Grekland Fas 2





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För utvecklingen efter EU:s "räddningsplan" se Grekland Fas 2

EU Bailout 2010 (May)

Olli Rehn /European Commissioner for Economic and Financial Affairs/ is quoted with the dramatic statement that a failure of Greece is a failure of the EU.
"If Greece fails and we fail, this will do serious and maybe permanent damage to the credibility of the European Union... The euro is not only a monetary arrangement but a core political project of the European Union."
Eurointelligence 15.03.2010

Greece Economy Watch

FT Greece in depth

It was the morning after the night before and I was riding an elevator to the 13th floor in the European Commission.
Two men smiled at each other and one said "I hear Greece has been saved". "Couldn't be better," beamed the other, before disappearing into the vastness of bureaucracy. It felt like news shared from a distant front: "Bastogne has been relieved" or "Malta is holding out".
Gavin Hewitt, the BBC's Europe editor blog 26 March 2010

Wings over Malta

The French president also got written into the draft a phrase that mentioned "the economic government of the European Union". It was the Irish, initially, that choked on the words. The Dutch and the British were not far behind. Officials emerged to say there had been "asymmetrical translation" and the word "government" was replaced by "governance".

In truth the Germans and French mean different things by the words "economic governance". The Germans want a tougher regulatory regime that won't tolerate cheats. The French want to see closer economic co-operation.

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German taxpayers are fiercely opposed to bailing out Greece, which is burdened by debt of nearly 300bn euros
and a public deficit of 12.7% of GDP - more than four times the official eurozone limit.
It is also having to refinance its debt. Because of doubts over its ability to pay, it is having to pay interest at about 6% - around double what Germany has to pay.
BBC 25/3 2010

SPIEGEL ONLINE: And in Athens in the meantime, they are burning the flags of Europe.
Weidenfeld: Clearly that is not a good thing.
But in this you can also see the meaningful role that Europe now plays.

På torsdag och fredag möts EU:s stats- och regeringschefer i Bryssel för sitt ordinarie vårtoppmöte.
Frankrike och Spanien har krävt ett extra toppmöte /om Grekland/ för de 16 euroländernas ledare just innan det ordinarie toppmötet startar för att lösa frågan.
Problemet är att euroländerna inte är överens. Därför är det troligt att Van Rompuy inte kallar till ett extra möte om länderna inte först har enats om en överenskommelse.
DN/TT 2010-03-24

Diskussionen om Grekland handlar inte bara om pengar, utan ytterst om fördjupat samarbete.
Euroländerna har i dag gemensam valuta, gemensam penningpolitik och gemensam centralbank. Men varje land sköter själv sina statsfinanser och sin ekonomiska politik. Greklands kris visar på riskerna med det
Men om euroländerna ska ge stöd åt den medlem som råkat i knipa kommer det oundvikligen att följas av krav på inflytande över medlemsländernas ekonomiska politik och budgetar.
Henrik Brors, DN 25/3 2010

Turerna för att få till stånd en nödvändig räddningsplan för Grekland och andra allt mer nödställda euroländer börjar likna en bisarr politisk musikteater av sällan skådat slag.
Kanske kan de eurokramande folkpartisterna med vår kommissionär Cecilia Malmström i spetsen istället satsa på att få in en fot genom att satsa på några lämpliga dansnummer.
SvD/24 Per Lindvall 2010-03-25

Ytterligare spänning skapas av det faktum att det inte handlar en engångsföreställning utan att risken är överhängande att samma pjäs behöver sättas upp i såväl Lissabon, Dublin och kanske framför allt en stor gala i Madrid.

Den högste chefen för IMF, fransmannen och socialisten Dominique Strauss-Kahn utpekas som utmanare till den alltmer impopuläre sittande presidenten Sarkozy i det kommande presidentvalet. Sarkozy har därför personliga skäl att hålla IMF borta från Grekland.

Inför de kommande delstatsvalen har Angela Merkel iklätt sig rollen som järnkansler som hårt driver linjen att enskilda länder måste klara ut sina egna problem och att Tyskland inte har något ansvar för dessa.

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Det riktigt stora potentiella bekymret är Spanien.
Spaniens externa nettoskuld är fem gånger så stor som Greklands.
Det skriver Per Lindvall på i en utmärkt artikel.
Rolf Englund blog 24/3 2010

Germany has laid down three conditions for an agreement: an immediately pending catastrophe, involvement of the IMF, and treaty changes to harden the stability pact (or rather a commitment to accept those changes).
Eurointelligence 24/3 2010

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The sad reality is that Greece's domestic and external imbalances have reached such a dimension that their correction within the straightjacket of Eurozone membership will necessarily involve many years of painful deflation and of deep economic recession.
Desmond Lachman, /Timbros storasyster/ American Enterprise Institute, March 16, 2010

Lacking its own currency, Greece cannot restore international competitiveness through currency depreciation. Nor can it use exchange rate devaluation to stimulate its export sector as a means to offset the negative impact on domestic demand of massive budget consolidation.

Groucho Marx famously observed that he would not join a club that would have him as a member. As the Greek economic crisis heats up, one wonders whether Greek policymakers are not thinking the same about Greece's Eurozone membership. Not only does its Eurozone membership seem to be condemning Greece to many years of deep economic recession and deflation. Rather, Greece's present economic travails are now raising serious questions about the longer-run viability of the Eurozone in its present form.

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Greklands premiärminister Giorgos Papandreou sade att "så länge Grekland lånar till en orimligt höga ränta över 6 procent" måste landet hålla "alla alternativ öppna".
SvD/E24 2010-03-18

Premiärministern sade dock att han skulle föredra en EU-lösning /framför IMF/.

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German Chancellor Angela Merkel told investors they shouldn’t expect this week’s European Union summit to agree on assistance for Greece
Greek 10-year bonds fell to their lowest since Feb. 25, with yields rising by 16 basis points to 6.51 percent,
The risk premium investors demand to hold Greek securities over comparable German bonds widened for a third day by 18 basis points to 342 basis points. (3,41 procent)
Bloomberg, March 22, 2010

The beginning of the end of Europe’s economic and monetary union as we know it.
This is the true historical significance of Ms Merkel’s decision.
Wolfgang Münchau, FT March 21 2010 19:35

Chancellor Angela Merkel has halted at the Rubicon.
Has Germany just killed the dream of a European superstate?
So after weeks of Euro-bluff it looks ever more like an IMF rescue for Greece after all, and hence for any other eurozone nation driven to ruin by the wrong monetary policy.
Ambrose Evans-Pritchard, 21 March 2010
Very Important Article

Greece, the euro, and the Battle of Jutland
A Gefechtskehrtwendunga 180-degree turn that saves you
Mr Juncker, the Commission’s Jose Barroso, and their allies, have been trying to exploit the crisis to advance the EU Project, pushing the boat stealthily across the Rubicon towards fiscal federalism and a de facto debt union.
Ambrose Evans-Pritchard 18/3 2010

They hoped that the Germans would not realize fully what was being done to them until too late. Chancellor Angela Merkel appears to have balked at this

“A Gefechtskehrtwendung is a 180-degree turn that saves you. I think this may save Germany from a bail-out that they don’t like, that they can’t sell to German voters, and that creates legal problems under the no-bail-out clause of Article 125 of the EU Treaties.”

This morning, Greek premier George Papandreou openly threatened to go to the IMF in an address to the European Parliament.

“Greece, unlike Hungary does not have a free currency. We have the worst of the IMF and none of the advantages of the eurozone. This is where Europe must come in and provide what the IMF can offer. Or Greece will have to go to the IMF, we hope that will not be necessary.”

So Hungary has a “free currency” and is therefore better off? I am shocked, shocked, that he could say such a thing.

IMF a devaluation of 30pc or so to offset the pain of fiscal austerity and to allow the country to claw its way out of its hole through exports and import substitution.
This is obviously Verboten in euroland.

Latvia is going through a version of this IMF-pain-without-an-IMF-cure treatment, it its case to defend its euro-peg. The IMF expects the result to be a 30pc contraction of GDP from peak to trough, just about a world record. Not surprisingly, the ruling coalition disintegrated yesterday, unable to agree on how to implement this euphemistically named “internal devalulation”.

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Battle of Jutland - wikipedia

This is a extraordinary story.
Here was the European Council making a political declaration that they would be ready to stand by Greece, and now Germany wants Greece to turn to the IMF for aid.
Eurointelligence 18/3 2010

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Finansminister Anders Borg har flera gånger tagit halvt avstånd från tanken att svenska skattebetalare skulle bidra till en lösning av eurons kris. Det skedde senast i tisdags morse i en intervju i P1-morgon i Sveriges Radio.
Men valutasamarbetet är en viktig, ja helt central del av EU.
DN huvudledare 17/3 2010

Den grekiska regeringen har lovat att i en första omgång få ned
det statliga budgetunderskottet från tolv till åtta procent av BNP.

