The Greek Crisis Is a Euro Crisis
Dec. 14, 2009 (EIRNS)—The crisis in Greece provides the evidence that the survival of the European Monetary Union is based on the extinction of nation-states. Once Fitch downrated Greece's sovereign debt, and the threat of a sovereign default became concrete, German Chancellor Angela Merkel, speaking Dec. 10 at the European Popular Party Congress in Bonn, said that the EU should go over the heads of the Greek parliamentarians and enforce "corrections," to avoid a default and save the euro. This was one day after Greek Prime Minister Papandreou stated that "the financial crisis threatens the sovereignty of the country," for the first time since 1974, when the military dictatorship was overthrown. The "Colonels" of today are the EU bureaucrats.
"What happens in one [EU] member-country affects all others—particularly when we have a common currency. Therefore we share a common responsibility," Merkel said. "Then the question is raised of what authority Europe actually has to give a task to national parliaments, in order to avert damage to Europe itself?" The conflict between EU economic and monetary policies and national social strategies must be cleared up, Merkel said. "National parliaments don't want to accept dictates. We must discuss such questions."
The Greek government is already in half-receivership, as Eurostat officials have taken over their accounts.
However, the problem is not in the nation of Greece: The euro system itself is bankrupt. It has been kept afloat so far by sovereign states, which have provided each and every bank with collateral to obtain liquidity at the ECB. Not only have EU member-states bailed out large banks, loading those debts onto their budgets, but the very notes issued by those states have been purchased by banks, and used as collateral to get ECB loans.
The entire euro financial system is an empty shell, which can collapse at any moment, if any sovereign state, such as Greece, Ireland, or Spain, is forced to default. If a state defaults, it can start again the next moment. Not so, a private or even a central bank.
To save the bankrupt financial system, London and Brussels are ready to exterminate what they nicely call the PIIGS (Portugal, Ireland, Italy, Greece, and Spain), i.e., the EU member-states on the frontline of the threat of sovereign default. A default of any one of them could bring down the whole system. A commentary in the German economic daily Handelsblatt Dec. 11 made it clear: "First, many international investors, including banks, have bought Greek bonds. They can even use them in Germany as collateral for securities. Nobody really knows where those papers are. But exactly this uncertainty would magnify the damage, if state bonds suddenly are not serviced or cancelled."
Also, a banking crisis would not be isolated: "If Greek banks get in trouble, it would provoke panic waves through the whole finance sector."
However, Greece can survive only by leaving the euro zone. The Paris daily Libération presented a fictional account of such a scenario Dec. 10. "Athens, the presidential palace. Today is March 31, 2010. The Prime Minister, backed with a slim majority in the Parliament, just announced his intention to leave the euro zone and readopts the drachme. Everybody, from Dominique Strauss-Kahn of the IMF ... to Jean-Claude Trichet of the ECB tried to avoid the catastrophe. But each time, the conditions fixed by the international institutions to open up new credit lines for Greece were rejected by the Parliament. Too unpopular."