David Craig, on January 30th, 2015You’re probably aware of the heat and noise in the Eurozone since the Greeks elected a government that would rather not pay back most of the money the Greeks have borrowed and spent in the 11 years since the euro was launched. So, let’s quickly review the facts:
1. The euro was a political project – the introduction of the euro was claimed to be an ‘economic project’ to make the EU more competitive and prosperous. This has always been a lie. The real aim was for the EU elites to increase their power and accelerate their dream of creating a single European superstate ruled by unelected, undemocratic, wasteful, corrupt bureaucrats in Brussels
2. The books were cooked – in order to persuade the world’s financial system that the euro would be a solid currency, the Maastricht Treaty set out criteria regarding the level of deficit and debt countries could have before being allowed to join the euro. Unfortunately for the eurocrats, the Mediterranean PIGS (Portugal, Italy, Greece and Spain) were all a million lightyears from meeting these criteria. No problem. BoE Governor Mark Carney’s former (and probably future) employers Goldman Sachs and other clever bankers were called in and using a series of complex financial derivatives, they managed to fiddle the PIGS’ deficit and debt levels (with the full knowledge of the Brussels bureaucrats) so that magically all the four Mediterranean PIGS suddenly qualified for joining the euro
3. Germany prospered – had Germany kept the Deutschmark, this would have risen and made German exports uncompetitive. By being in the euro, Germany was able to swamp the world with its machinery and cars at competitive prices
4. The PIGS borrowed and spent – prior to the introduction of the euro, the corrupt, financially-incontinent PIGS would have had to pay interest rates of 10% to 15% or more if they could find anyone stupid enough to lend them money as most have defaulted several times in their history (Spain, for example no fewer than 13 times). But once they were in the euro, they could borrow at the same rates as the fiscally-responsible Germans as lenders assumed the Germans would always bail them out if they got into trouble. The PIGS went on a massive borrowing and spending spree allowing them to bribe their people with millions of unnecessary public-sector jobs, offer full pensions at 55 and infrastructure projects like roads to nowhere, pointless bridges, unnecessary airports and millions of new homes nobody needed. PIGS politicians and their business cronies became very very rich and, of course, never bothered paying any tax on their massive earnings
5. The PIGS’ debt levels shot up – borrowing like Gordon Brown and Ed Balls on a bender, the PIGS piled up totally unrepayable levels of debt, with Greece having the highest level, closely followed by Italy and Portugal (click to see more clearly)
(The figures in the chart are from a couple of years ago. Since then Greece’s debt has climbed further from about 160% of GDP to around 175%)
6. Each Greek owes almost as much as we Brits – Greece’s government debt amounts to about €27,000 for every man, woman and child in the country. That’s almost as much as Britain’s government debt at €28,400 per person
7. We’re all Greeks now – of course, even though the useless Coalition Government has doubled our national debt in just 5 years from £750bn to about £1.5trn, we’re not quite as bankrupt as Greece because our GDP per capita is almost double that of the lazy, tax-dodging Greeks. But it’s still a slightly sobering thought that our supposedly ‘fiscall-responsible’ government has borrowed more per person than the laughably, ludicrously profligate Greeks
8. Grexit won’t happen – most economic pundits are predicting a ‘Grexit’ (Greece leaving the euro). And if we were dealing purely with economics, that’s probably what should happen. But as mentioned in Point 1, the euro is a political project and our rulers in Brussels will never allow any backtracking on their dream of a European superstate run by Germany. After all, if Greece was to leave the euro and prosper, then other PIGS might want to leave too. Greece recovering outside of the euro would spell disaster for the great European project. So of course it will not be allowed to happen by the idiots in charge of Europe.
Category: 
It will be most interesting to watch Chancellor Merkel negotiating the choppy waters between on the one hand keeping Greece in the Euro zone at all costs and on the other dealing with a German population which is sick and tired of bailing out and subsidizing an indolent, unmotivated Aegean country fit for little other than providing cheap holidays in the sun and the opportunity to observe the neglect and decay of some of the world’s post precious ancient monuments.
How could anyone with a shred of common sense ever have entertained in the first instance the idea that the grim, hard-working Germans, the chauvinistic, greve-and-manifestation-loving French, the excitable Spanish, the dismissive Portuguese and the corrupt Italians could find sufficient common ground to form a workable common currency? The whole thing was a self-serving stitch-up on the part of the Eurocrats from the first and could never, and will never, work. I found it ironic in the extreme then that Brussels-generated “EuroFedocrat” euphoria was at its height just at the time when those other modern artificially created federations, Yugoslavia and USSR, were blowing themselves apart in and excess of violence and bloodshed. Every nation has its unique national characteristics which determine its attitudes to work, family, leisure and religion and politicians meddle with these at their peril. I suppose in the UK we must be thankful that at least our inept politicos stopped a hair’s-breadth from taking us into the Euro.
Further to your point 1 above, it surprises me how many people (both pro- and anti-EU) are heard declaring that the EU was never originally intended to be a political project but an economic one, as if everything was on the rails but somehow got out of control thereafter.
Whilst the line between the two may be somewhat blurred, I fail to see how anybody could read the Treaty of Rome and conclude that it was ever intended as anything but a political union.
If you doubt what I say then take a quick skim through. Unlike most EU documents, it is actually quite clear and readable.
The EU…why Socialism doesn’t work but in macrocosm.
German banks lent money to Greece
Greeks bought German goods
Now cant pay
so it German banks needing German people to bail THEM out for their profligate lending. Remember the German banks will have profitting all the while the borrower kept up repayments.
Likewise if German banks hadn’t let them the money then the German manufacturers wouldn’t have enjoyed bonanza and booming economy they have had.
I can’t help feeling the Germans have only themselves to blame and it is the lenders ultimately guaranteed by their own governments/people who will need to write the loans off to experience and a failed experiment.
As they say what goes around comes around.