The Lehmann
Letter (SM)
If Alexis Tsipras
heads the next Greek government, a rupture with Europe seems increasingly likely.
Will Europe survive?
Consider two
stories in today’s press.
Begin with
this headline in The Wall Street Journal:
Defiant Message From
Greece
The important passages are:
“The head of Greece's radical left
party—throwing down a gauntlet that could increase tensions between Greece and
its frustrated European creditors—said he sees little chance Europe will cut
off funding to the country but that if it does, Athens will stop paying its
debts……
“Our first choice is to convince our European
partners that, in their own interest, financing must not be stopped," Mr.
Tsipras said in an interview with The Wall Street Journal. He said Greece
doesn't intend to take any unilateral action, "but if they proceed with
unilateral action on their side, in other words they cut off our funding, then
we will be forced to stop paying our creditors, to go to a suspension in
payments to our creditors."
Looks like he means business. But so do the
other European leaders.
Go to this
headline in The New York Times:
A Greek Exit? Euro Zone May Be Ready
Here are the
key excerpts:
“It
is increasingly conceivable that Greece may leave the euro zone, not just
because of its own political dysfunction but also because the consequences of
such an exit for the rest of the Europe and the global economy no longer seem
quite so scary.
“The
foot-dragging and brinkmanship of the last few years have won the other members
of the currency union valuable time to prepare for life without Greece. Banks
have recorded losses on Greek investments, companies are making contingency
plans and Europe has bolstered rescue funds for other vulnerable nations like
Portugal, Ireland and Spain…..
“.....European
leaders are increasingly willing — even eager — to comment publicly on the
possibility that Greece will leave, something they long refused to countenance,
not just because relations with Greece continue to deteriorate but also as a
result of their own preparations.”
The article makes clear
that not everyone is optimistic about the consequences of a Greek departure,
but you get the gist.
So the key
question is not: Will Greece leave? It seems to be: Will Europe survive Greece’s
exit?
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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