May 9, 2011
Early in the afternoon last Friday, Der Spiegel dropped a monster bombshell when it said that Greece was threatening to leave the Eurozone, and that an emergency meeting had been convened for that night among top leaders.
It was obviously partially true.
There was a meeting on Friday, and there is an acknowledgment that the current bailout path is unsustainable.
But the explosive report always seemed a little fishy, like something emanating from interested German sources.
Greek economics professor Yanis Varoufakis expounds more on this theory:
It is my considered opinion that Der Spiegel, in consultation with certain circles within the German government (in particular the Finance Ministry) was trying to send a message to the German Chancellor but also the Greek Prime Minister. And what is this message? That there are far worse things than a debt restructure, the worst being a step-by-step dismantling of the euro that will begin once a country like Greece is forced into an impossible situation. And that continuing to live in denial, and to peddle blatant lies about the sustainability of the present course will no longer be tolerated.
According to Varoufakis, the fundamental thrust of the story is false. Greece is not really considering leaving the Eurozone, although naturally it has come up.
Varoufakis cites his own sources in saying that the minister of finance and various German banks were getting fed up:
More precisely, the message sent by the Spiegel incendiary article was that the policy of fresh expensive loans for insolvent states, combined with savage austerity at a time of deep recession, does not and will not work. That the time for debt restructuring for the eurozone’s stressed periphery has come, as has the time for a rational resolution of Europe’s banking crisis. To drive their point home, the circles within Germany that saw to it that Spiegel publishes this article illustrated vividly, for Mrs Merkel’s and Mr Papandreou’s benefit, that there is something far, far worse than a debt restructure: the commencement of a successive elimination of countries from the eurozone that will give rise to magnificent levels of speculation in the money markets as to who comes next and when.
By causing a mild, early panic, along these lines, they sent the stark message that the time for lies is over, that more liquidity to insolvent states and bankrupted banks will make things worse, that it is time to have the debate we ought to have had more than a year ago in Europe.
The tactic may have worked. The euro tanked on the news and it was followed by furious comments about restructuring.
This article was posted: Monday, May 9, 2011 at 3:09 am