, after initial relief of the agreement to a second bail out subsided.

Now the Greeks want a referendum on the terms of the bail out and no one can be in any doubt that the Greek people will say no.

Where does all this leave us?

It looks like Greece will have to leave the Eurozone and ditch the euro. The market has known this for some months and now it is the only logical outcome.

If Italy follows and also leaves the Eurozone, which is looking more likely than ever and the other smaller economic states withdraw, this will obviously have a major impact.

What of those states left in, with interests and stronger economies to maintain? It’s likely that they will be forced into fiscal harmony and have to redefine the charter, drafting new agreements that effectively create a single state. Forget cultures and sovereignty, as the need to stabilise and create growth momentum and move forward will take precedence.

What of the UK?

Providing the UK moves quickly to build trading agreements with all those leaving the Eurozone and rekindles former trading partnerships, the future could be a good one. A new dawn, in a new world, where trade becomes the prime objective and we consign the crazy notion of the Eurozone, the single currency and all the red tape and weird Brussels laws to history.

Beware of Greeks bearing gifts! Not necessarily, as they might provide the greatest gift of all, if this finally shows up the folly of the single currency and the autocrats in Brussels.

No doubt the impacts of these issues on MTF’s and Stock Exchanges will enter into the discussions at the next post-trade forum debate on the 29th November.

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Comments: (8)

A Finextra member
A Finextra member 03 November, 2011, 15:21Be the first to give this comment the thumbs up 0 likes

Today the Greek premier has retracked and announced there will not be a referendeom. Bullied by French and German and kicked to bits by his own people i am beggining to feel sorry for him. Nop that weak moment has gone and now on with the show! It would be a comedy if it was not so tragic  

A Finextra member
A Finextra member 04 November, 2011, 11:20Be the first to give this comment the thumbs up 0 likes

"Now the Greeks want a referendum on the terms of the bail out and no one can be in any doubt that the Greek people will say no."
- No not quite, it was the Greek PM who came out with this, even memmbers of his own Govt are against.  In any case, for the Greek people, I think this is a good idea.

And about this:
"...we consign the crazy notion of the Eurozone, the single currency and all the red tape and weird Brussels laws to history."
- Why is a single currency such a crazy notion?
- You do some idea of how the EU works I hope?  There are the MEPs (ther UK ones are directly elected by you), the Council of Ministers (so UK govt takes part in that), and as for the commision, again it's national governments who deccide on the officers here?

 

A Finextra member
A Finextra member 04 November, 2011, 11:35Be the first to give this comment the thumbs up 0 likes

History says that you do not get a single currency without fiscal harmonisation and a single control point. Look at the American Civil War. The single currency is a idealogical idea that simply does not work. You only need to look at the mess in Europe today. The only long term solution to maintaining the single currency is if  all states come under a single fiscal policy from a central Government. Will the French give up to Germany or any other country?

The majority of the MEPs are hardly voted for by UK people who just see idiotic laws commng out of Brussels and hopeless politicians talking baloney when jobs and lives are at risk

There will be a war in Europe at some time and massive civil unrest accross the region. We have just seen the start of it. Its impossible to defend the single currency but we now must try and manage the fall out of a crazy idea

A Finextra member
A Finextra member 04 November, 2011, 11:53Be the first to give this comment the thumbs up 0 likes

Several countries share the currency ECD (East Caribbean Dollar; I remember it being a currency used by half a dozen nations, but don't remember much more than that).

The current EUR mess is due a lot to fraud - there's no way that the Greeks should have been allowed to join the EUR.  As for other countries, I don't know.

WRT MEPs, who elects them then?  If British voters are NOT interested in choosing MEPs, is that not their fault?  I'm pretty sure that at at some point, all Parliaments/assemblies pass 'idiotic' laws, even the UK (I can think of a few now...).  What particular 'idiotic laws from Brussels' have caused the UK great damage?

I sincerely hope you are wrong about the war and Europe bit; after all that was the whole idea of setting up Europe, and it's worked well for 60 years I'd say in that respect.

There are problems with how the EU is set up and run (as with any other large organisation).  However I'm aamzed at the Brits' ability to blame Brussels for all and everything (actually the EU has not yet been blamed for the England football team, amazing ;)).

A Finextra member
A Finextra member 04 November, 2011, 12:10Be the first to give this comment the thumbs up 0 likes

A bit of a difference between ECD and Euro i think

Cucumbers being a certain dimention was one law but there are masses believe me

MEPs are pretty faceless people in the UK. We dont know who half of them are and there is little respect they have. Gravy train expenses that we do hear of are hardly going to help gain respect.

