Friday, February 5, 2010

A double message

As Der Spiegel points out, the EU is sending a double message about Greece. The first one is that the country will not be abandoned not because it is too big to fail but because if its economy implodes, the euro might suffer and that must not be allowed.

The second message is that if Greece does not sort its economy out as fast as possible, the euro will suffer and that must not be allowed. So, strict instructions are going out to the Athens government as to what it should do and a monitoring regime is to be introduced.

All of which, as I pointed out during the debate at the Euromoney conference in Vienna, leads to the link between government and governed to be broken. If the regime is really enforced the people of Greece who, one must admit, do not seem to have realized that one cannot keep spending money one does not have and that applies to governments as well, will find that they have absolutely no control over their government. Not a happy situation in a country that has had a somewhat volatile history in the last couple of centuries.

Meanwhile, the markets are getting their revenge. So you thought politics and ideology could really buck them? Well, the politics of southern Europe is not doing the euro's stability any good.

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