1. Seit dem griechischen Schuldenschnitt im März hat sich die Stimmung in den Regierungszentralen spürbar gewandelt. Die privaten Gläubiger Griechenlands wurden zum Verzicht auf gut hundert Milliarden Euro gezwungen, doch die Panik an den Finanzmärkten blieb aus. Der Rest der Euro-Zone kam relativ ungeschoren davon. Diese Erfahrung hat die Erkenntnis reifen lassen, dass Griechenland vielleicht doch nicht so systemrelevant ist wie lange angenommen.What are these people smoking?
2. Obendrein ist die Euro-Zone inzwischen besser gewappnet. Griechenland könnte zum ersten Test für die neue europäische Finanzarchitektur um den Europäischen Stabilitätsmechanismus (ESM) werden. Wie stabil ist die Brandmauer, die ein Übergreifen einer Staatspleite auf andere Länder verhindern soll? Wie stark sind die Banken nach der Rekapitalisierung? Wie schlagkräftig die EZB im Kampf gegen internationale Spekulanten?
Dass führende europäische Politiker und Notenbanker inzwischen offen über einen Austritt Griechenlands aus der Euro-Zone spekulieren, zeigt ein neues Selbstbewusstsein. Seit zwei Jahren bereiten sie sich auf den Ernstfall vor. Nun ist der Kollaps eines Mitgliedslandes in greifbare Nähe gerückt - und er scheint zum ersten Mal beherrschbar. "Die Ansteckungsgefahren", sagte der luxemburgische Finanzminister Luc Frieden dem SPIEGEL, "sind jetzt nicht mehr so groß wie vor einigen Monaten."
[1. Since the Greek debt reduction in March, the mood in government centers has notably changed. Greece's private creditors were compelled to forego a good hundred million euros, yet there was no panic on the financial markets. The rest of the eurozone came out relatively unscathed. This experience has allowed the perception to develop that Greece is perhaps not really so system relevant as has long been assumed.
2. Above all, the eurzone has since become better armed. Greek could become the first test for the new European finance architecture around the European Stability Mechanism (ESM). How stable is the firewall that would hinder the spread of a state bankruptcy to outher countries? How strong are the banks after the recapitalization? How prepared is the ECB in the fight against international speculators?
That leading Euorpean politicians and central banks have are now speculating openly about an exist by Greece from the eurozone shows a new self-awareness. For the last two years they have been preparing themselves for this eventuality. Now the collapse has moved very close - and for the first time it seems manageable. "The risks of infection," said the Luxembourger Finance Minister Luc Frieden to Spiegel, "are now no longer so great as they were a few months ago."]
I've become increasingly aware that "financial markets" in the austerity-economics vocabulary means "the Great God Free Market" and his theology as interpreted at the moment by whoever is using the phrase Financial Markets. The real-world financial markets have not been rewarding aggressive austerity during this depression; Spain's bond rates have spiked to the critical 6% range lately and both Spain and Italy have announced that their austerity economics are still falling short of what they promised Angie they would achieve.
Ed Harrison is also looking on the bright side in Will the Greek exit be voluntary or involuntary? Credit Writedowns 05/14/2012, saying, "I believe Europe can ‘handle’ a Greek departure from the euro zone. It will be painful but the politics of such an exit increasingly favour it." But he also lists some of the substantial risks involved:
Tags: angela merkel, austerity economics, eu, euro, european union, greece
[emphasis in original]
- Euro banks are undercapitalised, not just in Spain where we are seeing this build to crisis proportions but generally. French banks in particular are very exposed to Greece and a Greek re-default/euro zone exit would render some of the biggest banks there insolvent.
- Private sector indebtedness is high in many euro area economies within the core as well as the periphery. This means the deflationary policy response has/will hit these economies hard.
- Bailout fatigue is building in places like Germany where the CDU were crushed in the Landtagswahl in Nordrhein-Westfalen. The reigning center-left/Green party coalition has now moved from minority to majority rule. The last 11 state elections have been miserable for Chancellor Merkel’s coalition government’s parties. But German politicians still have no mandate to break up the euro zone.
- Bailout fatigue = Greek expendability = Euro bank recap.
- Austerity fatigue means nationalism and political extremism as we have seen in Greece and France. Spain, Ireland and Portugal are outliers in this move but politics in Italy, Netherlands, Belgium and France can also become strained the longer austerity and recession dominate the headlines. For Greece, austerity fatigue does not mean politicians have a mandate to exit the euro area though.
- The ECB capital issue will become a political event if monetisation losses are crystallised, requiring euro area governments to pony up more ECB capital. How this affects policy is as yet unpredictable.