As a Asian, I have different perspective to our British counterpart view of the 'Merkel' deal. Only with 50% haircut will Greece be able to pull back from the slippery slope of ever rising government bond's rate. Greece's rich has already bolted , leaving behind the ordinary folks to fence for themselves. It will be painful, but Greece now truly has a chance to right herself and heal her economy, with the firm guidance and steady support of EU.
The banks' shareholders will suffer through dilution, and rightly so, as it is obvious that the Greek bond's yield do not justify their recklessness. EU has put aside finance and support mechanism to also ensure financial stability of these exposed European banks, without the use of rampant money printing press. The EU taxpayers will also bear some of the burden.
I am confident EU and the EUR will survive. It is not the currency that is at the heart of problem, but the fudging of the national budget books (with the help of Goldman Sachs, in Greece case) that 'helped' to cover up the budget black holes. The new Greek government is set to come clean, and that is a demonstraction of moral courage.
My concern is more for those EU countries like Italy who are still dragging their feets to put their budget in order before they tip over. With the strong mind of Merkel, and Germans' discipline, EU is in save hands, though the process will take a while to overcome.
Europe has been around for a long time, and has build strong tradition and institutions. British who are not in the EUR seems to wish for EUR demise, though they may claim otherwise.
Europe will emerge stronger and steadier than US and even UK who has been infected with the US financial scheming.
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