The War and civil unrest is based on similar situations in the Thirtys after the depression and the fact the Tax payers become very angry if they see their living standards fall or are being exploited by other nations. Some of the comments i have already heard from German Tax payers are saying why should they bail out Greece or Italy who live beyond their means. If it carrys on and increases this anger will grow

Just use your eyes to see rioting on the streets in Greece and how powerless the people feel. How the political system in Europe has failed them. Other countries will feel the same unless drastic action is not taken

Why did the Eurozone let all these countries in? Not fraud more deluded by the single currency and the idealogy of a single Europe. The single market in Europe was always intended as a trading block but politicians has sold the idealogy to people and created this situation. People in Europe have been hoodwinked and still can not see what their eyes tell them

A Finextra member
A Finextra member 04 November, 2011, 13:41Be the first to give this comment the thumbs up 0 likes

"A bit of a difference between ECD and Euro i think"
- Most probably, but it is an exampel of a several soverign nations sharing a currecny.

"Cucumbers being a certain dimention was one law but there are masses believe me"
- I remember seeing somethign on that on the BBC.  Perhaps a silly regulation, but not that bad surely?  I'm sure there are some modern UK health and safety regulations that are just as silly (I recall that kids at some schools can no longer play games like 'it', or 'football' or whatever because the school is so worried about the potential to be sued in the even of an accident?).  Can you do any better than that one, one which you consider has caysed the UK great harm?

"MEPs are pretty faceless people in the UK. We dont know who half of them are and there is little respect they have. Gravy train expenses that we do hear of are hardly going to help gain respect."
- But Brits elect MEPs!  Wouldn't it be a good idea to find out who you're voting for, what their policies are?  WRT 'gravy train', British MPs are all above board, none have been imprisonend in recent years for fraudalent expense claims?  And it's perfectly reasonable to expect taxpayers to pay for one's moat?
- However, there are a few glaring examples of unreasonable expenditure - the Parliament in Strasbourg for one; as every Brit knows, the CAP needs looking at and revising.

"The War and civil unrest is based on similar situations in the Thirtys after the depression and the fact the Tax payers become very angry if they see their living standards fall or are being exploited by other nations. Some of the comments i have already heard from German Tax payers are saying why should they bail out Greece or Italy who live beyond their means. If it carrys on and increases this anger will grow"
- I hope we've progressed enough since the 30s that this risk is less than you imagine.

"Just use your eyes to see rioting on the streets in Greece and how powerless the people feel. How the political system in Europe has failed them. Other countries will feel the same unless drastic action is not taken"
- Hard to comment on this as I haven't spoken to anyone in the country and have not been there in a very long time.  The news can be misleading though when it comes to city riots (thinking back to riots in London, Paris in last few years).  As for "in Greece and how powerless the people feel", this is why I personally thought the Greek PM's idea of having a referendum was dead right if courageous.

"Why did the Eurozone let all these countries in? Not fraud more deluded by the single currency and the idealogy of a single Europe. The single market in Europe was always intended as a trading block but politicians has sold the idealogy to people and created this situation. People in Europe have been hoodwinked and still can not see what their eyes tell them"
- Fair points; for a start too many countries were let into the EUR at once.  And the 'European project' has evolved, undoubtedly too quickly.

A Finextra member
A Finextra member 06 November, 2011, 13:28Be the first to give this comment the thumbs up 0 likes

Good debate.  The part that caught my eye was the tendency to believe that this will lead to 'war of some sort' in Europe.  Desperate times result in desperate measures, but as you say, I hope we've come further since the 30's to realise that war was not a solution.  There are still enough mature heads to know that fighting for your country can be a mugs game and that even that measure is taken advantage of by a few at the deep expense of the many.  Civil unrest yes, but war I hope never.

A Finextra member
A Finextra member 06 November, 2011, 14:34Be the first to give this comment the thumbs up 0 likes

I hope and pray your right and the world is more civilised but then i remember the scenes from Lybia and wonder how far have we all come?

War is made by politicians not people but when hardship affects people so badly after they have a increased expectation of high living standards, who knows?

I heard a Greek man saying on the TV that out of this disaster a new strong leader might emerge to save the country. Sound familiar?

Gary Wright

Gary Wright

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BISS Research

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