Greece continues to weigh heavily on the stabilization of the Eurozone but the impact is far more reaching than that, which leaves the question whether the euro and the Eurozone would not be better off without the Greek perils that seem to continue.
Greek Finance Minister, Evangelos Venizelos, called the default rumors “organized speculation” this past Friday in an email statement.
A decision will be made this weekend whether or not Greece will receive its sixth tranche of the 110 billion euro bailout package.
At the same time, the markets and economists have duly noted that a review of Greece’s fiscal performance was postponed for 10 days and the reports will not be reviewed until mid-month, well after the ECB/IMF funding decision.
In the private and corporate world, this would be considered working backwards whereby required documentation is provided after the loan has been approved and the funds have been transferred.
Greece’s problems began before the euro was firmly established but the fiscal deficits did not become visible to the other Eurozone partners or the world for that matter until March 2010.
More than 1 year later, it seems the same problems continue to plague Greece independent of the paper promises of severe austerity packages, which were the main requirement.
That begs the question whether or not the Eurozone is not better off without the Trojan horse and whether giving Greece back to the Greeks and their legacy currency would not have a positive and strengthening impact on the euro as a whole.
Needless to say that such a drastic move would be devastating to the new Drachma and one can easily predict an immediate devaluation of 30% or higher following such a decision, but it would be beneficial for the Eurozone members and their young currency.
Neither one of the Treaties, Maastricht Treaty and Lisbon Treaty, that are the underpinning of the Eurozone creation has a stipulation or clause to enforce such an exit except when this would occur voluntarily.
That is not a decision to be expected from Greece any time soon. One does not cut off the hand that feeds you but in the end a decision will have to be made.
When the new high-speed train, the “ECB/IMF Western Express”, went into service early last year with the Club Med countries as a destination, nobody expected that the one way ticket would become so popular.
The money and gravy train will continue to roll at high speed as long as the recipient buys another one-way ticket and send the train back empty.
The question is who will be willing to continue to load the wagons?
Written by Nick Doms © 2011, all rights reserved.