"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
John Dalberg Lord Acton
Greece is the most awkward of the EU countries by far in terms of economic fit.
There is no conceivable way that Greece can remain in a single currency union without regular transfer payments from the rest of the EU to compensate them for holding a highly overvalued currency relative to their own economy, geared more to the Germans and the French.
The problem is that the political structure of the EU does not accommodate this sort of adjustment, and within the current political character of the EU the notion of such payments is abhorrent. The Germans, for example, have never thought of themselves as 'fellow Europeans' with a country such as Greece, and the economic structure of Europe does not easily lend itself to de facto payments.
Compare this to the US, with Greece as one of the poorer states, which receives much more in tax receipts and federal projects than the tax revenue that they send in.
It 'works' in the US because it is one nation by structure and by character. Despite their regional differences, most Americans can comfortably think of themselves as 'Americans' first wherever they might live. Unless they are urban cowboys from Texas perhaps (lol).
Every time I look at the structure of the EU politically and economically with the one currency I ask myself, "What were they thinking?" There is no way to go by halves with a single currency and no accompanying political union.
But this is the sort of building by half measures to which Europe has often been susceptible. Bureaucrats love compromise, often blinded to how weak and unsustainable that compromise might be. Any deal is not always better than 'no deal,' except to the dealmakers.
So either the EU will change politically, which is highly unlikely, or Greece will leave the EU and once again obtain its own currency.
I think that outcome is almost predetermined. Now it is only a question of 'how' and mostly with regard to the possibilities of cross-contamination in the financial realm.
The best solution is for Greece to simply leave the EU, default on its debts, nationalize its banks, and restore the drachma at some highly devalued level. I think Iceland shows the way in this. This will greatly disappoint the private financiers who are licking their lips at the prospect of buying real national assets on the cheap with overvalued paper.
The worst problems will be for the European banks who hold Greek debt.
I would consider seriously an action that allows the banks to simply write off the Greek debt, and declare all CDS on Greek sovereigns null and void except for those who actually hold Greek bonds, to the extent of fifty percent of their nominal value.
If this is not workable, I would suggest that Europe also should nationalize and restructure their banks. This is what ought to have been done in 2008, and much of what has been done since then is waste. The greatest resistance to this will come from the one-worlders and their friends in the Anglo-American financial cartel. They would also like a single world currency, which is unworkable without government by a 'new world order.'
The absolute worst model is the American way, in which the banks are given the keys to the Treasury, the markets, and the political process, and allowed to do as they please, while maintaining a thin facade of legitimate government by the people.
They may as well get this done, and stop the charade. And then the rest of the world can begin thinking of how they might reform international trade, replace the existing reserve currency system, and bring the Anglo-American privateers back under control once again.
