• 33 mins Gold Miners Brace For Seasonal Downturn
  • 8 hours The Silver Plunge Continues
  • 24 hours 7 COVID Vaccine Stocks To Plan Upside Moves
  • 1 day Rhodium Climbs Reaches Record Highs
  • 2 days Tesla Tumbles After Battery Day Fails To Impress
  • 2 days Three Energy ETFs To Watch This Decade
  • 3 days What To Do With $2 Trillion In Suspicious Bank Transactions?
  • 4 days How The Stock Market Predicts Electoral Victory
  • 4 days Tesla's "Battery Day" Could Deal A Blow To Cobalt Miners
  • 5 days New TikTok Deal Hopes To Bypass National Security Concerns
  • 5 days Where Will Gold Go From Here?
  • 6 days COVID-19 Is Fueling A Pastic Waste Crisis
  • 6 days Gold Output Set To Decline
  • 7 days Uber And Lyft Look To Go Electric
  • 8 days COVID-19 Is Crushing Palladium Demand
  • 9 days This ‘Once-Boring’ Tech Company Is Now Super Hot
  • 10 days Will Air-Based Protein Be Our Future Food?
  • 10 days Google Pledges To Go Carbon-Free By 2030
  • 11 days A New Twist In The TikTok Saga
  • 11 days Gold Inches Closer To $2,000
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Greek Bailout Keeps 'United States Of Europe' Dream Intact...for Now!

by Arnold Bock with Lorimer Wilson

Underlying much of what we see and don't see regarding the modern-day tragedy that is Greece, is all about preserving the dream of a pan European nation state, a United States of Europe if you will. Only secondarily is it about the solvency of the Greek nation and about bailing out the foreign bank holders of Greek sovereign debt. Let me explain my perspective.

When I first wrote about the Greek debt issue (Greece: a Greek Tragedy or a Greek Comedy (of Fiscal Mismanagement)?) I said it wasn't about bailing out an insolvent Greece, rather it was about preventing the bankruptcies of foreign banks which held Greek debt. All the talk in the mainstream media at that time focused on the solvency of Greece itself. Now the crisis has mutated into preserving the ongoing European political project of one united European nation, although the mainstream media for the most part still does not understand this reality.

Interest rates on Euro sovereign debt in every member nation were always very low because there was always a misplaced belief in the soundness of the EU and the Euro. In addition, everyone seemed to believe that there was also an implicit guarantee that the Euro currency and Euro sovereign debt would ultimately be backstopped by the European Central Bank, the EU and, if necessary, the IMF and the US Federal Reserve Bank.

More recent actions show that:

  • the prevailing belief in the soundness of the EU and the Euro is misplaced,
  • the European Central Bank, the EU, IMF and the US Fed will go to seemingly any length to protect the foreign banks which hold Euro sovereign debt, and that
  • the collective dream of establishing a single political entity, a pan European nation state, is slowly slipping away.

Indeed, perhaps it is their attempt to salvage the pan European nation state goal which explains so many of the somewhat 'senseless' measures that have been taken, or not taken, to preserve Greece. To let Greece out, or to force Greece out, of the Euro zone, would create a precedent for the other weak links such as Portugal, Spain and Italy to follow suit. The domino effect of any measure applied to other ailing Euro member nations would effectively kill any chances of the formation of a United States of Europe. Most policy makers in Europe are not ready to think seriously about discarding that fading dream - yet.

In the meantime, the measures being taken are simply designed to maintain the status quo:

  • don't let Greece out, don't force Greece out, of the Euro zone,
  • don't let Greece become insolvent,
  • don't let Greece become a negative precedent to apply to the other sick Euro nations,
  • don't allow the banks which hold Euro sovereign debt be seen to be bankrupt, even though most are if accounting shenanigans and vast infusions of new digital Euros had not become their current salvation.


Conclusion

By bailing out Greece and the foreign bank holders of European sovereign debt, the pan European political dream remains intact...for now. Current and future actions, therefore, are designed to simply buy more time to preserve the political dream of a future United States of Europe.

 


Arnold Bock is a frequent contributor of articles to www.FinancialArticlesummariesToday.com and www.munKNEE.com where it was initially posted (see here). For automatic receipt of every article Arnold writes and those of other such insightful analysts of the current economic/financial/investment environment please go here. Article edited by Lorimer Wilson.

 

Back to homepage

Leave a comment

Leave a comment