Monday, 7 May 2012

Is Greece heading out of the Euro?

Given the current election results in Greece, with the mainstream parties rejected, is Greece finally going to escape the Euro?

What is of interest is that voters are now supporting the more extremist parties, with some similarities to Germany in the years following the Great War. The German people went for the extremist parties, both communist and facist.

Merkel is not best please with the result, nor would I imagine with the new French President. It seems that the great Euro dream is faltering.

The Greek people have simply had enough. It could be argued that it is the country's own fault for allegedly fiddling the figures prior to entry, but that is the politicians, not the people. Tax avoidance is apparently common in Greece, from top business leaders right down to the taxi driver in the street.

The turning point for the Greeks had to be when Merkel told the then Greek prime minister to cancel his referendum of the Euro. One nation telling another what to do. And unbelievably he obeyed.

I am no economist. I understand the basics but I have little time or inclination to learn about banking and finance. What I do know is that we are in a strange situation where every country seems to owe money. How long can this go on for? I also understand that you cannot always let a bank collapse, but then on the other hand you cannot have them directing policy after they made a mess of their business first time around.

The Greek people have had their say. And judging by current events they will have yet another as a coalition has yet to materialise. That could get even more votes for the extremist parties. The question is whether the new Greek government has the balls to exit the Euro. It may cause them more problems but it would at least give them the tools to sort out problems themselves.

If Greece decides to abandon the Euro, then Spain and Portugal might decide to follow. And if they go, the rest will follow suit. France under its new socialist President may decide to return to the Franc as well, leaving Germany a bit annoyed. How it will affect their economy I haven't a clue, but probably not pleasantly. That would leave Merkel vulnerable.

Greece leaving the Euro might give the respective European governments the proverbial kick up the backside that is sorely needed. Austerity isn't working.

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