Greek Government Collapses - Snap General Election Called

Sierra Oscar

It looks like more political instability is on the horizon in Greece. The failure of parliament to agree on a presidential candidate has collapsed the government. A snap general election will be held at the end of January.

BBC News - Greek MPs' vote triggers snap poll

Greek MPs have rejected the presidential candidate nominated by Prime Minister Antonis Samaras, triggering a snap general election.

Stavros Dimas failed to reach the necessary 180 votes, which means that parliament will have to be dissolved.

The news could not come at a worse time for the Greek economy. It has been recovering somewhat over the last few months, but stocks markets have already tanked following the news of an early election. The Greek stock exchange was down 10% today and the 10 year bond yields reached 10%.

Syriza (Coalition of the Radical Left) is currently leading the polls and should lead the Greek government by the end of January if the opinion polls are to be believed. The party wants to substantially renegotiated the EU/IMF bailout, burn its bondholders and to immediately reverse austerity policies and hike spending.

Greece currently has a secure credit line until next March with the backing of the Eurozone. However if the new government cannot reach an agreement with its Eurozone partners then there is the very real prospect that it might have to go it alone and rely on the bond markets.

Eitherway political analysts in Ireland will be following the Greek elections and coalition negotiations very very closely indeed. Afterall certain parties and groups in Ireland, who could be in government after the next election, advocate a similar line when it comes to the EU / IMF deal and the bondholders. Events in Greece over the next six months will undoubtedly shape the narrative of our own upcoming General Election.

BoJack Horseman

An election to see if the failure of previous Greek government book keeping should be returned to.

Baffling.

kenmccarthy

Far Left will definitely get elected....but what can they (anybody) do?????
The Greek Budget has been a house of cards for many years---- long before lehman brothers. I guess the danger is that any 'green shoots' of recovery in EU land could be trampled on??

BoJack Horseman

kenmccarthy wrote: »

Far Left will definitely get elected....but what can they (anybody) do?????
The Greek Budget has been a house of cards for many years---- long before lehman brothers.

Exactly.

Decades of laissez-faire attitude to government expenditure & tax collection caused their inevitable downfall.

Why they see a return to that as desirable I don't know.

Sierra Oscar

BoJack Horseman wrote: »

An election to see if the failure of previous Greek government book keeping should be returned to.

Baffling.

It is a major conundrum for the Eurozone leaders - well the entire European Union to be honest.

If Syriza do lead the next government and Eurozone leaders refuse to give in to their demands then it will be viewed as undemocratic domestically in Greece and there will be serious resentment. If they do give in to their demands then the Eurozone leaders will undoubtedly face mounting domestic pressure of their own as people cry foul of the continued transfer of wealth at a time when their own economies are stagnant and at risk of falling back into recession.

The biggest issue of all of course is the fact that if a new Greek deal is done then a precedent will be set for other countries - including Ireland. However the Eurozone itself could implode if a new deal has to be done for each country that received financial assistance during the crash.

Those with a more cynical outlook on things will call for Greece to be cast adrift from the Eurozone entirely if Syriza come to power and continue with their demands. This has the potential to spark extreme economic turmoil in Greece that could lead to major civil conflict, but you can be sure that many people would jump on this and say that this is the outcome when you elect 'extremists' into government.

It is going to be a fascinating few months.

kenmccarthy

I watched a programme on BBC3 late one night about the greek economy re paying income tax.........this big time solicitor with massive offices in centre of athens.......turnover of the firm was appx 12million per annum, hes driving a new audi A8.......got a huge summer house in crete etc etc

---

his TOTAL tax ( they dont do sneaky things like usc or prsi there).....................LESS than 1K!!!!!!!!!!!!!

BoJack Horseman

Certainly internal politics tries to brand the EU as being the big nasty bully.

In Greece's case, the only fault on the EUs part is that they have enabled & perpetuated their failed civil service through easy credit.

Like an addict, the Greek state struggles to control itself.

The best thing Europe can do for Greece would be to cut its bailouts, let her sink or swim.

kenmccarthy

In Greece's case, the only fault on the EUs part is that they have enabled & perpetuated their failed civil service through easy credit.



That's it in a nutshell!!!!!!!!!!!!!
If my memory serves me right...wasn't Greece's whole application to join the EU a big three-card-trick?

Inquitus

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

kenmccarthy

Inquitus wrote: »

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

Yes, therein lies the problem-you're forgetting that lovely word that became so popular around the time of the bank guarantee in sept08............CONTAGION!!!!!!!!!!!!

