Today the fate of both the Euro currency and the EU is in the fate of politicians seeking to entice banks, insurance companies, and large pension funds to volunteer money for a Greek bailout.
Merkel Agrees to Voluntary Bondholder Role
Chancellor Angela Merkel retreated from German demands that bondholders be forced to shoulder a “substantial” share of a Greek rescue, saying she’ll work with the European Central Bank to avoid disrupting markets.
“We would like to have a participation of private creditors on a voluntary basis,” Merkel told reporters in Berlin today at a joint press conference with French President Nicolas Sarkozy.
“The aim is involvement of the private sector on a voluntary basis, and for that the Vienna Initiative, as it’s called, is a good basis,” Merkel said. “I think we can achieve something on this basis.”
“This is a breakthrough,” Sarkozy said. “Finally we have found a solution for an involvement of the private sector on a voluntary basis,” he said. “What we decided just now is precisely in the spirit of what was decided in Vienna.”
What was the market's reaction?
Greek two-year notes surged, driving the yield down 168 basis points to 28.01 percent as of 3:37 p.m. in London, paring a weekly increase that pushed it above 30 percent yesterday for the first time since the euro’s introduction.
It appears the market recognizes the words We would like and The Aim is and I think we can achieve something as politician-speak for "We don't have a plan and the fate of the EU is in the hands of investors." Investors already see Greece as bankrupt. Why would they fund it further?
Notice Sarkozy saying "What we decided just now. . ." makes no sense. They have only decided to seek help from investors. It is the investors who will or will not decide to volunteer their capital.
I strongly doubt they will. And Merkel freely admits it would be check mate.
EU to Discuss Greek Plan
“We all lived through Lehman Brothers,” she told a meeting of activists from her ruling Christian Democrat party. “I don’t want another such threat to emanate from Europe. We wouldn’t be able to control an insolvency.”
Juncker is even more specific.
Athens News
Juncker, the prime minister of Luxembourg who also chairs the 17 eurozone finance ministers, was quoted as saying that a Greek bankruptcy "could prove contagious for Portugal and Ireland, and then also for Belgium and Italy because of their high debt burden, even before Spain."
"We are playing with the fire," he told the paper.
"Everything is becoming yet more expensive because we are including private creditors due to domestic political considerations in Germany," Sueddeutsche Zeitung quoted him as saying.
And yet, in the face of all this, Jean-Claude Trichet is still the EU's foremost propagandist.
Trichet warns of widening global imbalances
Trichet said the euro zone does not contribute to global imbalances, pointing to projections by the International Monetary Fund which see the euro area current account broadly balanced this year and the next, up to 2015.
He pointed out that "the euro area has a significant stake in effective global re-balancing, notably through sounder domestic policies worldwide which, in turn, would contribute to global external stability."
Such imbalances raise challenges for international monetary and fiscal cooperation, Trichet said, referring to global imbalances as "one of the main challenges facing the global economy and the world community."
Trichet is a shill for globalists. Greece is single-handedly contributing to global imbalances. He knows full well that "sounder domestic policies" would include prohibiting Greece, Portugal, Spain, and Italy from being able to borrow at the same rate as Germany. This equal borrowing treatment is currently one of the main challenges facing the world community . . . because it is about to unravel quickly.
Each country is different. Homogenized monetary policies do not work. Yet Trichet is saying they do. He is merely spreading propaganda for globalists who seek to do the same thing in Asia and the Americas: create more monetary unions even though their efficacy is proving non-existent.
What is their solution? Adding fiscal unity on top of the currently failing monetary one.
With the exception of visa-free travel throughout the Euro zone, the EU has been a failure. And its failure should be seen as a good thing to anyone who loves their country and their country's sovereignty.
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