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Tuesday, June 19, 2012 1:16 PM


It's Just Impossible


The off-again, on-again, off-again Telegraph writer Ambrose Evans-Pritchard is back on-again with correct analysis in his post Greek agony drags on as Asphyxiation Bloc wins

Europe’s establishment is delighted by the victory of New Democracy and pro-asphyxiation bloc. This relief is unlikely to last much beyond today, if that.

Greece’s new leaders have a mandate from Hell. Almost 52pc of the popular vote went to parties that opposed the bail-out Memorandum in one way or another. There is no national acceptance of the Troika’s austerity policies whatsoever.

The hard-Left Syriza party of Alexis Tsipras is arguably more dangerous in opposition, now fortified with big bloc of seats in Parliament. He can lacerate the government without responsibility as the state sheds 150,000 public sector workers, a fifth of the total.

It was for this outcome that the Greece’s elected government was toppled last year in an EU Putsch. We now learn from ex-premier George Papandreou that this was "all Sarkozy’s fault".

France’s leader refused to let Papandreou call a referendum on the bail-out terms (which would almost certainly have passed), and Chancellor Angela Merkel went along with this shoddy act of EU colonialism. The EU threatened, in effect, to cut off Troika payments. The PASOK government was replaced by an EU-appointed technocrat.

A frightening precedent was set, and for no purpose. All the EU has achieved is to replace a truculent Greek parliament with one that is completely unworkable.

As for New Democracy, it cannot meet the terms of each quarterly Troika payment in the future even if it secures the support of PASOK socialists because the terms are – politically – impossible to meet.
As is always the case, Pritchard is at his finest when he analyzes what has happened or what is about to happen. He gets in trouble when he proposes solutions to prevent the inevitable.

In this case, Pritchard did not ask for Eurobonds, beg German chancellor Angela Merkel for steps the German supreme court will not allow,  ask the ECB to turn on the printing presses, or any other such silly ideas that tend to get him in trouble.

Instead, he simply (and correctly) stated "the terms are – politically – impossible to meet".

Mathematically Impossible

The Financial Times also notes the impossibility of it all.

Please consider the opening statements in  What happens if Angela Merkel gets her way

  1. The Bundesbank said there should be no banking union until there is a fiscal union. 
  2. Angela Merkel said that there should be no fiscal union until there is political union. 
  3. François Hollande said that there should be no political union until there is a banking union. 

The writer of that article should have stopped right there, but instead went on with nonsense about a "concrete proposal" from Hollande to let the ESM inject unlimited liquidity into banks via the ECB.

Excuse me for pointing out that neither the Bundesbank nor Merkel, nor the German constitution would allow such a stupid thing. That means we need to have a fourth bullet point.

4. The German supreme court will not allow a political union nor a fiscal union, nor a banking union without a German referendum.
 
In recognition of the impossibility of it all, I offer this musical tribute.



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