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Monday, February 13, 2012 4:42 PM


Cracks in Agreement in Greece, Finland, Germany, France; Of Duct Tape, Glue, Rubber Bands


The latest Greek deal is unraveling in multiple places already. The EMU wants to hold it together but can't. Cracks are wide, deep, and widening.

Greek Party Leader Might Seek to Renegotiate Terms
Social unrest harms hopes of Greek reform

Sunday’s explosion of street violence in Athens underlines the danger that political disorder may undercut Greece’s attempt to implement the economic reforms required to avert a debt default, according to Greek politicians and economists.

Although parliament passed the measures, the rebellion and the urban violence raise the prospect that the next Greek government, which will take office after elections set for April, will lack the authority and determination to hold firm to the austerity course.

According to opinion polls, the election’s most likely outcome is a victory for the centre-right New Democracy, but without an overall majority.

Antonis Samaras, leader of New Democracy and the likely next prime minister, and Evangelos Venizelos, finance minister and one of Pasok’s senior figures, are both pledged to the austerity plan dictated by Greece’s European and International Monetary Fund creditors. But Mr Samaras appeared to put his personal commitment in doubt when, before the vote, he suggested to his party faithful that he might seek to renegotiate the plan’s terms if he became prime minister.
Unless and until all political parties agree to the terms Germany will not OK the plan. Yet, how can anyone agree to what they cannot control? Election outcomes are not cast in stone.

The Guardian says the same thing in Eurozone Crisis Live: "New Democracy wouldn't confirm today that their leader, Antonis Samaras, would sign the pledge. Without his signature, Greece still wouldn't get the bailout package."

Finland Seeks Collateral
Athens, Helsinki to sign collateral deal
Finland may sign a deal on securing collateral in exchange for its commitment to Greece’s second bailout in the “next few days,” Finance Minister Jutta Urpilainen said on Monday.

A vote in parliament on Finland’s participation in the bailout could follow next week, she told reporters in Helsinki.

Euro-area finance ministers share a “very strong” common stance in their view on what Greece must do, namely act on its pledges of austerity before more aid can be released, she said.

Finland, one of four AAA-rated euro members, last year became the only nation in the currency bloc to secure extra assurances that its commitments to a second Greek rescue be repaid by insisting on collateral.
This battle was fought once before and approved, but if there really is collateral, it places Finland first in line should Greece default. However, the previous collateral proposal was so watered down as to be meaningless. What happens this time, may or may not be the same story.

German Head of CSU Party Seeks Referendum on Euro

Seehofer calls for people's vote on euro
Horst Seehofer, the head of the Christian Social Union party, wants Germans to vote on whether the euro should be saved or not and is calling for a change to Germany’s Basic Law, or Constitution, to allow that to happen.

“The CSU is for a people’s vote in Germany over the basic questions about Europe. That’s a good path to bring the European idea closer to citizens,” Seehofer told the paper. The instrument of a people’s referendum should be anchored in the German constitution, he told the paper.

A week ago the Ferdinand Kirchof, the vice president of the Federal Constitutional Court, told the paper that Germany “finally needs a direct democracy in the EU,” saying Brussels had distanced itself from European Union citizens and from the home regions comprising the EU.
French Candidate Hollande Intends to Reopen Treaty Discussions

Hollande insists on fiscal treaty move
The main opposition candidate for the French presidency has spelt out his intention to reopen discussions on the new European treaty with all signatory countries if he wins the election, a move that would throw into doubt the results of months of negotiations by his opponent Nicolas Sarkozy and the German chancellor Angela Merkel.

François Hollande, the Socialist candidate currently leading the polls in France’s presidential election campaign, brushed aside stern warnings from Mr Sarkozy and Ms Merkel that the treaty – due to be signed by 25 European Union countries in early March – would have to be respected by any new president.

The opposed positions of Mr Hollande and Ms Merkel – who has pledged to campaign for Mr Sarkozy – suggest a difficult relationship if he is elected. So far she has declined to meet him ahead of the vote. He said he would travel to Berlin for such a meeting, but added: “I won’t knock at the door if she doesn’t want to open it. That’s unpleasant for me.”

He said the treaty would not have been ratified in France and several other countries before the election, which will be held over two rounds on April 22 and May 6. “In France the treaty is ratified by parliament, not the head of state ... We have a window of opportunity [to renegotiate],” he said.
Of Duct Tape, Glue, Rubber Bands

Does anyone seriously believe this penned agreement is worth the paper it's printed on. Actually, what makes anyone think there is an agreement in the first place?

This agreement is similar to the effect one would get attempting to use use duct tape, glue, and rubber band, to hold together blue cheese crumbled feta cheese.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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