12 July 2015

How the Germans Have Yet Again F%$#ed Up a Signature Foreign Policy Initiative

First, the hash tag: #ThisIsACoup , which is trending on Twitter.

Rather unsurprising, given that now that Greece has capitulated to the insane and sadistic demands of the Troika, but there is still no deal because the so-called hawks still want another pound of flesh:
Greece’s final attempt to avoid being kicked out of the euro by securing a new three-year bailout worth up to €80bn ran into a wall of resistance from the eurozone’s fiscal hawks on Saturday.

Finland rejected any more funding for the country and Germany called for Greece to be turfed out of the currency bloc for at least five years.
All of this means that not only will Greece have to leave the Euro, but it means that there will be poverty, epidemics, and starvation that has not been seen on the European continent since the end of World War II.

It also means that Greece will be exiting the Euro Zone, because all of its banks will be shuttered in the next few days.

This could have turned out better, but it now appears that the current Greek government has made no plans at all for the eventuality of leaving the Euro:
Here are just a few of their concerns - focused in particular on the idea, put forward by the German Finance Minister Wolfgang Schaeuble, that there perhaps could and should be a temporary exit of Greece from the euro.

So the first rather chilling thing I've learned, from well-placed bankers, is there have been no conversations between the Bank of Greece, the government or regulators and Greece's commercial banks about the technicalities of leaving the euro and adopting a new currency.
(emphasis mine)

The "hawks", in particular the Germans, and most particularly Wolfgang Schäuble, are eager to make an example of Greece, thinking that this will cow the other members of the Euro Zone will see what happens to the Greek people and fall into Germany's hegemonic line.

I think that this is a gross miscalcculation.

Any nation in the Euro zone that is seeing what is being done to Greece has to be drawing contingency plans for a rapid flight from the monetary union.

The lesson of this disaster is that a plan be that can be implemented in a few days must be ready to go, and I expect  that plans are being drawn up in Italy, Spain, Portugal, and Ireland.

If any of these countries has their ducks in a row, then in the event of a Euro exit, it means that this action will in fairly short order be followed by economic growth.

Once this happens, it is likely that the others will follow, seeing that an exit can be managed gracefully.

If either Italy or Spain leaves, the Euro would soar, because the effects of Germany's predatory export state on the currency would be less diluted, which would likely make countries like France, the Netherlands, and Belgium (particularly with the possibility of an ethnic split between Flemish and Walloon) look for the exit as their exports become prohibitively expensive.

Assuming the gradual dissolution of the Euro, or as I like to think of it, the New Reichsmark, Germany sees its currency become much stronger, and its export driven economy looks a less successful.

I expect this to happen for two reasons:

First, because I do not see how the Euro can survive in the face of the German insistence on economics as a morality play.

Second, it is clear that the creation of the Euro, and its management over the past decade have been a major foreign policy initiative by the Germans, and all of the "bold" German foreign policy initiatives since reunification (there were none prior to reunification) have been a disaster, with Germany's premature recognition of Slovenia, hastening the brakup of Yugoslavia, which prevented a negotiated separation, and guaranteed a bloody civil war being only the first of such disasters.

The Euro was structured by the Germans for the benefit of Germany, and the rest of the people of Europe are reaping a bitter harvest as a result.


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