Jan. 6 (Bloomberg) -- European Central Bank Executive Board member Juergen Stark said investors canât assume that the rest of the European Union will bail out Greece if such a move were necessary, Il Sole said, citing an interview. âThe markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece,â the paper cited Stark as saying in an interview published today. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.4cGz1tLfU4 Outsch ! Short EUR. Short Greece GB's. Short Greece stock market indices. Short Greece.
and..... the EUR rallies. kinda get the feeling that, in this bizarro world market, if they announced that Greece broke off and fell into the sea, both the EUR and Greek stocks trading on the EUREX (since the Greek exchange would be submerged) would rally!
Suppose a government of a European Union member country borrows Euro. Such a loan might have to be repaid in Euro rather than the domestic currency. Domestic currency can be created at will, Euro can not be created by members. Consequences might be extreme. A debtor country might direct farmers to sell food to foreign buyers rather than domestic consumers to earn Euro required for debt repayment. Citizens might go hungry. It might not be a stable situation.
of course we'll not pay for greece bail out but we'll happily take control of most of their resources, companies and utility cash cows in exchange for the euros they need to keep afloat. that's the whole idea about the monetary union. you get stability but lose sovereignty. it is about the federalization of europe, in a broad sense, it is an attempt of having an united states of europe, under the command of the frankfurt/paris. that's why the brits are not keen on joining the euro.
It's colonialism - named "democracy". And the economic playing field is the mean for this "transition". The EU is simply an expansion of France's and Germany's distribution markets...
Everyone ALWAYS says they won't do bail outs until the market makes things really ugly and they falter/cave. When the shit hits the fan, Greece will be bailed out one way or the other, and the market knows it has the almighty power. Hell, everything has been going its way for how many years now? Governments continue to ride to the rescue. No one is responsible for making risky/bad calls anymore. Look what happened with Dubai? "Dubai must stand and make things good on it's own." - Abu Dhabi. Yeah right. Then the market showed them a glimpse into the abyss and they came a runnin'.
the europeans even want to go further: the federalization of all nations of the world via the IMF. so they could tell the US and the Chinese what to do and what not.
Or the Fed trotting out a couple of guv's to say they saw no reason to cut rates in the summer of 07 ... only to cut rates when things started looking rough. Or Paulson saying no more bailouts to Lehman, and then ... bailing out AIG, ML, BAC, GS days later
I read some article the other day about an internal meeting the German Bundesbank (their central bank) had about how to deal with potential PIGS defaults and to their shock their legal experts advised them there is no way to kick out a EUR zone member state from the currency union, regardless of how irresponsibly they manage their finances. Some unnamed Bundesbank guy was quoted as saying "Our politicians spent years negotiating the entrance criteria for new members, they must have forgotten to devise a mechanism to remove failed economies". They're stuck with the PIGS. If necessary, they will bail them out until the bitter end.