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

BoJack Horseman

Inquitus wrote: »

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

Well, its up to Greece whether it remains an EU member.

The far-left Syriza are pretty anti-EU.
If they form a government they may make moves to exit the EU.

I wouldn't like to see Greece leave the EU, but I wouldn't have any issue if it decided to leave the Eurozone.

BoJack Horseman

kenmccarthy wrote: »

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

I have a feeling that if, hypothetically, if Greece left the eurozone, the currency would strengthen.

The markets see her as dead weight on the currency.

kenmccarthy

Perhaps so.....but to use another expession from sept08......'uncharted waters'
I DO believe the euro would strengthen if the deadwood was cut adrift BUT it would be a very very slow burner............here I go again with yet another expression from sept08......but wouldn't the pain be front-loaded???

BoJack Horseman

kenmccarthy wrote: »

Perhaps so.....but to use another expession from sept08......'uncharted waters'
I DO believe the euro would strengthen if the deadwood was cut adrift BUT it would be a very very slow burner............here I go again with yet another expression from sept08......but wouldn't the pain be front-loaded???

What pain?

Currencies rise & fall.

The Euro has been relatively stable.
Minus Greece, it would probably strengthen slightly

I don't see what "pain" that involves?

kenmccarthy

Interest rates for government bonds would only go one-way.........there would definitely be contagion-effect........markets would look at the other 'PIGS' and say......."if el greeko jumped ship whats to stop the paddies and the Spanish looking for the exit door"......... markets operate with 'herd' mentality...........why lend to any country that was in a bailout regardless of that country's fundamentals and repayment record.I honestly think it'd be a bad days work for Ireland if the Greeks pour the 'parting glass' ---- thats ny view anyhow

AlekSmart

kenmccarthy wrote: »

Yes, therein lies the problem-you're forgetting that lovely word that became so popular around the time of the bank guarantee in sept08............CONTAGION!!!!!!!!!!!!

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

It might'nt be all bad though.

A Greek decision to go-it-alone,burn it's bondholders,tax it's Denis O'Brien's,boot out it's Joan Burtons etc might just make it a Nirvana for hundreds,if not thousands of disaffected Irish folks,each convinced they're being trodden into the ground by evil fascist dictators.

There may,of course,be some downsides to this potential salvation route,but hey,sure anywhere has to be better than this kip etc etc....?

http://www.athensinfoguide.com/history/t9-97-2junta.htm

The main reason why our situation remains stable,may be that we don't have enough Colonel's to form a Junta

Although even as recent as 2011,some of the rushes were blowing in the wind of possible revolt....

http://www.reuters.com/article/2011/11/02/us-greece-govt-military-idUSTRE7A17BZ20111102

Military sources said the move to replace the chiefs may have been hastened by a protest against austerity measures that halted a major national parade last week.

The annual military parade in the northern city of Thessaloniki is one of the most symbolic events in Greece's political calendar, honoring its fight against fascism in World War II, and it was the first time it had been canceled.

President Karolos Papoulias was forced to leave the parade abruptly after being called a traitor by angry crowds.

The previous day, Defense Minister Beglitis was booed by a crowd of students in Thesssaloniki. On Wednesday he described his reception as a "tragic experience."

Ye have to admit,there's a lot of it about these parts too....;)

Palmach

kenmccarthy wrote: »

Interest rates for government bonds would only go one-way.........there would definitely be contagion-effect........markets would look at the other 'PIGS' and say......."if el greeko jumped ship whats to stop the paddies and the Spanish looking for the exit door"......... markets operate with 'herd' mentality...........why lend to any country that was in a bailout regardless of that country's fundamentals and repayment record.I honestly think it'd be a bad days work for Ireland if the Greeks pour the 'parting glass' ---- thats ny view anyhow

The Markets aren't stupid is obvious Ireland and Greece are too different animals. Jettisoning Greece would be a benefit to the Eurozone. It would send out a singal that third world standards of governance will not be tolerated.

kenmccarthy

Good posts............looking at the bigger picture ...long term it would be best to give Greece the red card......but in the short term the 'knee jerk' reaction by the markets wouldn't be in Ireland's favour.......listening to the coverage today I don't think its a 'done deal' that far left will top the polls--this whole snap election could turn out to be a damp squib

Sierra Oscar

And so it begins. Der Spiegel are reporting that German officials have signaled that they are preparing for Greece to exit the Eurozone.

