As Greece is paralysed by series of strikes, whilst its government ministers go cap in hand to the EU for a bailout, Angela Merkel is trying to dampen down hysteria in Germany that there may a bailout on the cards for Europe's most impoverished economy.
Greece's situation is not helped by the fact that last October it transpired that its previous government had been fiddling the official statistics. The level of debt was in fact twice that previously reported.
The good citizens of Germany are quite rightly rather pissed off at having to bailout a fraudster.
Now chickens are coming home to roost. The local citizens of Greece have no intention of succumbing to the austerity package necessary for Greece to live up to its commitments to remain in the Euro.
1 The EU bails Greece out, even though there are no formal mechanisms in place for such a bailout (the IMF may well have to intervene), or
2 Greece leaves the Euro.
In the event Greece leaves the Euro the next countries to be forced out will be Spain, Portugal and Ireland.
The EU is caught between two very hard rocks:
- an unpalatable and possibly ruinous bailout, or
- the collapse of the Euro.
Either way the outcome may well be the kiss of the death for the Euro experiment.
As I have noted before, the "one size" fits all approach of the EU (wrt interest rates etc) simply does not work when there are so many economies that are in the EU that are so clearly out of sync.
Maybe the next time that the Euro experiment is resurrected the membership list is kept a little more exclusive, and those who do apply for membership are rigorously tested first to ensure that they have not cheated.
So much for the "United States of Europe"!