Fram till nu har det varit osäkert om EU vill – och kan – ge bistånd i ett sådant ekonomiskt krisläge. Men efter eurogruppens möte i måndags kväll förklarade dess ordförande Jean-Claude Juncker att Grekland kan räkna med hjälp.
I vilken form detta ska ske är inte klart.

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Början på sidan

Does nobody read German any more?
As of today, German finance minister Wolfgang Schauble has not yet agreed to anything beyond a last resort rescue “if insolvency were imminent” and if there were to be a threat to the “financial stability of the euro area as a whole”.
Ambrose Evans-Pritchard March 16th, 2010
Very Important Article

Grekland och spekulanterna och rådvilla EMU-ministrar
Tänk Dig att Du vore ansvarig för en obligationsfond som skall placera en miljard i statspapper i valutan Euro.
Tänk Dig vidare att Du gick in till Din chef och sade att Du hade plancerat miljarden i grekiska statspapper.
Din chef frågar Dig då: Varför köpte Du inte tyska statspapper? Dom är ju också i euro?
Då gäller det att ha ett bra svar.
Rolf Englund blog 15/3 2010

Greece, Ireland, Portugal and Spain will cut the demand
So, unless as-yet-unspotted foreign cavalry ride to Europe’s rescue by buying up the continent’s products, aggregate demand will fall.
Less competitive Eurozone countries will be forced to deflate and shrink their economies to match Europe’s diminished and diminishing circumstances.
FT Editorial March 15 2010

Thomas Mayer, economist at Deutsche Bank, said the latest Greek austerity measures could cause the economy to shrink by 4 per cent this year, making the government’s task even more formidable.
“The adjustment remains a Herculean task, and the costs of the adjustment in terms of lost output could be larger than policymakers currently anticipate,” Mr Mayer said.
FT March 15 2010

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Grunden för ekonomisk tillväxt är efterfrågan. Det är ganska självklart,
om få vill ha de varor och tjänster som produceras kommer de inte att produceras.
Olle Wästbergs nyhetsbrev, januari 2008
The Law of Supply and Demand

If life in the eurozone becomes intolerable, exit will become the default resolution mechanism.
And when you include the legal possibility of an exit, the whole political and economic dynamic changes,

and the threat of an exit might turn into a self-fulfilling prophecy.
This does not apply only to Greece, but to a number of countries that have lost competitiveness to Germany.
Wolfgang Münchau, FT March 14 2010

Olli Rehn /European Commissioner for Economic and Financial Affairs/ is quoted with the dramatic statement that a failure of Greece is a failure of the EU.
"If Greece fails and we fail, this will do serious and maybe permanent damage to the credibility of the European Union... The euro is not only a monetary arrangement but a core political project of the European Union."
Eurointelligence 15.03.2010

Eurons framtid avgörs i Grekland
Ekonomiekot Lördag 27 februari 2010

Framtiden för Europavalutan euron avgörs just nu i Grekland. Ekonomiekot Lördag tar dig med till demokratins vagga. Vad betyder veckans generalstrejk? Och demonstrationerna som spårade ur? Är Grekland slutligen på väg att lämna arvet från diktaturen bakom sig? Medverkar gör Elsa Kazemi, handelssekreterare och chef för Svenska Exportrådet i Athen och Christoforos Sardelis, med bakgrund i Stockholms universitet, Handelsbanken, Svenska riksbanken och Greklands Riksgäldskontor.
Vikarierande programledare, Staffan Sonning, Sveriges Radios ekonomikorrespondent.

Lyssna här

Många hade hoppats att EU-medlemskapet 1981 skulle kickstarta en modernisering av den grekiska ekonomin.
I stället blev det ett hejdundrande party när miljarder pumpades in i Grekland och tillät politikerna att ignorera landets strukturproblem.
Festen fortsatte när euron infördes. Grekland fick en räntenivå som var på tok för låg, satt av Europeiska centralbanken med de starka tyska och franska ekonomierna som riktsnöre.
SvD/E24, reporter Tomas Lundin, 14/3 2010

Utmaningen består i inget mindre än att utrota en kultur av skattefusk och vardagskorruption som enligt uppskattningar kostar staten över 200 miljarder kronor årligen.

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French Finance Minister Christine Lagarde said no such plan would emerge if Greece doesn't default on its debt.
"There is no such thing as a bailout plan which would have been approved, agreed or otherwise, because there is no need for such a thing,"
WSJ MARCH 13, 2010

Nonetheless, Ms. Lagarde said that "technical experts" at the EU have been working on a contingency plan, so that if the need arose, "all we would have to do is press the button."

Ms. Lagarde gave only guarded support for the creation of a European Monetary Fund, a new project currently under debate within the European Commission. "The European Monetary Fund is one of many options that we should explore [and] examine to see whether there is virtue and value in having it," she said. "I am not sure it is the ultimate answer to the issues we are dealing with at the moment."

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242 miljarder kronor
De 16 euroländerna har enats om att stötta Grekland med ett nödlån på 25 miljarder euro.
De tekniska detaljerna för ett stöd till Grekland är inte helt klara.
Ekot 13 mars 2010

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Greklands ekonomiska problem tvingar EU att ta ett nytt steg ut i det okända.
Vi sitter alla på första parkett och betraktar hur historien vrider sig, ännu ett stycke.
Unionen är en ofullbordad och därmed känslig konstruktion. Det verkar just nu inte särskilt troligt – men kanske hejdar sig unionen i steget och börjar tveka. Då kan det oavslutade bygget i stället börja krackelera.
Annika Ström Melin, Signerat, DN 12/3 2010

"Nu behövs ett statsmannalikt ledarskap... Europas ledare, först och främst Tyskland och Frankrike"
Ska vi rycka ut för de sydeuropeiska länderna
eller ge upp och låta euron dö?
Den frågan klargör vad hela krisen handlar om: det europeiska projektets framtid.
Joschka Fischer, kolumn DN 10/3 2010

Början på sidan

The Eurozone's 'Bay of PIIGS'
The PIIGS group clearly poses a systemic risk for the EZ
Roubini Global Economics 2010-03-09

The analysis shows that Greece, Portugal, Ireland, Italy, and Spain are the most vulnerable to external shocks, in that order.

Applied to the domestic market, our analysis shows that Spain, Ireland, Portugal and Italy are most vulnerable on the home front (like unemployment and productivity).

If Greece fails by itself or contagion takes down the PIIGS, the EZ may splinter. The PIIGS group clearly poses a systemic risk for the EZ and, by extension, for the planet as a whole.

EZ = EuroZone

Bay of pigs

Samtidigt som fokus ligger på ett krisande Grekland har oron för en rad grannländer - de så kallade PIIGS-länderna - ökat.
Spanien, Irland, Italien, Grekland och Spanien som åtminstone har ett gemensamt – de kommer att få svårt att exportera sig ur den kris de hamnat i.
Spanien och Irland har haft en kredittillväxt och en byggbom som gick alldeles för långt, säger professor Lars Calmfors.
SvD/e24, 2010-03-09, reporter Annelie Östlund

Början på sidan

Greece last week solved its fiscal problem by creating a private sector problem of identical size.
The Greek state – the sum of its public and private sectors – is just as bankrupt today as it was a week ago
Wolfgang Münchau March 7 2010

This means that, by following the fiscal policy rules, the eurozone would risk a private sector depression, which would almost certainly be concentrated heavily in Europe’s south. This scenario would greatly increase the probability of a eurozone break-up at some point in the future.

Read more here

Början på sidan

Den nuvarande krisen är ingen eurokris utan en kris för länder som misskött sina ekonomier. Ändå debatteras EU:s skuld i det grekiska dramat.
Om Grekland bara hade stått utanför den gemensamma valutan euron och behållit drakman hade krisen varit lindrigare, får vi höra.
Ett annat tema i ”skyll-krisen-på-euron”-debatten har handlat om makten över räntepolitiken.
Peter Wolodarski, DN Krönika 2010-03-07

Tillåt mig att tvivla. Som svenskar tillhör vi elitserien i valutadopning, eftersom vi mellan 1973 och 1992 lät kronan minska i värde sex gånger.

Det har ingenting att göra med euron, eller medlemskapet i EU, eller finanskrisen. Det handlar om att leva i nivå med sina tillgångar.

