The Greek new Prime Minister has fired a shot over the bow of the EU. To add insult to injury, he took out a open editorial discussing why he is fighting the harsh sanctions.
First, I would like to say that this was the head economic adviser to a very popular video game producer. That being said, I don’t know if that should bolster his reputation or hinder it. True, he was involved with a very profitable company. However, the rules that involve a company which is actively producing games that the public want to pay for are different than a country which is not known for any particular product and is blowing their money on expansive pensions at age 55. Companies rarely toss money away.
What amazes me is that he seems to be bluffing with an “eight high” hand.
His comment is that the EU cannot survive without the Greeks. The EU, like all fiat money, is built upon a false assumption of perceived value. Ask the Russians how that is working out for them now. Anything that hurts the perception of the value causes that currency to plummet. Why? Because there is no real value to fiat money. It is valuable only because we agree that it is valuable. In all fairness, even gold is fiat. In famine, no one will trade food for gold. However, gold is at least something…paper is only paper.
This is all true. If the Greeks bail, it will hurt the EU. However, do you know what will hurt the EU more? What will hurt the EU more is countries thinking they can spend however they want and the rest of the EU is obligated to bail them out. In particular, the PIGS (Portugal, Italy, Greece, and Spain). If the rest of Europe bails out Greece even thought they refuse to stop spending like sailors, then they send the signal to PIS that they can do likewise.
Germany is a smart country, and they know better than that. It is better to have 1 country pull out and default on their debt rather than to have four do so (and drag Germany under).
Imagine you have four friends. You know that you can help one friend, pretty much indefinitely, but you also know that that friend is not going to change their ways. If you help the first friend, the other three friends will demand your help. You know that you cannot help all the friends without destroying yourself and that (once you are destroyed) they will go bankrupt anyway. Also, you know that by helping one friend, you are obligated to help the other three. What would you do? It might break your heart, but only a fool would help them under these circumstances.
Greece is playing a losing hand and bluffing bad in a game where their opponent cannot fold. They are fools.
Long Live the Constitution!