Monday, June 18, 2012

The Democratic Dark Ages

So the pro-bailout party in Greece barely eked ahead of Syriza, 29.6% to 26.9%. This week will be a little less bumpy.

It is not changing the mood much, though. Spanish yields have spiked 22bp to a new historic euro-era high of 7.14% again this morning.

And here's the vivid phrase of the day: London Mayor (and Tory Telegraph columnist) Boris Johnson says dithering Europe is heading for the "democratic dark ages" as any government formed in Athens is subject to Brussels and Berlin. Strong language from even a British elected leader.


It won’t work. If things go on as they are, we will see more misery, more resentment, and an ever greater chance that the whole damn kebab van will go up in flames. Greece will one day be free again – in the sense that I still think it marginally more likely than not that whoever takes charge in Athens will eventually find a way to restore competitiveness through devaluation and leaving the euro – for this simple reason: that market confidence in Greek membership is like a burst paper bag of rice – hard to restore.

Without a resolution, without clarity, I am afraid the suffering will go on. The best way forward would be an orderly bisection into an old eurozone and a New Eurozone for the periphery. With every month of dither, we delay the prospect of a global recovery; while the approved solution – fiscal and political union – will consign the continent to a democratic dark ages.


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