Ett annat tema i ”skyll-krisen-på-euron”-debatten har handlat om makten över räntepolitiken. De länder som just nu är i blickfånget – Grekland, Italien, Irland, Spanien och Portugal – skulle enligt detta synsätt ha klarat sig bättre om de inte avhänt sig makten över styrräntan till Europeiska centralbanken. ECB:s räntemedicin har passat dem illa. Deras överhettade ekonomier hade behövts kylas ned med en högre ränta.

Men euroskeptikerna lägger alldeles för stor vikt vid vad en centralbank kan åstadkomma genom att laborera med sin ränta. Se bara på Storbritannien som står utanför EMU.


Spanien är ett skolexempel på att Margaret Thatchers ekonomiska rådgivare, Alan Walters, hade rätt i sin kritik mot EMU
”Spanien hade inte hamnat i det här läget om landet inte hade varit med i EMU.”
, menar professor Lars Calmfors SvD/E24 2010-03-03
reporter Annelie Östlund

De mest aktiva EMU-förespråkarna har närmast velat förlöjliga argumentet om asymmetriska störningar.
Men argumentet måste uppenbarligen även fortsättningsvis tas på största allvar.

Min uppfattning är att det inte går att dra någon klar slutsats om hur balansen mellan för- och nackdelar för Sverige av att införa euron har förändrats.
Lars Calmfors, professor, DN Debatt 15/1 2010


Wolodarski: Den nuvarande krisen är därför ingen eurokris utan en kris för länder som misskött sina ekonomier. Utan euron skulle förmodligen storm utbrutit på den europeiska valutamarknaden, vilket hade kunnat orsaka farliga politiska spänningar.


Om Grekland hade haft kvar sin valuta och den hade flutit, som den svenska kronan, dollarn eller den norska kronan, så hade den grekiska valuta sjunkit, men det hade inte varit någon kris. De vanliga medborgarna hade knappast märkt så mycket och EMU-ländernas regeringschefer hade inte behövt åka på krismöte.
Kris förutsätter fasta växelkurser eller en monetär union.
Rolf Englund blog 2010-02-27


Wolodarski: Men det grekiska dramat blixtbelyser också allvarliga svagheter i Europasamarbetet.

Det finns varken någon gemensam finanspolitik eller europeisk motsvarighet till internationella valutafonden.

Man /EU/ måste ha förmåga att assistera ett medlemsland i nöd. Det är inte konstigare än att en nationalstat hjälper en kommun eller region i svårigheter, ibland genom tvångsförvaltning. (kurs. här)

Framgångsrika valutaunioner har genom historien byggt på ett tätt politiskt samarbete mellan deltagarna. Utan detta politiska klister faller till slut pengarna samman.

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Alla valutaunioner i historien har antingen lett till en stat eller spruckit.
Varför skulle EMU vara så annorlunda?
Anders Lindberg, Hässelby, SvD Synpunkt 14/8 2003

Frågan om Sverige skall bli medlem av en europeisk valutaunion är ett av de största och mest vittomfattande beslut som vårt land stått inför på mycket lång tid.
Göran Persson i Sv D Brännpunkt 96-12-29

Krugman, Nils Lundgren och Europas Förenta Stater
Rolf Englund blog 2010-02-10

Finns euron kvar om 15 år?
Euron blev verklighet därför att det fanns europeiska ledare - Helmut Kohl, Francois Mitterand, Jacques Delors - som önskade sig de nya pengarna.
Om deras efterträdare bestämmer sig för att inte tro på projektet, då kommer det förr eller senare att haverera.
Peter Wolodarski Signerat DNs ledarsida 3/6 2005

Början på sidan

- EU måste ha förmåga att assistera ett medlemsland i nöd. Det är inte konstigare än att en nationalstat hjälper en kommun eller region i svårigheter, ibland genom tvångsförvaltning, skrev DNs politiske chefredaktör Peter Wolodarski 2010-03-07.
Klarare än så går det inte att uttrycka en federalistisk grundinställning.
Rolf Englund blog 2010-03-08

Athens sold €5bn in 10-year bonds and received orders for three times that amount.
However, the interest rate the country has been forced to pay to attract investors is 6.25%, 2 pp more than Portugal
Eurointelligence 5/3 2010

If they do not get the money from the Europeans, they will get it from the IMF.

Greece desperately needs €20 billion ($27 billion) in the next two months to roll over expiring debt.
“We want to be able to borrow at the same rates as other euro-zone countries,” Mr Papandreou said, perhaps optimistically.
On the other hand, as he has also pointed out, Greece cannot afford to go on borrowing indefinitely at 350 basis points over Germany.
The gains from austerity measures could be swallowed up by such a high debt premium.
The Economist print Mar 4th 2010

The German constitutional court ruled two decades ago that the Maastricht treaty was acceptable only if its no bail-out provisions were respected—so any bail-out would have to be disguised to avoid legal challenges. Yet German banks are on the hook for so much Greek (and other Mediterranean) debt that some kind of taxpayer support may be unavoidable.

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"The euro is certainly in the most difficult phase since it was created,"
"And that's why it's so important that we're conscious of the fact that, on the one hand, it's our common currency but on the other hand of the need to really tackle the causes of the troubles at their roots," she added.
We've got a treaty that does not include any provision for bailing states out, to help them out of a jam.
German Chancellor Angela Merkel

Millions of migrants have arrived in Greece, Italy and Spain over the past decade.
To avoid serious social problems, those countries need to do a better job of making them feel welcome
Time Magazine March 1st 2010

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So we now know the trick.
France and Germany’s contingency plan to bail out Greece would use their state-owned banks, CDC and KfW respectively
An interesting question now is the legal consequence of this shrewd plan.
Charles Wyplosz, FT February 22 2010

So we now know the trick. France and Germany’s contingency plan to bail out Greece would use their state-owned banks, CDC and KfW respectively, according to Der Spiegel magazine (the German finance ministry insists nothing has been fixed). Paris and Berlin also want other countries to pitch in some €25bn ($34bn, £22bn), in proportion to their European Central Bank shares, but does every euro area member government own a pocket bank to do its dubious errands? If not, what will be the other trick?

By holding Greek debt, they first receive attractive yields, a reflection of the risk that they take. If the risks are then underwritten by European support, banks keep the yield and make capital gains too.

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One banker said the situation was surreal.
"How can they call the Germans incompetent Nazis and still expect a bail-out?"

Ambrose Evans-Pritchard, 24 Feb 2010

Theodoros Pangalos said the current crop of EU leaders were of "very poor quality" and had botched this month's crisis summit in Brussels.
"The people who are managing the fortunes of Europe were not up to the task," he said.

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Grekland skyller krisen på nazismen
Greklands vice premiärminister Theodoros Pangalos kritiserade Tysklands hållning till den grekiska krisen och påpekade att hans land aldrig har fått någon ersättning för de ekonomiska följderna av den nazityska ockupationen under andra världskriget.
DI/TT 2010-02-24

Grekland, EMU, Tyskland och Freden
Rolf Englund blog 23/2 2010


Officials have said they will support Greece, but they haven't said how. This has some skeptics of the euro project wondering if the rich, thrift-minded EU states ultimately can be counted on to come to the aid of poorer and heavily indebted ones.
"They can choose solidarity or chaos," said David Marsh, author of The Euro: The Politics of the New Global Currency.
Fortune February 19, 2010

Less than a year before the euro became the currency of 11 European countries in January 1999, a declaration signed by 155 German-speaking economists called for an “orderly”— ie, long — delay.
The prospective euro members, they said, had not yet reduced their debt and deficits to suit a workable monetary union;
some were using “creative accounting” to get there, and a casual attitude towards deficits would undermine confidence in the euro’s stability.
The Economist print Feb 18th 2010

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“The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,”
“The alternatives are to default in some way or to leave, or both.”
Martin Feldstein, an adviser to U.S. presidents since Ronald Reagan, Bloomberg 17/3 2010

Greece’s 10-year bond yielded 6.12 percent at 12:25 p.m. in London today, more than a percentage point lower than Jan. 28.
The premium investors demand to hold the bonds over their German equivalents narrowed to 298 basis points from 396 basis points in the same period.

As long ago as June 1992, Feldstein wrote in the Economist that “economic analysis” didn’t justify a single European currency. In his most-famous contribution to the debate, he wrote in Foreign Affairs in 1997 that “war within Europe itself would be abhorrent but not impossible” under the euro.


Lars Jonung, an adviser to the European Commission in Brussels and co-author of a January paper on how American economists viewed the euro through the 1990s, says Feldstein is a “consistent pessimist, and so far he’s been proved wrong.”