Exit from the monetary union: Federal Government considers Greece's exit from the euro for manageable

dlouth15

Most likely a deal will be done to cut Greece's debt burden rather than have them leave the Euro.

Celly Smunt

dlouth15 wrote: »

Most likely a deal will be done to cut Greece's debt burden rather than have them leave the Euro.

I'd say its more likely they'll cut the debt and chuck them out tbh.

SpaceTime

I don't think it'll impact Ireland at all. We're out of the headlines and our ratings are returning to respectability. Most Irish financial news stories have been very positive.

It's Spain that's got people nervous as there's no serious signs of recovery and it's looking like they'll be unable to recover in the Euro rules.

Celly Smunt

Does anybody know if there's any procedure for countries to take a hiatus if sorts from being tied with the euro?. In spains case it could be very beneficial for everybody if they could take a break from the euro zone and recover their economy with a domestic currency before re-entering. Its clear that Spain cannot compete with the other members while the euro is in use unlike Ireland.

dlouth15

Celly Smunt wrote: »

I'd say its more likely they'll cut the debt and chuck them out tbh.

I don't think there's provision for that under EU law.

Sierra Oscar

BBC News - Greece must 'abide' by bailout terms - Germany

The German government expects Greece to uphold the terms of its international bailout agreement, a spokesman for Chancellor Angela Merkel has said.

But spokesman Georg Streiter declined to comment on reports that Berlin is now content that eurozone could withstand Greece's exit from the bloc.

More mutterings from German officials again today. Meanwhile Syriza's lead in the polls has narrowed but at the moment they are still on course to lead the next government.

Inquitus

Sierra Oscar wrote: »

BBC News - Greece must 'abide' by bailout terms - Germany



More mutterings from German officials again today. Meanwhile Syriza's lead in the polls has narrowed but at the moment they are still on course to lead the next government.

Echoes of the Scotland poll, fear of the unknown may well tip the balance against Syriza, if I was Greek and I was hearing Europe say they were willing to cut Greece adrift, I'd think long and hard about the future and the possible impacts of my vote, and the unknown is usually scarier than the known to people.

kenmccarthy

That's the way I see it too......loads of sabre rattling but election day will return the status quo

Zonda999

Inquitus wrote: »

Echoes of the Scotland poll, fear of the unknown may well tip the balance against Syriza, if I was Greek and I was hearing Europe say they were willing to cut Greece adrift, I'd think long and hard about the future and the possible impacts of my vote, and the unknown is usually scarier than the known to people.

Indeed, and the meaning of this is to warn the Greeks off the idea of electing Syriza. If theres' a belief out there that Germany is willing to let Greece leave, then Syriza's negotiation leverage with the rest of the Eurozone is non-existent. The time for a potential Greek exit came and went 3 to 4 years ago IMHO. for now,i think its in their own best interests to stay.

SpaceTime

I really don't think the Germans are saber rattling at all. It's more like a message to the markets that a Greek exit isn't really that big a deal and might be better for everyone, especially the Eurozone.

What would happen to the New Drachma is another question. Greece could go into freefall but, that's up to them and they'd just have to sort it domestically.

It could be a massive boost to Greek tourism as it might drop the costs but on the other side of it Euro or Dollar denominated debts and imports would become a lot more expensive and Greece makes very few consumer goods.

Markcheese

So can the euro zone actually cut Greece adrift - what if they selectively default and refuse to leave the euro ? As well as stay in the eu - can't think why they'd want to leave the eu anyway -it's a cash cow for Greece !

Godge

SpaceTime wrote: »

I don't think it'll impact Ireland at all. We're out of the headlines and our ratings are returning to respectability. Most Irish financial news stories have been very positive.

It's Spain that's got people nervous as there's no serious signs of recovery and it's looking like they'll be unable to recover in the Euro rules.

It will make an interesting debate for the next general election. What happens Greece if they default is what the AAA and SF are offering the Irish people.

dlouth15

Essentially, the Syriza party don't want to exit the Euro but are threatening to do so if they win the election but don't get a significant debt reduction deal. Germany don't want any country to exit the Euro either but are calling the Greeks bluff on the matter. It will be a case of who blinks first. Don't take what either side says at face value.

BoJack Horseman

dlouth15 wrote: »

Essentially, the Syriza party don't want to exit the Euro but are threatening to do so if they win the election but don't get a significant debt reduction deal. Germany don't want any country to exit the Euro either but are calling the Greeks bluff on the matter. It will be a case of who blinks first. Don't take what either side says at face value.

