To: Archie Meeties who wrote (60733 ) 2/5/2010 3:05:08 PM From: TobagoJack 1 Recommendation Respond to just in in-trayI've invested more energy than I thought I had reviewing the ECB (as well as the Fed and BOJ,more later). My conclusion FWIW is Greece is lucky to be in the Euro, unions be damned. Except for their exceptional history as a country I have little doubt they would never have been allowed to join the ECU. They appear to have massaged their numbers (surprise,surprise) to gain entry, and despite the continued sleight of hand their errant ways are now the focus of attention. Greece has benefitted enormously from use of a credible currency to finance its feckless policies. Its cost of capital as a nation has been and continues to be a far cry from the days of the drachma. No doubt the unions and civil service view this as their birthright.It is not.Greece represents exactly 2.6% of Eurozone GDP. It is approximately as significant to the Euro as Idaho is to the USD. The markets fear the Euro caboose will conduct the Euro train. And Portugal and Ireland will follow,with the leaky acid cutting to the core in Spain and Italy.This is palpable nonsense IMHO.Germany and Trichet will stick to the ECB constitution. Greece is expendable,the Euro and its credible currency are not. Greece has a choice,painful austerity or sovereign bankruptcy. There is no middle ground, no 'third way'. The Euro-zone can only benefit from either alternative,while the slippery slope created by a bailout would fatally endanger the credibility of the currency regime and raise the cost of capital to the larger and better behaved core member nations. The collective memory of the American people is the nightmare of the Great Depression. The collective memory of the German people is the nightmare of the Weimar hyperinflation.Germany is the engine car for the Euro train, and Trichet is its conductor. The Euro will survive from this experience battered but stronger. I'm less certain about Greece.