Paul Krugman about Jonung
Anyway, I’ve always been a mild euroskeptic —
I’m one of the American economists that Jonung and Drea, in a spectacularly ill-timed piece, mock for their doubts about EMU.
NYT February 15, 2010,

My concerns were always just what they are now: fears that the lack of fiscal and labor market integration would lead to very nasty adjustment problems.
I just never dreamed how bad it would get.

Let Greece take a eurozone ‘holiday’
Martin Feldstein FT February 16 2010

The writer is professor of economics at Harvard and president emeritus of the National Bureau of Economic Research. He chaired the Council of Economic Advisers under President Reagan and is a member of President Obama’s Economic Recovery Advisory Board

There is a better idea that could preserve the single currency while helping the beleaguered country to adjust its twin deficits.

The rest of the eurozone could allow Greece to take a temporary leave of absence with the right and the obligation to return at a more competitive exchange rate.

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Martin Feldstein

RE: Greek Holiday. Sounds nice.

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The PIGS (Portugal, Italy, Greece and Spain) are old hat.
The new acronym on trading floors for possible dominoes if Greece should fall is STUPID
(Spain, Turkey, UK, Portugal, Italy, Dubai).

The worst that could happen now is a leap into the imaginary world of soft options.
That would be the end of the eurozone.
Wolfgang Münchau February 14 2010

The EU has issued a political pledge to rescue Greece – and by precedent, all Club Med – without first securing a mandate from the parliaments of creditor nations.
Europe's leaders still refuse to face the awful truth: that monetary union is unworkable as constructed.
Ambrose Evans-Pritchard GMT 14 Feb 2010

The last two weeks have cruelly exposed the Original Sin of monetary union: that EMU was launched without an EU treasury or debt union. This will be tested again and again by bond vigilantes until such a mechanism is created.

The Frankfurter Allgemeine summed up German feelings when it asked why taxpayers should bail out a country that thinks it an outrage to raise the retirement age to 63. "Should Germans have to work in the future until 69 instead of 67 so that Greeks can enjoy early retirement?"

Europe's leaders still refuse to face the awful truth: that monetary union is unworkable as constructed. That different labour markets, different sensitivities to interest rates, different economic structures, have caused the gap between North and South to grow ever wider; that a chunk of Europe is priced out of EMU by 30pc, has swung from boom to bust, and is on the cusp of a debt-deflation spiral.

Spanish unions have accepted a 1pc pay deal this year, only to be undercut by reports that Germany's IG Metall may accept zero. Must Spain slash wages to close the gap? What would that do to a country with 19pc unemployment and total debt near 300pc of GDP?



EMU - en snabbkurs

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I Sverige driver Folkpartiet frågan om det inte vore dags med en folkomröstning om euron under kommande mandatperiod.
År 2013 har det gått 10 år sedan Sverige röstade nej till euron, och någon gång är det förstås klart att frågan bör bli aktuell igen. På lång sikt är det rimligt att Sverige går med i eurozonen.
Men det lär inte bli nu.
SvD-ledare 27 mars 2010

Det gångna året har gett många anledningar att fundera över eurons betydelse.
Det är många olika kulturer som ska fås att samverka, och det tar tid.
Europasamarbetet är för viktigt för att hastas fram.

Under den globala finanskrisen... var det gott att eurons stabiliserande kraft fanns.

Man har varit för ivrig att locka med stater som inte har haft i euron att göra
Detta borde få dem att tänka efter, som vill vidga eurozonen österut i snabbare takt än vad reglerna anger.

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Tänk om Svenska Dagbladet hade vågat, om man nu vill det, skriva att det bör inte vara dags med en folkomröstning om euron under kommande mandatperiod.
Rolf Englund blog 27 mars 2010

Är krisen ett bevis på att eurons införande – som i den antika grekiska tragedin – drevs av hybris och att det är en ödesbestämd nemesis som är under uppsegling?
Utan euron skulle riskerna för europeiskt valutakaos inte vara mindre utan större
Efter valet kan det vara dags att ånyo ställa frågan om Sverige ska vara med i valutaunionen
SvD-ledare signerad Claes Arvidsson 15/2 2010

Svaret är att utan euron skulle vi se en islandisering av eurons svaga ekonomier. Liran, pesetan, escudon och särskilt den grekiska drachmen skulle vara indragna i en svårstoppad vadslagningskarusell – som under den svenska räntekrisen i början på 1990-talet. Utan euron skulle riskerna för europeiskt valutakaos inte vara mindre utan större.

Det betyder inte att allt är frid och fröjd.
Euron är ett politiskt flaggskepp i EU och därför är det grekiska dramat en rejäl prestigeförlust.

Det är en skandal att Grekland har ägnat sig åt att förmedla en falsk bild av läget i ekonomin, men också att man från EU:s sida har tolererat detta.

För Grekland är det ett måste att genomföra reformer för att få kontroll över budgetunderskottet och öka tillväxten i ekonomin.

För EU är lärdomen av de scener som nu spelas upp att man behöver fundera över regin för att få spelet att flyta bättre.

Efter nejet i folkomröstningen 2003 led euron en hastig politisk död. I finanskristider har opinionen för en svensk euro ökat och efter valet kan det vara dags att ånyo ställa frågan om Sverige ska vara med i valutaunionen fullt ut.
Då vet vi också hur det grekiska dramat har slutat.

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SvD skriver om EMU och Grekland!
Rolf Englund blog 15/2 2010

Svenska Dagbladet

Euro Currency Union Showing Strains
Rolf Englund, a Swedish economist who campaigned vigorously against the euro in a 2003 referendum whether to adopt it there, said the current crisis underscored why Swedes resoundingly decided to keep the krona.
''It will crack sooner or later, because it's impossible to have a common currency for such a big, and diverse area,'' he said.
''There's no real EU solution for Greece. They're helpless now, and they have no instruments to fend it off.''
New York Times, Associated Press, February 12, 2010

Hur länge kan SvD tiga om Grekland?
Är SvD:s politiske redaktör P J Anders Linder en feg opportunist?
Rolf Englund blog 13/2 2010

PIGS is a horrible acronym.
But this is how the financial markets refer to the troubled and heavily-indebted countries of Europe - Portugal, Ireland, Greece and Spain.
(Some analysts use PIIGS to include Italy - Europe's longstanding biggest debtor.)
BBC 11 February 2010

Svårt fall av svininfluensa
DN 2010-02-04 Signerat/Annika Ström Melin

Daniel Gros, direktör för Centre for european policy studies, skriver i fredagens Financial Times

Länderna i Pigsgruppen har definitivt liknande symtom. Men Daniel Gros anser att diagnoserna skiljer sig åt – och att Pigsländerna därför bör utsättas för olika typer av behandling. Han hävdar att Grekland och Portugal inte enbart kan ordineras nedskärningar i de offentliga utgifterna

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Desillusionerade Europaanhängare längtar efter en djupare mening med den gemensamma valutan, strukturfonderna och sjätte momsdirektivet.
Annika Ström Melin, Axess nummer 9, 2006

Credit Suisse says Greece must raise €30bn (£26bn) in debt by mid-year, mostly in April and May.
Greek banks have been shut out of Europe's inter-dealer markets, forcing them to raise money at killer rates. They are suffering an erosion of deposits as rich Greeks shift money abroad.
This could come to a head long before April.
Ambrose Evans-Pritchard, 11 Feb 2010

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Mr Van Rompuy, the new President of the European Council:
The 16 eurozone countries "will take determined and coordinated action if needed to safeguard stability in the eurozone as a whole".
BBC 11/2 2010

Here, in a chart, is why Britain can’t afford to be complacent about the plight of Portugal, Ireland, Italy, Greece and Spain.
UK banks are exposed to these countries to the tune of 16 per cent of gross domestic product, according to this chart from Stephen Jen of BlueGold Capital Management
(the figures themselves are Bank for International Settlement numbers).
Edmund Conway February 10th, 2010

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French banks hold €80bn of Greek debts, twice the exposure of German banks, though Greek debt is merely the tip of the iceberg.
Total exposure to Club O'Med is $853bn for France (30pc of its GDP), and $707bn for Germany (19pc of GDP)
Ambrose Evans-Pritchard, 10/2 2010

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German exposure to the region amounts to €43bn in Greece, €47bn in Portugal, €193bn in Ireland, and €240bn in Spain,
according to the Bank for International Settlements.
German lenders are already vulnerable, with the world's lowest risk-adjusted capital ratios bar Japan.
Ambrose Evans-Pritchard, 10/2 2010

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Because of the way the European Monetary Union was designed,
there is in fact no mechanism for a bail-out of the Greek government
by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty).
Niall Ferguson, FT February 10 2010

True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God.
Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma.
There is not even a mechanism for Greece to leave the eurozone.

