Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Europe has a Financial Nuclear Option that Nullifies the Greek Blackmail

Politics / Eurozone Debt Crisis Jul 08, 2015 - 11:44 AM GMT

By: Atlantic_Perspective

Politics

Since the Syriza government took power a few months ago, Alexis Tsipras backed (or controlled) by Varoufakis, assumed a defiant position based on the assumption that “We owe Europe so much money that we´ve got you on our hands. If you (Europe) want to see some of that money back, we determine the rules”.


This is pure blackmail. But Europe has a much more powerful trump card up its sleeve.

As written before in The Atlantic Perspective, Greece can´t pay back all its debt and a write down is a mathematical must. You can find our specific proposals to solve the Greek crisis once and for all, in the following articles:

The definitive solution to the Greek crisis

Delusional Greeks commit mass Hara-Kiri (read the section titled “The card that was never played”)

But instead of using the sensible, logical and effective approach we propose, both the Greek government and the European leaders chose to adopt a confrontation policy, fuelled by ideology. Christine Lagarde wanted grown-ups on the table. That message should have been be directed to Europe too.

The ongoing negotiations are a farce

In a perfect world, both the Greeks and the Europeans would negotiate in good faith, trying to get a deal that serves the interests of both sides in a balanced manner. Unfortunately, neither side is negotiating in good faith.

The Germans are only concerned with not allowing a debt pardon precedent, while the Greeks just want the debt to go away and that´s it. Neither side is actually negotiating a sensible solution to the current situation.

The ongoing negotiations are not about the Greek situation at all. Greece is just a pawn in a much bigger game. Germany can´t let Greece off the hook, as that could result in a wave of leftist governments taking over Europe. The Spanish and Portuguese elections are just around the corner. Risky, risky...

The European Union can go on without Greece. But if Spain falls, then the domino effect begins and the European Union would quickly unravel. This is a not a good time to be Greek, or European for that matter.

Europe´s financial nuclear option

If and when Alexis Tsipras basically tries to bully Europe into accepting whatever nonsense he wants, Europe has basically two options:

1. Accept Tsipras proposal and take the risk of the far-left taking over Europe. Soon, most European countries would be Greece.

2. Saying “NO” to Greece and losing the money lent to Athens. Losing? Maybe not...

Europe has a financial nuclear option: printing back the Euros lent to Greece.

In case the negotiations reach a deadlock, Europe can tell Mr Tsipras: “You have zero leverage over us. Zero. What we lent you and “lost”, we can just print back. You are the weakest link, bye-bye”.

Of all the billions of Euros lent to Greece, surely a good portion came back to Europe in the form of Greek imports, investments, capital flight, etc. The European bureaucrats and the army of statisticians at Eurostat can determine how much that was. Whatever amount did stay in Greece, Europe can just print back. Greek debt problem solved. That´s the Atlantic Perspective.

Copyright © 2015 by The Atlantic Perspective.

The Atlantic Perspective is an opinion blog, aimed at explaining and providing solutions to some of the world´s most relevant issues.

www.atlanticperspective.com


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Rickkk
08 Jul 15, 18:52
Whose Nuclear Option? The Greek's? The IMF & ECB's?

Lest I'm mistaken, the Greeks happen to have a printing press that can print Euro notes, do they not? On that basis alone, I would say that the leverage is decidedly on the Greek side. Dare the IMF & ECB entertain that (nuclear) option?


Post Comment

Only logged in users are allowed to post comments. Register/ Log in