Destroying Greece Probably Equals Killing the Euro

It seems increasingly likely that the Eurozone countries will wait so long to come to Greece’s aid with the 12 Billion Euros it needs to pay its government bonds maturing in July that Greece will already be beyond help.

Beyond help, that is, if Greece is not already beyond help. Its new bonds are not finding buyers, and if anyone even bids on them, it is with the demand to receive more than 20% interest on their investment. Most countries are paying about 3 to 3.5 % these days.

At the same time, Greek citizens are continuing to protest the harsh measures (higher taxes, cutting the number of government jobs, sharp reductions in social services) required by the Eurozone members as the price for their help.

Most experts say that it is now inevitable that Greece will default on its bond payments and that this will happen even with Eurozone monetary intervention. What is happening now in the Eurozone, they say, is that the timing of the default is being negotiated. One TV commentator even suggested that the timing was meant to give European banks and the European Central Bank (ECB) a head start in cutting their future losses by off-loading their Greek bonds.

While Great Britain is not a member of the Eurozone, having kept its Pound Sterling, rumors in Europe today suggest that London banks are dumping Greek bonds and other Greek debt in an effort to avoid losses when the Greek collapse arrives. Watch for other European banks to start doing the same.

The Eurozone and the ECB are now in a real corner.

If they let Greece default, it will be their banks that will lose money and need to write it off on their accounting books. This will lead to less money being available for customer loans, as well as demands for advance payments going out to non-Eurozone banks (in the USA and China) that could cause these banks to lack capital, too. The chain reaction will have begun, with no one knowing exactly where it will end.

But, if the Eurozone and the ECB continue to support Greece financially, they will have almost no chance of being re-paid, because Greece is broke, and with the harsh measures being required by its Eurozone “saviors”, there is no possibility of Greece regaining its economic balance. So, read the last paragraph again. All roads lead to Rome, make that default.

Remember the film, “Who Killed Roger Rabbit”? Today, the question is who wants to kill the Euro.