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Niall Ferguson

Jesper Katz och Johnny Munkhammar:
Ge inget EU-stöd till Grekland
Vanligtvis leder sänkta statliga utgifter till minskad tillväxt tillfälligt, men om det leder till sänkta räntor kan en budgetsanering ge högre tillväxt än vad som annars vore fallet.
Europaportalen 2010-02-04

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How Greece managed to present fraudulent accounts – with the help of Goldman Sachs
Der Spiegel/Eurointelligence 10/2 2010

Der Spiegel has a cracking news story about how Greece managed to cheat on its Maastricht debt. Goldman Sachs set up a highly intransparent currency swap through which Greece was able to hide its true deficit. Here are the relevant bits of the story:

Full text at Eurointelligence

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Euroland måste nu antingen bli en riktig federation, överstatligt och med Tyskland i spetsen, det land som vann kriget genom att förlora det.
Eller Euroland faller itu vilket vore detsamma som en renationalisering. Inget av alternativen är särskilt trevligt.
Richard Swartz, Kolumn DN 3 september 2011

Men för det senare är jag långt mer rädd än för det förra. Dock rör vi för litet på oss för att klara av det förra.

Och då har jag ändå inte nämnt Europas babyloniska språkförbistring som mer än något annat klistrar oss fast vid vår geografiska fläck.

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Federalism "ever closer union"

EU:s själva grundidé har därför varit att försöka förena oss européer i en större, fredlig gemenskap som en gång för alla ska förhindra att vi kör vår europeiska historia som repris.
Denna nyskapade gemenskap har fungerat förbluffande väl trots att den bygger på en inneboende motsättning mellan just gemenskap och nationell suveränitet. Men ...
Richard Swartz, Kolumn DN, 2010-02-06

Men en fördjupad gemenskap uppfattas av många – och delvis med rätta – som den överstatlighet som de fruktar skulle sätta det genuint svenska, franska eller polska ur spel. Deras recept är därför mer svenskt, franskt eller polskt; och mindre av Europa.

Grekland är en mycket liten nationalstat. Men en suverän stat. Av snävt egenintresse har Aten vägrat visa gemenskapen solidaritet. Och det vittnar om det europeiska projektets skörhet när denna inneboende motsättning mellan gemenskap och nationell suveränitet kan komma att framkalla en kris så mycket större än den lokalt grekiska.

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Logiken i det hela rör sig i federativ riktning... Sch! säger Kohl åt mig när jag tar upp det.
Göran Persson



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Richard Swartz om en union utan gemensamma värden
i Bryssel talas ju ideligen – och högtidligt – om gemensamma värden och identitet. Men vad betyder det konkret? I verkligheten mycket litet: för den ene är staten en trygg försörjare, för den andre ett hot, här skatter utslag av solidaritet, där av konfiskering och något som bör undvikas, för några är arbete livets mening, för andra dess kvarnsten. Och så vidare. Och alla måste vi passa till formeln ”europé” för att EU ska kunna fungera.
DN 2011-05-14

The last few days have reminded me of the speculative attacks
on sterling and the Italian lira in September 1992.
Wolfgang Münchau February 7 2010

Such panics are easily triggered and difficult to stop.
Greek 10-year borrowing costs, at 6.7 per cent, are about 2 percentage points dearer than Ireland or Portugal, the two next riskiest eurozone sovereigns. This air of danger has infected Greek businesses.
Financial Times editorial February 5 2010

If the Greeks do not regain the markets’ confidence, they may fail to refinance the €20 billion ($28 billion) or so of debt that falls due in April and May.
At that point the government would default or would have to be bailed out.

“If Germany steps in, there will be people on the Athens street who will say the Wehrmacht is back,” an economist remarks.
The Economist print Feb 4th 2010

The treaty governing the European Union includes a “no bail-out” clause, forbidding countries from assuming the debts of others. That clause was inserted in 1991, at the insistence of Germany, at the EU summit in Maastricht, the Dutch town where many of the ground rules for the euro were set down.
Other treaty clauses, however, may allow for aid to an EU state in trouble.

The Greek crisis only confirms the folly of binding a group of disparate countries together in a currency zone with no mechanism, such as a central fiscal authority, to address its internal imbalances.

Full text of VIA - Very Important Article

EMU - en snabbkurs

Det var redan i Maastricht 1991 som det hela gick snett.
Ett framgångsrikt statsbygge måste vila på en tydlig gemensam identitet
Stefan Hedlund, Timbros Smedjan, 23/6 2005

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Greklands sak är vår
Sverige borde så snart som möjligt ta det sista steget in i EU:s monetära samarbete, delta i diskussionerna och ta fullt ansvar för eurons framtid.
DN huvudledare 2010-02-04

Peter Wolodarski är en duktig pojke, som väl förtjänar att sitta på Herbert Tingstens stol.
Men det är synd att han ännu inte har förmått svänga DNs linje om EMU.
Dagens Nyheters ledarredaktion har länge tillhört de sista, snart enda, entusiasterna för ett svenskt EMU-medlemskap.
Rolf Englund blog 2010-02-05

Should Germany bail out Club Med or leave the euro altogether?
Germany faces a terrible dilemma. Either Europe's paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury, and debt union, or the euro will start to unravel,
and with it Germany's strategic investment in the post-war order.
Ambrose Evans-Pritchard, 31 Jan 2010

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Stålbad för greker och press på euron
Den statsfinansiella krisen i Grekland har vuxit till den största oroshärd som eurosamarbetet haft att hantera sedan euron infördes 1999.
DN/TT 2010-02-03

På utgiftssidan planeras utöver frysta löner även anställningsstopp 2010 och ett löfte om att begränsa nyrekryteringar av offentliganställda till en femtedel av de vakanser som uppstår därefter.

Regeringen har även utlovat att upprätta en buffertfond.

Greklands budgetunderskott ska enligt den nu godkända stabilitetsplanen från Aten dras ned under taket på 3 procent av BNP i EU:s stabilitetspakt till 2012, en ambition man delar med rader av europeiska regeringar som till följd av finanskris och recession bryter mot paktens regler.

Mest illa ute är dock just grekerna, vars underskott beräknas ha skenat iväg upp till 12,7 procent av BNP 2009, medan statsskulden vuxit till över 120 procent av BNP.

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Det svenska stålbadet och Bibbi och Kenta, en lågavlönad barnfamilj.

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Experts in Athens told the country's parliament that it had
uncovered €40bn of "hidden debts"
during an investigation into past manipulation by the financial authorities.
Ambrose Evans-Pritchard, 02 Feb 2010

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The euro was meant to be a monetary union but not a political one.
The construction is patently flawed. A fully fledged currency requires both a central bank and a Treasury.
The Treasury need not be used to tax citizens on an everyday basis but it needs to be available in times of crisis. When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a Treasury can deal with problems of solvency. This is a well-known fact that should have been clear to everyone involved in the creation of the euro.
George Soros FT February 21 2010

Participating states established a common central bank but refused to surrender the right to tax their citizens to a common authority. This principle was enshrined in the Maastricht treaty and has since been rigorously interpreted by the German constitutional court. The euro was a unique and unusual construction whose viability is now being tested.

The crash of 2008 revealed the flaw in its construction when members had to rescue their banking systems independently. The Greek debt crisis brought matters to a climax. If member countries cannot take the next steps forward, the euro may fall apart.

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A group of far-sighted statesmen, inspired by the vision of a United States of Europe, recognised that this ideal could be approached only gradually, by setting limited objectives, mobilising the political will needed to achieve them and concluding treaties that required states to surrender only as much sovereignty as they could bear politically.
That is how the postwar Coal and Steel Community was transformed into the EU – one step at a time, understanding that each step was incomplete and would require further steps in due course.
George Soros, Financial Times 11 July 2011

It seems that quite a number of observers have forgotten what Emu is, and what it is not.
Financial aid from other EU countries or institutions that amounted, directly or indirectly, to a bail-out would violate EU treaties and undermine the foundations of Emu.
Such principles do not allow for compromise.
Once Greece was helped, the dam would be broken. A bail-out for the country that broke the rules would make it impossible to deny aid to others.
Otmar Issing, February 15 2010

It seems that quite a number of observers have forgotten what Emu is, and what it is not. The monetary union is based on two pillars.

One is the stability of the euro, guaranteed by an independent central bank with a clear mandate to maintain price stability.

