MarketNeutral
26th April 2010, 05:06 AM
Ambrose Evans-Pritchard at The Telegraph has some characteristically sober observations about the state of Greece and the EU as a whole.
The nut of the piece is that typically an IMF bailout wouldn't be devastating, but when an IMF bailout comes under EU rules -- strictly speaking the Maastricht treaty with its no bailouts rules -- the effects will be quite rough.
The EU-IMF "therapy" of deflation for Greece repeats the catastrophic errors of Chancellor Heinrich Bruning in the early 1930s and must lead to a depression, he said.
Yet that is what IMF chief Dominique Strauss-Kahn is preparing for Greece, against the better judgment of his own experts. "Greek citizens shouldn't fear the IMF; we are there to try to help them," he said over the weekend. Yet a week ago he told Greece that devaluation and default are non-starters. "The only effective remedy that remains is deflation. That will be painful. That means falling wages, and falling prices. There is no other way."
Actually, the IMF pursues other ways often, last year in Jamaica. What Mr Strauss-Kahn means is that the EU will not tolerate any other way. The Greek people must be sacrificed for the Project and to hold the EMU line, like the Spartans of Thermopylae who perished to gain time for the Alliance.
http://www.businessinsider.com/the-greeks-are-about-to-be-sacrificed-at-the-altar-the-european-shrine-2010-4
The nut of the piece is that typically an IMF bailout wouldn't be devastating, but when an IMF bailout comes under EU rules -- strictly speaking the Maastricht treaty with its no bailouts rules -- the effects will be quite rough.
The EU-IMF "therapy" of deflation for Greece repeats the catastrophic errors of Chancellor Heinrich Bruning in the early 1930s and must lead to a depression, he said.
Yet that is what IMF chief Dominique Strauss-Kahn is preparing for Greece, against the better judgment of his own experts. "Greek citizens shouldn't fear the IMF; we are there to try to help them," he said over the weekend. Yet a week ago he told Greece that devaluation and default are non-starters. "The only effective remedy that remains is deflation. That will be painful. That means falling wages, and falling prices. There is no other way."
Actually, the IMF pursues other ways often, last year in Jamaica. What Mr Strauss-Kahn means is that the EU will not tolerate any other way. The Greek people must be sacrificed for the Project and to hold the EMU line, like the Spartans of Thermopylae who perished to gain time for the Alliance.
http://www.businessinsider.com/the-greeks-are-about-to-be-sacrificed-at-the-altar-the-european-shrine-2010-4