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Stratfor analysis of Greece and the euro crisis

with 4 comments

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Written by Peter Cooper

February 6, 2010 at 2:29 pm

4 Responses

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  1. Euro Crisis
    There is a big difference between a liquidity problem and a solvency problem. When a company or a country has enough assets to cover its liabilities but they have a problem raising the money they need to pay off the loan they have a liquidity problem. But when an entity has more debt than it can serve than it has a solvency problem and in that case more debt and loans will only dig it into a bigger hole. Greece has a liquidity problem since it has much more debt than the economy can serve. Germany and the Euro are perhaps will to give them loan in attractive interest rates but unless they are willing to consistently transfer money from the core of Europe to the weak countries those countries are doomed.
    If German politicians think they can convince there citizens to fund Greece’s recklessness throw transfer payments all I have to say to them is GOOD LUCK!

    Euro Crisis

    February 15, 2010 at 4:19 pm

  2. Another Follow-up:

    Here’s the real news for today, according to Ambrose Evans Pritchard’s column:

    1. Bundesbank chief Axel Weber said it would be “politically impossible” to ask taxpayers to bail out a profligate state, and

    2. Die Welt has called for Greek withdrawal from the euro.

    After reading Ambrose’s column, I agree that “it’s time for Germany to lance the boils in Euroland” …

    obewon

    February 7, 2010 at 10:07 pm

  3. Follow-Up to Peter:

    Peter, I realize Germany’s interest in keeping the European common market as stable as possible. But think about this for a moment. At what cost? Germany is the only country that can can act as the Grand SugarDaddy for the financially weak Eurozone.

    That’s why I used the adverb “ultimately” in my first comment above. Yeah, OK, Germany may cave in this time, but when they see that the sink hole is far deeper than they realized, then . . .

    it is likely that Germany may ultimately decide to “throw in the towel” and depart from the EURO.

    But not before they’ve gone through a lot of pain and significant expenditure… 2012 maybe?

    obewon

    February 7, 2010 at 9:12 pm

  4. Germany knows that Greece’s fall is inevitable; they know that Greece (and the PIIG countries) has lied about the extent of their problem. They also know that a fall of one EUR country will result in a domino effect for other EUR countries, including the rest of the PIIGS, France, and Belgium.

    They also know that, if Germany were to provide Greece with a $50 billion Euro gift, it will just be the start. The PIIGS will “want in” on this gravy train, and Greece will ultimately require more.

    Knowing this, and also knowing that their continued support of the Euro will cost them dearly, it is likely that Germany may ultimately decide to “throw in the towel” and depart from the EURO.

    When viewed objectively, this is the only sane option that Germany has!

    Yet this action will have dire consequences for Europe and the global financial community.

    We live in interesting and dangerous times!

    Ed Note: Germany give up the euro? PIIGs might fly!

    obewon

    February 6, 2010 at 8:39 pm


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