The other is fiscal solidity, which has to be delivered by individual member states.
Member countries are still sovereign. Emu does not represent a state; it is an institutional arrangement unique in history.

In the 1990s, many economists – I was among them – warned that starting monetary union without having established a political union was putting the cart before the horse. Now the question is whether monetary union can survive without such a political union. The current crisis must be handled in such a way as to produce a positive answer. The viability of the whole framework – nothing less – is at stake.

This moment is a turning point for Emu, and for the future of Europe.

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Alla valutaunioner i historien har antingen lett till en stat eller spruckit.
Varför skulle EMU vara så annorlunda?

Anders Lindberg, Hässelby, SvD Synpunkt 14/8 2003

Should Greece be left to go bust?
Otmar Issing, a former board member of the European Central Bank, says an EU rescue would be disastrous.
The Economist online Feb 3rd 2010

Otmar Issing, who served as the European Central Bank's chief economist for its first eight years

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Otmar Issing om Europas ödestimma nu
Rolf Englund blog 15/2 2010

A vicious circle at the heart of the eurozone
An excellent article, as so often by
John Plender, Financial Times 12 July 2011
Highly Recommended

Undercapitalised banks are supporting over-indebted governments by holding their IOUs; over-indebted governments are supporting troubled banks; and there is insufficient equity in the European banking system to absorb the losses implicit in the solvency gap.

The outcome is that the European Central Bank ends up providing liquidity on an open-ended basis to the peripheral countries to keep their banking systems afloat at the cost of an ever weaker balance sheet.

The one surprise in all this is that more of the retail deposit base of southern Europe has not disappeared in capital flight.

The taxpayers of northern Europe do not want to bail out what they perceive to be profligate and lazy southern Europeans.

Yet their elected politicians cannot contemplate the alternative of sovereign default because that would put the whole European banking system at risk.

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Greece is not the only country with problems.
The eurozone has a structural flaw in the shape of a north-south financial imbalance.
John Plender, February 2 2010

The super-competitive surplus savers of northern Europe are dependent on the Club Med countries to absorb their exports. The Mediterraneans suffer from fiscal strains and competitiveness problems that cannot be solved by devaluation. Yet the Protestant northerners are reluctant to rebalance their economies towards domestic consumption to address this.

The risk is that what started in Greece, with the worst southern European budget deficit and a history of playing games with official numbers, could ultimately reach Portugal, then Spain and finally Italy.

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British chancellor Alistair Darling said Britain would not join any European effort to bail out Greece
FT January 29 2010

Answering questions about a possible European bail-out of Greece at the World Economic Forum in Davos, the British chancellor made it clear he saw the problem as one for the eurozone and not the wider European Union.

“The euro area has primary responsibility for anything that might be happening. We are not involved in that,” he said.

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EU signals last-resort backing for Greece
José Luis Rodríguez Zapatero, Spain’s prime minister, who said: “The euro club is a strong club with strong ties and reciprocal support. Let no one be mistaken about that.”
FT January 28 2010 19:42

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Armageddon at Parthenon?(nice pic)
The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading.
Spreads over German Bunds reached almost four percentage points,
by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral.
Contagion hit Portuguese, Spanish, Irish, and Italian bonds.
Ambrose Evans-Pritchard 28 Jan 2010

A key trigger yesterday was testimony in Germany's parliament by economy minister Rainer Brüderle,
who said there would be "no bail-outs" for struggling debtors
and no move to a "European economic government".

Jean-Claude Juncker, head of the Eurogroup of finance ministers, backs "assistance",
with support of EU integrationists hoping to nudge the EU towards full fiscal union.

Tim Congdon, from International Monetary Research, said the danger is that
wealthy Greeks may shift money to bank accounts abroad if they lose confidence
(akin to Mexico's Tequila Crisis in 1994-1995).
This would set off a banking crisis and become self-fulfilling.

Greece has been financing current account deficits – 15pc of GDP in 2008 – through its banks, which have built up €110bn foreign liabilities. "If foreign creditors want their money back, defaults and/or a macroeconomic catastrophe appear inevitable," Mr Congdon said.

The deeper concern is Spain, where youth unemployment has reached 44pc and the housing bust has a long way to run.
Nouriel Roubini said Spain is too big to contain.
"If Greece goes under that's a problem for the eurozone. If Spain goes under it's a disaster," he said

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Tim Congdon

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In tackling the deficit, Greece faces a Hobson’s Choice:
whether to accept social pain with financial and economic stability, or instability. Whatever it chooses, Greece will face economic pain and difficult socio-political fallout.
Roubini Global Economics 27 januari 2010

More aggressive spending cuts or tax hikes than initially envisaged in the stability program Greece presented in December could curb or even derail recovery, perhaps inciting social unrest. But if the debt becomes unfinanceable in the primary market or if Greece elects to exit the euro and devalue and redenominate its liabilities (a la Argentina), this could render its banking system insolvent and tip it into economic and financial isolation and decline, also with dire socio-political consequences.

Hobson’s Choice

Nouriel Roubini

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A principled Europe would not leave Greece to bleed
Trichet failed to note that there had long been a double standard – in effect two Maastricht treaties, one for the large and powerful countries, another for the smaller and less powerful.
When France broke the EU edict not to let debt exceed 3% of GDP, there were strong words, but little else.
Joseph Stiglitz, 25 January 2010

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The management of the Greek economic crisis raises some disturbing parallels with the aftermath of the Peloponnesian war. The war ended in 404BC
I fear something similar might happen if the eurozone were to impose austerity from the outside, as a quid pro quo for a possible bail-out, which may become necessary if the Greek government were to get into financial difficulty.
Wolfgang Münchau January 22 2010

The management of the Greek economic crisis raises some disturbing parallels with the aftermath of the Peloponnesian war. The war ended in 404BC, when the victorious Spartans imposed on Athens the rule of the Thirty Tyrants, who deprived the Athenians of most of their civil and democratic rights. The tyranny ended in a revolt after one year, when democracy was restored. A few decades later, the proud city states of Greece and Sparta were off the geopolitical map.

The country entered the eurozone in 2001 with the help of some creative accounting.

There are four likely scenarios.
Option one is default by Greece with a bail-out from the eurozone or the European Union, conditional on a strict austerity programme.

Scenario two is a default without bail-out.
The EU would refuse financial aid on the grounds that Greece failed to observe EU rules. In this case, the crisis is very likely to spread to Portugal, which is in a similar predicament. Eventually the financial markets might also question whether Spain can ever return to a sustainable path.

Scenario three is the one everyone in Brussels prays for:
the EU would succeed, by means of gentle persuasion, to get the Greek government to do all that is necessary, all by itself.
This would include severe cuts in social and healthcare expenditure, a hugely unpopular broadening of the tax base, cuts in public sector employment levels, public sector wage freezes, and labour reforms that allow real wages in the private sector to fall. This is a gruesome list, but this is probably what it will take for Greece to restore its competitive position, lost during its decade in the eurozone.
When you are locked in a monetary union, this is how you adjust. There is no exchange rate to devalue any longer.

A fourth option would be a fudge, something that can fool a sufficiently large number of people without resolving anything.
Over the course of the years, the EU has developed some expertise in this particular area.
Under such an option, the Greek government could produce a package with respectable headline numbers, or make misleading promises about structural reforms. Nemesis is postponed, for now.

Not only is the credibility of Greece at stake, but also that of the eurozone itself.

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Wolfgang Münchau

Peloponnesian war

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Klassisk bildning om det grekiska dramat
Rolf Englund blog 25/1 2010

The Greek government has promised to slash its fiscal deficit
from an estimated 12.7 per cent of gross domestic product last year to 3 per cent in 2012.
Is it plausible that this will happen? Not very.
But Greece is merely the canary in the fiscal coal mine.
Other eurozone members are also under pressure to slash fiscal deficits.
What might such pressure do to vulnerable members, to the eurozone and to the world economy?
Martin Wolf, January 19 2010

Some, knowing of my opposition to UK membership of the eurozone, may suppose that I find some pleasure in these looming difficulties.
On the contrary, I fear the dangerous consequences.
Martin Wolf, January 19 2010

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Lars Calmfors, professor, DN Debatt 15/1 2010
Man kan försöka beräkna hur mycket den gemensamma ränta som ECB sätter för hela euroområdet skiljer sig från den ränta som skulle vara önskvärd för det enskilda eurolandet utifrån dess konjunktursituation.
European Economic Advisory Group har gjort sådana kalkyler /som/ tyder på att skillnaderna i konjunkturläge mellan länderna i dag är större än någon gång tidigare sedan EMU-starten.
Några euroländer har drabbats mycket mer av den pågående krisen än andra. Det gäller främst Irland, Spanien och Grekland.
De djupa nedgångarna i dessa länder beror dessutom i hög grad på att den gemensamma penningpolitiken inte tillräckligt motverkade de tidigare överhettningarna där med snabb kredittillväxt, fastighetsbubblor och kraftigare prisökningar än i omvärlden.
De mest aktiva EMU-förespråkarna har närmast velat förlöjliga argumentet om asymmetriska störningar. Men argumentet måste uppenbarligen även fortsättningsvis tas på största allvar.
Läs mer här

Varför ska Sverige gå med i EMU?
Framför allt Grekland, Irland och Spanien har under senare år haft kraftiga överhettningar som inte har dämpats tillräckligt av den gemensamma penningpolitiken.
Dessa överhettningar har bidragit till att de pågående konjunkturnedgångarna i dessa länder har blivit särskilt djupa.