If Greece get another debt write down deal on top of the 53% haircut private debt holders had to take last time, hopefully it will be modest.

The Troika have bent over backwards for Greece.

Though they are now back in primary budget surplus, the populace seem keen to revert back to the crazy days from what should be the norm for functioning countries.

dlouth15

BoJack Horseman wrote: »

If Greece get another debt write down deal on top of the 53% haircut private debt holders had to take last time, hopefully it will be modest.

The Troika have bent over backwards for Greece.

Though they are now back in primary budget surplus, the populace seem keen to revert back to the crazy days from what should be the norm for functioning countries.

I'm not trying to defend either side in this. However their debt of over 150% of GDP is probably unsustainable regardless of whatever cuts they make. Either a deal or leave the Euro and default.

BoJack Horseman

dlouth15 wrote: »

I'm not trying to defend either side in this. However their debt of over 150% of GDP is probably unsustainable regardless of whatever cuts they make. Either a deal or leave the Euro and default.

Yeah, 150% is tough to repay.
Its just a shame that a generation of feckless mis-governance by the Greek state is effectively rewarded for same.

Godge

BoJack Horseman wrote: »

Yeah, 150% is tough to repay.
Its just a shame that a generation of feckless mis-governance by the Greek state is effectively rewarded for same.

If the Greeks are rewarded for electing Syriza, electorates all over Europe will be eyeing up their own lunatic fringe to see what's possible.

Can't see UK, Ireland, France or Spain agreeing to do a deal for Greece because of the potential electoral contagion.

dlouth15

Godge wrote: »

If the Greeks are rewarded for electing Syriza, electorates all over Europe will be eyeing up their own lunatic fringe to see what's possible.

Can't see UK, Ireland, France or Spain agreeing to do a deal for Greece because of the potential electoral contagion.

It may simply be the way things work. We (by this I mean the Irish Government) thought that, by obeying all the rules and fulfilling our various obligations without complaint, we would get a deal on debt. We can now see that this would never have happened. Yet at the time we thought it would work.

We took the bank losses on our own shoulders when we could have caused contagion throughout the Eurozone by allowing banks to collapse.

It would therefore be very unfair if the Greeks got a debt deal though threatening to leave the Euro and default. But maybe we're being naive expecting fairness.

Personally I think the best thing for the Greeks would be to leave the Euro and default on their debts. There would be a lot of short term pain but in the long run they would benefit.

However the likely scenario, as I've said earlier on this thread, is that a deal will be done on condition that they don't leave the Euro.

Playing hardball with Europe will yield them results for the same reason that the softly softly approach has not yielded results for us.

FreudianSlippers

Markcheese wrote: »

So can the euro zone actually cut Greece adrift - what if they selectively default and refuse to leave the euro ? As well as stay in the eu - can't think why they'd want to leave the eu anyway -it's a cash cow for Greece !

There is no way pursuant to the treaties that a country can leave the Eurozone without leaving the EU. There is also no method by which a Member State can be expelled from the EU - they can have certain rights suspended and the Council can make binding sanctions against a Member State. Effectively, the position would be that they would either have to make a deal with Greece that they would voluntarily leave, or the EC would need to make life so hard for Greece via suspensions and sanctions that they would have no alternative but to leave.

Uncharted waters in any case.

Markcheese

FreudianSlippers wrote: »

There is no way pursuant to the treaties that a country can leave the Eurozone without leaving the EU. There is also no method by which a Member State can be expelled from the EU - they can have certain rights suspended and the Council can make binding sanctions against a Member State. Effectively, the position would be that they would either have to make a deal with Greece that they would voluntarily leave, or the EC would need to make life so hard for Greece via suspensions and sanctions that they would have no alternative but to leave.

Uncharted waters in any case.

So you can be in eu and not in the euro - but if you leave the euro you have to leave the eu- weird -
How much impact would Greece leaving have ? I assume that free trade part Would remain -at least for a while ?

FreudianSlippers

Markcheese wrote: »

So you can be in eu and not in the euro - but if you leave the euro you have to leave the eu- weird -
How much impact would Greece leaving have ? I assume that free trade part Would remain -at least for a while ?

