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Wednesday, February 17, 2010

EU Gets Heavy

The EU started to flex its muscles wrt Greece's fraud and debt scandal.

It has told Greece that it will not be allowed to vote at an upcoming EU meeting, and could lose control over its tax and spending policies, if it fails to meet a March 16 deadline on cost-cutting.

These measures have put some "bottom" under the beleaguered Euro, which has risen from its 9 year low.

However, as long as Greece remains in the Euro the contagion (in the form of a loss of trust and downgrading) will spread to other Euro countries.

The least worst result for the Euro and Greece will be for Greece to be thrown out of the Euro, thus cutting out the contagion and affording Greece the opportunity to go cap in hand to the IMF to bail it out.

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