Lars Calmfors Sieps JULI Nr 6-2009

Fears of a euro break-up have reached the point where the European Central Bank feels compelled to issue a legal analysis of what would happen if a country tried to leave monetary union.
Ambrose Evans-Pritchard 17 Jan 2010

“Recent developments have, perhaps, increased the risk of secession (however modestly), as well as the urgency of addressing it as a possible scenario,” said the document, entitled Withdrawal and expulsion from the EU and EMU: some reflections.

Crucially, he argues that eurozone exit entails expulsion from the European Union as well. All EU members must take part in EMU (except Britain and Denmark, with opt-outs).

This is a warning shot for Greece, Portugal, Ireland and Spain. If they fail to marshal public support for draconian austerity, they risk being cast into Icelandic oblivion. Or for Greece, back into the clammy embrace of Asia Minor.

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In 1861, the Confederate States of America attempted, and failed, to achieve secession by force of arms in the American Civil War.

Breakup of Yugoslavia

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Greek Prime Minister George Papandreou said there was "no chance" that Greece would exit the euro zone,
as the country's reform plans came under renewed criticism from the European Central Bank.
WSJ 14/1 2010

The prospect that Greece's fiscal crisis could force it to default on its sovereign debt has prompted speculation that it may eventually be pressured to depart the 16-member euro zone. In an effort to end such talk, Mr. Papandreou said in a nationally televised appearance that the country was committed to the common currency.

His comments came as the ECB warned Greece that a proposed law to restructure private-sector debt could do more harm than good, saying bluntly that key parts of the law were "not consistent with the principle of an open market economy" and might squeeze off the flow of credit.

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Jag var statsminister under dessa år och fast övertygad om fördelarna med en hårdvalutapolitik. Det hade delvis att göra med de tidigare decenniernas erfarenhet av devalveringspolitik, men var delvis en konsekvens av att jag strävade efter att Sverige skulle gå in i det europeiska samarbetets kärna, också den ekonomiska och monetära unionen, och därmed vara med i den gemensamma europeiska valutan från dess första dag.
Försvaret av kronan handlade om den viktiga kombinationen av ekonomisk politik och Europapolitik.
Carl Bildt veckobrev v1/2002

Greece will cut spending and raise revenue by about 10 billion euros this year
as part of a three-year plan adopted today to bring the European Union’s biggest budget deficit within the EU limit in 2012.
Bloomberg Jan. 14 2010

“We will do whatever it takes,” Greek Prime Minister George Papandreou said in a televised speech to his Cabinet in Athens today. “Our country can and is obliged to exit as soon as possible this vicious circle of misery. We will not retreat; we will proceed quickly.”

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Economist Desmond Lachman of Washington’s American Enterprise Institute:
The euro crisis, he argues, “is not at the periphery, but at the core.”
He emphasizes that German and French banks hold the bulk of the $2 trillion of sovereign debt
owed by Spain, Portugal, Ireland and Greece.
MaketWatch Dec. 17, 2010

Lachman, a former investment banker and International Monetary Fund official, foresees defaults and a European banking crisis this coming year. America, he says, should “get ready for the European economic tsunami” that could derail the U.S. recovery.

The euro, he believes, is in the process of unraveling.

Lachman argues that there is no way that Greece and Ireland can impose this kind of austerity and still get the economic growth needed to repay debts. Both countries are already in recession and are forecast to shrink another 2% to 3% in 2011. Lachman argues that Greece and Ireland, like Latvia in 2008, “are being sacrificed for the sake of the European banks.”

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Why Greece will have to leave the eurozone
Having spent a career studying emerging market economies at the International Monetary Fund and on Wall Street, I have seen more than my share of supposedly immutable fixed exchange rate arrangements come unstuck. I have also observed at close quarters the rather well-defined and predictable stages through which countries go as their currency regimes unravel.
This experience informs me that, much like Argentina a decade ago, Greece is approaching the final stages of its currency arrangement
Desmond Lachman, FT January 11 2010

If there is anything that the Greek authorities might learn from Argentina, it is the folly of attempting to fight the inevitable. Not only does this saddle a country with a mountain of official debt that cannot be rescheduled; it also deepens and prolongs the recession from which any post-devaluation recovery might begin.

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Desmond Lachman joined AEI /Timbros storasyster American Enterprise Institute/ after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies.
More at AEI

Jfr Sveriges kronkursförsvar 1992

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Greece was condemned by the European Commission on Tuesday for deliberately falsifying data about its public finances
and allowing political pressures to obstruct the collection of accurate statistics.
FT 12/1 2010

In a damning report published as the eurozone grapples with its worst fiscal crisis since the euro’s launch in 1999, the Commission said Greece’s figures were so unreliable that its budget deficit and public debt might be even higher than the government had claimed last October.

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Olli Rehn, nominated as commissioner for economic and monetary affairs
, called on European nations to bring down their deficits, including Greece, where, he said, the problem was “a very serious one” that could spill over.
“It is not so serious yet that it would threaten stability of the euro zone,” he said.
New York Times January 11, 2010

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Enligt marknaden för CDS-kontrakt, är det just nu allra högst risk att låna ut till Ukraina, Argentina och Venezuela.
Grekland, Island, Lettland och Dubai är andra länder som hamnar i pestligan på den internationella marknaden för statspapper med urusla kreditbetyg.
DI 11/1 2010

The European Central Bank has given its clearest warning to date that
there will be no EU bail-out for Greece if it fails to control its spiralling deficit,
raising the stakes in a game of brinkmanship over the future of the euro.

Ambrose Evans-Pritchard, 6 Jan 2010
Nice pic of dark clouds over Acropolis

Jurgen Stark, the ECB's chief economist and the powerful German member on the bank's inner council, said Greece's problems are entirely "home-made" and do not meet the terms required to trigger the rescue mechanism under EU treaty law, which is limited to countries that face severe difficulties "beyond their own control".

"The Treaties set out a 'no bail-out' clause, and the rules will be respected. This is crucial for guaranteeing the future of a monetary union among sovereign states with national budgets. Markets are deluding themselves if they think that the other member states will at a certain point dip their hands into their wallets to save Greece,"

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ECB considers this number far too “sensitive” to release
At present it is estimated that Greek banks hold up to €37bn of the outstanding €270bn-odd stock of Greek government bonds and bills. German banks, such as the Landesbank, are thought to hold a slightly lower amount, while French banks also have a significant chunk of Greek bonds.
It is a fair guess that many, if not most, of those bonds are now with the ECB. After all, what the ECB’s repo operations essentially do is let banks turn a risky asset (ie Greek bond) into something safer (euros).
Gillian Tett February 25 2010

n recent years, European banks have been happy to hold Greek bonds since they felt able to use them for repo deals with the ECB. But if the credit rating agencies keep downgrading Greek debt, these bonds may no longer be eligible for that ECB window from the end of this year.

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Another factor that has also been hurting the Greek bond price is a subtle, albeit geeky, discussion that is quietly underway at the European Central Bank in relation to its collateral policy.
Back in the autumn of 2008, after the collapse of Lehman Brothers, the ECB loosened the rules which govern how banks can get central bank funds. In particular, it let banks use government bonds rated BBB or above in ECB money market operations, instead of merely accepting bonds rated A-, or more.
Gillian Tett, February 4 2010

Earlier this year, senior ECB officials indicated that they intended to “normalise” the policy, as planned, at the end of 2010, as part of their exit strategy. That has removed one key source of support for Greek debt (and spooked investors, such as German insurance companies, which also hold large chunks of bonds.)