Only Denmark and the UK have an opt-out from joining the Eurozone (although Denmark is obliged to be in the Exchange Rate Mechanism which allows only for currency floatation in ±15% of the Euro rate). All other Member States are obliged to join the Eurozone once they have completed their 'probationary' two years in the ERM II (for example Lithuania just joined on 1st Jan).

dlouth15

FreudianSlippers wrote: »

Only Denmark and the UK have an opt-out from joining the Eurozone (although Denmark is obliged to be in the Exchange Rate Mechanism which allows only for currency floatation in ±15% of the Euro rate). All other Member States are obliged to join the Eurozone once they have completed their 'probationary' two years in the ERM II (for example Lithuania just joined on 1st Jan).

You don't really need an opt-out though to avoid joining the Euro. The trick is not joining ERMII in the first place. This is how countries like Poland have been in the EU for 10 years but have successfully avoided the Euro. There's no provision to force them into the ERM so although they are "obliged" to join the Euro they can put it off for as long as they wish.

FreudianSlippers

dlouth15 wrote: »

You don't really need an opt-out though to avoid joining the Euro. The trick is not joining ERMII in the first place. This is how countries like Poland have been in the EU for 10 years but have successfully avoided the Euro. There's no provision to force them into the ERM so although they are "obliged" to join the Euro they can put it off for as long as they wish.

Poland are obliged to join the ERM II pursuant to their 2003 Treaty of Accession. The trick is that they need a Constitutional Amendment to do so and are having an extremely difficult time getting it passed. To appease the EC, they have committed to comply with the Maastricht criteria by 2016 regardless of whether the Amendment is passed.

The Maastricht criteria including a 'probation' period on ERM II are obligatory (with the exception of the UK). In theory a country could put off joining the ERM II by doing what Poland did, but it would only last so long before the EC basically tells them to put up or shut up.

kenmccarthy

Excuse my ignorance and going off topic here--- so by 2016 Poland HAS to using the Euro??

dlouth15

FreudianSlippers wrote: »

Poland are obliged to join the ERM II pursuant to their 2003 Treaty of Accession. The trick is that they need a Constitutional Amendment to do so and are having an extremely difficult time getting it passed. To appease the EC, they have committed to comply with the Maastricht criteria by 2016 regardless of whether the Amendment is passed.

The Maastricht criteria including a 'probation' period on ERM II are obligatory (with the exception of the UK). In theory a country could put off joining the ERM II by doing what Poland did, but it would only last so long before the EC basically tells them to put up or shut up.

By what date exactly are they legally obliged under EU law to join ERM? The answer is there's no legal time period by which they have to join. Sure they can be pressurized by other means but if there's no time period specified as part of the legal obligation then that effectively means that they can put it off indefinitely.

I'm afraid the lack of a time period renders the legal obligation pretty meaningless.

But yeah, if they decide to join or they are pressurized to do so, then they will join. But it won't be because they are legally obliged to do so within a given period.

dlouth15

kenmccarthy wrote: »

Excuse my ignorance and going off topic here--- so by 2016 Poland HAS to using the Euro??

No they don't have to join by 2016 and they can't be taken to court if they don't join.

kenmccarthy

Thanks

FreudianSlippers

dlouth15 wrote: »

By what date exactly are they legally obliged under EU law to join ERM? The answer is there's no legal time period by which they have to join. Sure they can be pressurized by other means but if there's no time period specified as part of the legal obligation then that effectively means that they can put it off indefinitely.

I'm afraid the lack of a time period renders the legal obligation pretty meaningless.

But yeah, if they decide to join or they are pressurized to do so, then they will join. But it won't be because they are legally obliged to do so within a given period.

They cannot be full members of the EU without being members of the Eurozone though. All member states must fulfil the 5 criteria (including ERM II membership) to obtain Eurozon membership prior to becoming full EU members. The Ascension Treaty may not impose a time period, but Poland is technically in breach of the TFEU and Maastricht Treaties which could jeopardise their EU membership.

To answer kenmccarthy's question, the EC has agreed with Poland that by 2016, they will have joined ERM II. I'm not sure it's a formal agreement, but it would mean that Poland couldn't join the Eurozone any earlier than 2 years (minimum) after they have joined ERM II.

dlouth15

FreudianSlippers wrote: »

They cannot be full members of the EU without being members of the Eurozone though. All member states must fulfil the 5 criteria (including ERM II membership) to obtain Eurozon membership prior to becoming full EU members. The Ascension Treaty may not impose a time period, but Poland is technically in breach of the TFEU and Maastricht Treaties which could jeopardise their EU membership.

I don't think there's such a thing as "full member" of the EU because there's no such thing as partial membership. You are either in the EU or you are not.

