Christine Lagarde was perfectly right when she said about the Greek catastrophe, “what we need is a real fix, not a quick fix”. Unfortunately the European Nomenclature so admirably being led by Germany has no intention of really fixing any problem. The Frau’s chosen method, eagerly taken up by the Eurocrats, Olli Rehn and Jean Claude Juncker, is of simply kicking the can down the road, burying their heads in the sand and hoping the problem will just go away.
And why is this? Imbecility? Inadequacy? Foolishness? Lack of Knowledge? No. None of this. It is out of extremely short sighted self interest and a certain arrogant bloody mindedness. They know best. They won’t discuss it and the more their plans fail the more they insist on the same plans out of a total inability to admit they might have been wrong.
So Greece, since its leadership has no voice and no… yes, none of those either, will again be subjected to another disastrous Quick Fix. Schauble is already smirking over how he is fixing this one. Greece will get her tranche and possibly all the tranches that were to be payable within 2012, BUT at the cost of having automatic cuts and tax hikes imposed by a bunch of technocrats. That is through abolishing what is left of Greek democracy. The Greek economy has already been destroyed.
What will be gained by that? Well, the illusion that Germany, and the other European lenders, will not only not lose any money but will continue to rake in all the billions in interest from Greece. And secondly, but more important perhaps, that time will be gained till the German elections, after which Greece may be disposed of as useless baggage.
Now this is a dangerous little game since it cannot see further than Schauble’s nose. If Greece is not given the Real Fix right now, the disease will continue festering. Greece will certainly go completely bust and no “targets” will ever be attained. Besides, how much more can you cut wages and pensions and hike taxes? Already there really is not much left to take.
So far from continuing the lovely little gravy train of lending Greece more and more merely so she can pay you exorbitant interest while her economy collapses, you will end up with a destroyed country in Europe that cannot pay anything back any more because it no longer even has an economy. You will keep the Euro teetering along for another year. Problems in the whole of Europe will start going from bad to worse. Europe is already in recession with the smug AAA rated countries Holland and Austria, say, so dismissive of Greece, also falling into recession.
The German inspired policy is catastrophic. The level of competence of the EU Commissioner responsible Olli Rehn is appalling. The so called heads of the EU Rompuy and Barroso are complete nonentities who do as the Great Frau tells them regardless of the consequences. Consequences they do not even bother to think about. (Or even care about, provided they keep all their perks.)
Can disaster be averted? Of course it can. easily. Will disaster be averted? No. Not at this juncture. If the IMF does ratchet up the pressure as well it might, then Germany will fudge and fumble and procrastinate till it gets what it wants. Nothing to be really done till The Frau gets re elected.
An extremely ingenious German plan as always. Will it work? It may, in that it may well achieve its single object of reelecting the Mighty Frau. But since from the beginning of this crisis and as results clearly show, the German leadership* has grossly misjudged and mismanaged the whole situation, this time will be no exception either.
By continually kicking the can down the road at the expense of the peripheral and now core countries, the German leadership has not gained time, it has lost time and time is running out dangerously. And since the German Elections will be held in about a year, I would say there is not enough time for little Wolfie’s brilliant scheme to work.
The only thing Wolfgang can count on with certainty is the idiocy and complete and utter servility of the Greek government which he can do absolutely as he likes with. But then again, though he imagines he will give the Greek government time by granting, or appearing to grant, the loan installments, the consequences for Greece are so horrendous that I do not think the current parody of a Greek government has much more time left either.
* I feel I should clarify that when I say “Germany” I do not of course mean the entire German nation, but merely the bigoted, dogmatic leadership currently in power.