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The collapse of Lehman Brothers

Gillian Tett

“The unthinkable -- that the ECB would not accept sovereign securities from a member as collateral -- has become a measurable risk, and one exclusively controlled by Moody’s,” Nielsen said. Moody’s is now the “de factor decision maker on Greek eligibility.”
Bloomberg 18 december 2009

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A recent IMF study argues that sovereign default in today’s advanced economies (AEs)
is “unnecessary, undesirable and unlikely"
The study represents the triumph of dogma over evidence and logic
Willem Buiter cit. by Tyler Durden at zerohedge 23/9 2010

Germany would not be able to join the Euro Area (EA) today,
because it would fail to meet the deficit criterion (no more than 3% of GDP)
and the debt criterion (no more than 60% of GDP)

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Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.
Bloomberg Dec. 9 2009

“It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today.
“We could see our first EU 15 sovereign default since Germany had it in 1948.”

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More by Buiter

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We are headed towards a situation in which the risk of financial distress and contagion leads to an unconditional bail-out, whether or not Greece is reforming sufficiently.
The reasons we are at this juncture lie in the nature of the stability and growth pact. It is a fair-weather construction, ill-suited to crisis.
Wolfgang Münchau, FT December 13 2009

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Greece defies Europe as EMU crisis turns deadly serious
Euroland's revolt has begun.
Greece has become the first country on the distressed fringes of Europe's monetary union to defy Brussels and reject the Dark Age leech-cure of wage deflation.
Ambrose Evans-Pritchard, 13 Dec 2009

If Greece were to impose the draconian pay cuts under way in Ireland (5pc for lower state workers, rising to 20pc for bosses), it would deepen depression and cause tax revenues to collapse further. It is already too late for such crude policies. Greece is past the tipping point of a compound debt spiral.

Ireland may just pull it off. It starts with lower debt. It has flexible labour markets, and has shown a Scandinavian discipline. Mr Papandreou faces circumstances more akin to those of Argentine leaders in 2001, when they tried to cut wages in the mistaken belief that ditching the dollar-peg would prove calamitous. Buenos Aires erupted in riots. The police lost control, killing 27 people. President De la Rua was rescued from the Casa Rosada by an air force helicopter. The peg collapsed, setting in train the biggest sovereign default in history.

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Kommentar av John Livsey (14/12 07:37):

Trichet, who is no fool, made an interesting commment last week. He said that the ECB will begin to demand A ratings from at least two rating agencies on bonds whih are deposited with the ECB. This will soon disqualify Greek bonds.

The issue here is access to liquidity. There is an urban legend dear to Euro fans that claims that the EB has never followed the same path as the BoE and the Fed in supplying liquidity during this crisis. Of course, this is hopeful nonsense. The ECB has been accepting bonds on deposit and handing out cash Euros in exchange in huge amounts to Banks in countries at risk, notably Ireland, but also Spain, Greece, Hungary and so on. It's called the Liquidity Facility.

The funny thing is that the amount of cash that the ECB has supplied to Greece in particular seems to be far larger than Greece should require, by most estimates. So what's up?

What's up seems to be that Greek Banks have figured out a way to arbitrage the system. They have Greek Bonds which have fallen sharply in price since Greece dropped to a BBB rating - and stinks up their balance sheets - so they simply deposit those Bonds with the ECB for cash, and then turn around and use the new cash to buy much higher quality German sovereign Bonds. Greek Banks get the cash and the ECB assumes the risk of default.

It's a cute game, but now Trichet has put them on notice that pretty soon the ECB will no longer accept Greek Bonds. It just takes one more rating agency to drop Greece to BBB and then the game is up. That could happen this week.

Greek Banks aside, I wonder what Greece does when it needs cash and the ECB refuses its Bonds. Maybe the real straw in the wind here is the ECB getting ready to refuse sovereign Bonds from a Euro area member state as collatoral. Who expected that ever to happen?

On a side note, people keep telling AEP that he's always predicting awful things for the Euro. A broker I know commented to me this week "There is a difference between being wrong and being early."

Another comment on the same page:

The only reasons the US dollar works in America are

1. The annual movement of households between the individual states for economic reasons. This is approximately 2.5% and because of euroland differences in culture, language, schooling etc, it is impossible over here.

2. Automatic transfers, through Washington, from the wealthy to the needy states which would otherwise be able to boost economic activity by devaluing, were they not locked into the dollar. These automatic transfers equate to over 25% of USA GDP. The equivalent percentage in euroland is less than 2 percent.

Ergo, the euro cannot survive. In the mid 1990s, Professor Alan Walters predicted 20 years and it is worth remembering that when a currency goes, it is almost as sudden as an earthquake, so great are the internal pressures that have been building up beneath the surface.

EMU - en snabbkurs

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S&P's decision triggers jump in bond spreads to over 200bp;
a downgrade would put Greek government bonds at a level below ECB-accepted collateral;
Rating agency plans visit within 10 days ahead of a final decisionl;
Kathimerini reported that European officials agreed not to put on further pressure on Greece for 40 days;
Trichet says he is not happy about Ecofin's decision to water down EU supervisory reform;
Eurointelligence 8/12 2009

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Standard & Poor's has put Greece on negative credit watch
"The situation in Greece is very difficult," ECB chief Jean-Claude Trichet told the European Parliament's economic committee. "So this calls for very difficult, very courageous but absolutely necessary measures."
BBC 7 December 2009

The Mediterranean country's debt stands at more than 110% of GDP.

Separately, the president of the European Central Bank (ECB) said Greece needed to take "courageous" measures.

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David Marsh, author of The Euro: The Politics of The New Global Currency, said the danger for EMU laggards is that the ECB will begin to tighten before they are out of trouble.
It is German recovery that threatens to stretch the North-South divide towards breaking point.
Ambrose Evans-Pritchard, 22 Nov 2009

Eurozone creditors – German banks? – hold €200bn of Greek debt. Greek banks have borrowed €40bn from the ECB at 1pc, playing the "yield curve" by purchasing state bonds.

Greece current account deficit hit 14.5 pc of GDP in 2008. External debt has reached 144p (IMF). The interest spread between 10-year Greek bonds and German bunds has jumped to 178 basis points. Greek debt has decoupled from Italian debt. Athens can no longer hide behind others in EMU's soft South.

David Marsh, author of The Euro: The Politics of The New Global Currency, said the danger for EMU laggards is that the ECB will begin to tighten before they are out of trouble.
It is German recovery that threatens to stretch the North-South divide towards breaking point.
Ambrose Evans-Pritchard, 22 Nov 2009

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The Euro: The Politics of the New Global Currency
by David Marsh

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The spread between Greek bonds and German bunds widened to 153 basis points
FT Alphaville 2009/11/17

The Athens-based central bank said Greek lenders as a whole had borrowed amounts that were proportionally greater than other countries in the 16- nation euro area, the Web site said, without saying where it got the information.

Greek banks have borrowed a total of 42 billion euros ($63 billion) of the 570 billion euros the ECB has pumped into the system, according to Euro2day.

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Thirteen members of the European Union have been told to take action and get their budget deficits back in line.
EU requirements mean that they should not exceed 3% of the country's GDP.
EU's economy commissioner, Joaquin Almunia, saved his harshest criticism for Greece. Mr Almunia said the country had taken "no effective action".
BBC 11 November 2009

Varför ska Sverige gå med i EMU?
Framför allt Grekland, Irland och Spanien har under senare år haft kraftiga överhettningar som inte har dämpats tillräckligt av den gemensamma penningpolitiken.
Dessa överhettningar har bidragit till att de pågående konjunkturnedgångarna i dessa länder har blivit särskilt djupa.

Lars Calmfors Sieps JULI Nr 6-2009

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Being a member of the eurozone doesn’t immunize countries against crisis.
In Spain’s case (and Italy’s, and Ireland’s, and Greece’s) the euro may well be making things worse.
Paul Krugman, New York Times January 19, 2009

The euro zone faces tough times as the PIIGS — Portugal, Ireland, Italy, Greece and Spain —
will need a flexible exchange rate to compensate for the economic slowdown
so some of them may decide to break free from the single currency's straightjacket

Hugh Hendry, Chief Investment Officer and Partner at Eclectica, CNBC 12/1 2009

EMU ökar spänningarna i medlemsländerna
Situationen som man ser i dag tror jag inte ska uppfattas som extrem. Det kommer att uppkomma situationer där konjunkturutvecklingen skiljer sig mycket mer åt mellan länderna än i dag”, säger Lars Calmfors
DI reporter Jonas Ohlin 7/1 2005

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Grekland har presenterat för låga, felaktiga uppgifter om storleken på de grekiska budgetunderskotten de senaste åren
Ekot 22/9 2004

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