To answer kenmccarthy's question, the EC has agreed with Poland that by 2016, they will have joined ERM II. I'm not sure it's a formal agreement, but it would mean that Poland couldn't join the Eurozone any earlier than 2 years (minimum) after they have joined ERM II.

The thing is though that they could decide some time between now and 2016 that the time is not right (actually I think they will probably do this) and there's nothing legally the EU could do. Of course there are various other means that could be used to coerce Poland into the ERM but these methods exist regardless of any legal obligation.

What I don't think will happen is that Poland will officially state that they will never join the Euro as this could bring them into legal conflict and force the issue. However the point stands that Poland are free legally to indefinitely postpone membership of ERM and thus the Euro since there's no timescale associated with joining.

FreudianSlippers

dlouth15 wrote: »

I don't think there's such a thing as "full member" of the EU because there's no such thing as partial membership. You are either in the EU or you are not.

I think technically Poland is what used to be called an associate member state, although I accept that term has never officially been used.

My point is that until they comply with the TFEU and Maastricht Treaties, they are in breach of EU law. Eurozone membership is a key to this.

The thing is though that they could decide some time between now and 2016 that the time is not right (actually I think they will probably do this) and there's nothing legally the EU could do. Of course there are various other means that could be used to coerce Poland into the ERM but these methods exist regardless of any legal obligation.

The TFEU and Maastricht Treaties are the legal obligation though. I don't know what the consequences are off the top of my head, but there would at least be fines and sanctions.

[/quote]What I don't think will happen is that Poland will officially state that they will never join the Euro as this could bring them into legal conflict and force the issue. However the point stands that Poland are free legally to indefinitely postpone membership of ERM and thus the Euro since there's no timescale associated with joining.[/QUOTE]
I don't disagree, my point was merely that they are obliged to join and have indicated that they will join the ERM before 2016. I also don't disagree that this is unlikely to happen given the political atmosphere in Poland.

dlouth15

FreudianSlippers wrote: »

The TFEU and Maastricht Treaties are the legal obligation though. I don't know what the consequences are off the top of my head, but there would at least be fines and sanctions.

The thing about the treaties is that the emphasis is very much on what countries must do in order to qualify to join the Euro. Thus if Poland wishes to join the Euro, for example, it must meat these criteria. The thought that some countries mightn't particularly want to join didn't really get much consideration.

Economically, I think the flexibility of a floating currency gives Poland an advantage economically and they should think very carefully before joining.

Sand

SpaceTime wrote: »

I really don't think the Germans are saber rattling at all. It's more like a message to the markets that a Greek exit isn't really that big a deal and might be better for everyone, especially the Eurozone.

That is a genuine error. The reason that we had/have a Eurozone crisis is down to that view being expressed by the Eurozone big boys (like Merkel and Sarkozy) which is and was a total failure of their leadership.

The Euro is supposed to be strong currency. Membership is irrevocable. It is supposed to be serious money that a global economy can build on and rely on. By delivering the message that members of the Euro can and will be thrown overboard when the going gets rough, the Eurozone leaders are spreading chaos and *encouraging* the markets to react negatively. A chaos which caused the market to presume that Greece was going to be kicked out, and that weaker member states like Portugal, Ireland, Spain and even Italy could rapidly follow suit. Investors and banks reacted entirely rationally to the insanity going on at Eurozone HQ by pulling all their money *out* of the periphery which was being threatened with expulsion, which turned a minor problem into a huge crisis that threatened to destroy the entire Euro.

The crisis only abated after the ECB broke with its completely stupid handling of the crisis before that point and underlined that it would defend the Euro to the hilt. That (temporarily) ended the fear of a Euro breakup. But its a height of how crazy the Eurozone leadership is that a central bank vowing to defend the currency to the hilt was seen a gamechanger...

That Eurozone leaders are now reintroducing the crisis by going back to the same stupid playbook of threatening to drive members out of the currency is stupidity of a truly special kind.

Already in 2015 the Euro is taking a dive against the dollar. Right on cue to the stupidity being publicly voiced by Eurozone leaders. The Euro is at the weakest it has been against the dollar since 2006. And that in an era of "quantitative easing" that horrifies US fiscal hawks.

So why is the dollar always seen as a strong global currency? Simples. The US federal government doesn't threaten to drive Idaho out of the US dollar every time the state and federal governments get into a disagreement. It certainly didnt drive New York out of the dollar after the city defaulted.

But then the US tends to have decent leadership - whereas the Eurozone leadership over the past decade has been awful. As bad as anything seen in the late twenties and early thirties.