It's apparent that the eurozone bureaucrats will do anything to keep the game alive, and it's virtually impossible to keep up with the smorgasbord of funds and acronyms. Actually, it's getting nauseating, and it's starting to sound like the guy who always has a deal in the works, and only needs a few more days to come up with the cash when asked for payment on overdue debts.
Those behind the Greek PSI debt deal like to highlight the beauty of reducing Greece's debt to 120% of GDP by 2020. Really? How? What's the GDP growth or contraction projection for the next 8 years? That's a wild statement that has no chance of ever materializing, and everyone knows it, while the PSI deal itself has lost relevance. Although opinions are being offered that the Greek deal is unique and not to be repeated, what exactly stops Portugal and others from asking for the same relief?
While the negotiations continue, the bills keep mounting, and now Greece needs 145 billion euros, or 15 billion more than when the second bailout package was approved last October, according to Bloomberg. Then there's Angela Merkel's opinion, as reported by The Guardian.
Angela Merkel has cast doubt for the first time on Europe's chances of saving Greece from financial meltdown and sovereign default, conceding that Europe's first ever multibillion bailout coupled with savage austerity was not working after two years of crisis that has brought the single currency to the brink of unraveling.
Besides the ongoing economic readings, there's the often missed underlying nature of the European friendship of nations, and it was well explained by Luxembourg's Foreign Minister Jean Asselborn in an interview with Spiegel Online. The article itself carried a blunt message: "Merkel's Fiscal Pact a 'Waste of Time and Energy."
The things that are discussed and agreed upon in the EU are communicated to the people incorrectly or at least ambiguously through their government filters. Many governments present themselves to the voters as defenders of their national interests against the others. This way citizens often have the feeling that the EU and other EU members want to harm them or take something from them. The financial crisis has once again fatally brought this misunderstanding to a head.
Then the so-called union, or lack thereof, was further questioned, and the core symptom of that is a reflection of citizen's sentiment, well defined.
Who can be expected to view Europe as good thing when, outside of a few nice words, most politicians make no argument for the collective cause? On the contrary, they use the EU as a comfortable scapegoat when things are going wrong back home. But the European Union will have no stability if the European people identify themselves only by their national interests.
Let's keep the "national interests" in mind as the game unfolds, and according to Reuters, "Germany wants Greece to give up budget control."
The Financial Times said it had obtained a copy of the proposal showing Germany wants a new euro zone "budget commissioner" to have the power to veto budget decisions taken by the Greek government if they are not in line with targets set by international lenders. "Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the document said.
I understand the frustration, but that's a monumental mistake, and is now the worst idea to date. The proposal by itself, if true, will flare up anti-German sentiment, and the references to World War II will increase, while Germany's intentions will be questioned. In addition, it opens the door to political opportunism, throwing a much bigger wrench into any cooperation efforts, and builds the foundation for the "I told you so" campaign slogan.
I sincerely do not believe that Germany harbors a hidden agenda that hinges on territorial expansionism, but when many in Europe face economic despair, the ease with which accusations are made is downright frightening, and will foster a greater disunion that will become the greatest obstacle to whatever feasible, yet far from good, solution is ultimately adopted.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.