By giving up national power in terms of monetary policy making (in order to enter E.M.U.) and by limiting (not really eventually) fiscal policy independence due to the Maastricht Criteria, Greece did gain a credibility that had never imagined and a macroeconomic stability that would have taken decades to be achieved.
Some weeks ago the newly elected Greek government did manage eventually to take some structural measures to a proper direction, trying to change the public debt dynamics, without causing any social unrest (an achievement after all). By doing so it gave a proper signal to markets that are always “right” (as J.C.Trichet said) and it managed to decrease the bond’s spread and the Greek government did borrow 5 billion Euros at a 5.9%, a very good borrowing rate, given that days ago it had “managed” to borrow funds at 7%. J.C. Trichet, the central banker of Eurozone repeatedly has been highlighting that Greece will not default. Thus, that was a point that no further political actions should be taken anymore. Decreasing spread was a matter of time and smoothing had started and “others” were already back on growth! The ideal scenario for the given circumstances.
Unfortunately, at that exact point a “bonehead” move was made by the government, mentioning I.M.F., giving the signal to the markets that Greece has real issues in covering its debt obligations. It should be noted that countries historically avoid considering even as a hypothesis I.M.F., unless they are about to financially collapse (i.e. I.M.F. is identical with saying markets will stop lending funds at this less developed country (LDC), a Eurozone member in our case!). It should be noted also that during these days a Turkish naval ship did almost approach the mainland of Greece by going between Andros and Evia. This “message” could be interpreted as following: “Now, that you Greeks decrease Government spending, do Not consider to decrease your defense spending also.At this context, the I.M.F. “bluffing” approach to Germans mainly, was not unfortunately a bonehead move only, but it does also imply that Greeks keep on not being nationally sovereign (to a degree that could not be imagined even by the naïve ones).
Thus, I.M.F. was used in the case of Greece in order to “attack” the economical integration procedure of Europe and make the political one a further remote scenario that eventually will be forgotten. The Germans seem to have adopted this scenario. The historical perspective, importance and the role of E.U. are adopted mainly by E.C.B. and not by the politicians!
Overall it is a case-situation that you wish to be governed by just a stupid and impotent government and useless or ineffectual consultants, but unfortunately you are governed by people that have no sovereignty and are just “means” within a geopolitical game.
Going back to the subordinate economics to politics: Inflation is not significant within such a short-run context, thus it was not considered. Interesting and disappointing times –as usual- overall.
Some weeks ago the newly elected Greek government did manage eventually to take some structural measures to a proper direction, trying to change the public debt dynamics, without causing any social unrest (an achievement after all). By doing so it gave a proper signal to markets that are always “right” (as J.C.Trichet said) and it managed to decrease the bond’s spread and the Greek government did borrow 5 billion Euros at a 5.9%, a very good borrowing rate, given that days ago it had “managed” to borrow funds at 7%. J.C. Trichet, the central banker of Eurozone repeatedly has been highlighting that Greece will not default. Thus, that was a point that no further political actions should be taken anymore. Decreasing spread was a matter of time and smoothing had started and “others” were already back on growth! The ideal scenario for the given circumstances.
Unfortunately, at that exact point a “bonehead” move was made by the government, mentioning I.M.F., giving the signal to the markets that Greece has real issues in covering its debt obligations. It should be noted that countries historically avoid considering even as a hypothesis I.M.F., unless they are about to financially collapse (i.e. I.M.F. is identical with saying markets will stop lending funds at this less developed country (LDC), a Eurozone member in our case!). It should be noted also that during these days a Turkish naval ship did almost approach the mainland of Greece by going between Andros and Evia. This “message” could be interpreted as following: “Now, that you Greeks decrease Government spending, do Not consider to decrease your defense spending also.At this context, the I.M.F. “bluffing” approach to Germans mainly, was not unfortunately a bonehead move only, but it does also imply that Greeks keep on not being nationally sovereign (to a degree that could not be imagined even by the naïve ones).
Thus, I.M.F. was used in the case of Greece in order to “attack” the economical integration procedure of Europe and make the political one a further remote scenario that eventually will be forgotten. The Germans seem to have adopted this scenario. The historical perspective, importance and the role of E.U. are adopted mainly by E.C.B. and not by the politicians!
Overall it is a case-situation that you wish to be governed by just a stupid and impotent government and useless or ineffectual consultants, but unfortunately you are governed by people that have no sovereignty and are just “means” within a geopolitical game.
Going back to the subordinate economics to politics: Inflation is not significant within such a short-run context, thus it was not considered. Interesting and disappointing times –as usual- overall.
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