Oh well, the drama subsides.
Germany is going to bail out Greece and will bail out all the other little piggies who have been nipping out at night and partying at what looks like will turn out to be the expense of the plodding Northerners.
“Greece falsified deficit statistics, and that can’t be legal,” said Wolfgang Gerke, president of the Bavarian Center of Finance in Munich and honorary professor at the European School of Business. “Greece needs to be kicked out of the EU…”
My sentiments exactly. In my view, it’s about time the improvident “PIIGS,” and those who are foolish enough to lend them money, stop getting bailed out.
But it was never going to happen. Too many EU banks are exposed to Greece (particularly France, Germany and UK) and too much has been invested in the idea of a fiat currency without political unity or even, it seems, effective laws.
In fact, this isn't the first time Greece has pulled the wool over the eyes of Policeman Plod in Brussels. This is from Wikipedia:
In 2004, Eurostat, the statistical arm of the European Commission, after an audit performed by the New Democracy government, revealed that the budgetary statistics on the basis of which Greece joined the European monetary union (budget deficit was one of four key criteria for entry), had been massively underreported by the previous Greek government (mostly by not recording a large share of military expenses).
However, even according to the revised budget deficit numbers calculated according to the methodology in force at the time of Greece's application for entry into the Eurozone, the criteria for entry had been met.
I wonder how they finagled that one. Perhaps... no that sort of thing doesn’t go on in Europe. That’s why they sack their auditors periodically for suggesting there is corruption in Brussels.
Oh well, they will print some more fiat money and the Euro will depreciate. The Germans won’t mind. I mean, it’s not as if it’s 1923... but was it “legal.”
It looks like it’s turning into a bit of a bun fight on that score. The Greeks say that EuroStat knew all about it and the deal was reported in “Risk Magazine” (that’s poetic). EuroStat says they don’t read that one (too racy, I suppose).
“Goldman Sachs (NYSE:GS) broke the spirit of the Maastricht Treaty, though it is not certain it broke the law,” Michael Meister, financial affairs spokesman for German Chancellor Angela Merkel’s Christian Democrats.
That’s an interesting twist. ”It’s not certain they (and Goldman Sachs) broke the law,” but then it’s not certain they didn’t, either.
According to the Greeks, they acknowledge that that sort of thing would be illegal now, and they don’t do it anymore, although it’s not precisely clear when it became illegal.
Of course, the only way to find out if it was legal or not would be to take it to Court and see if a judge thought it was legal or not.
That would be interesting. Timothy Geithner’s favourite buddies getting charged with racketeering in Europe!
I wonder where they might hold the trial. My suggestion is the capital of Bavaria: Munich. And it should be a jury trial too -- twelve good Bavarians ought to do the trick.
Disclosure: No Positions