Tuesday, December 30, 2014

Explaining the Greek-German Euro Problem

Greece figured prominently in German news last night....actually pegged number one over the missing airliner and the sunk ferry off Albania with Germans onboard.

It's an epic story of Greek financial woes which have flipped Greece into deep trouble and left the average guy on the street there wondering about stability and the future.

The effort to take several political parties and form a new government.....involving a minimum of 150-odd members of the Greek Parliament?  Fizzled.  This is one of the problems when you have seven political parties in the mix.  Prior to the election.....there were potentially up to twenty-one political parties running candidates....but only seven met the minimum vote level to move onto the next step.

This week's problem figures from the continued efforts to establish a President and get enough votes to solidify this guy.  The seven-party balance has made it impossible.  And the icing on the cake is that the loans that the EU are providing to cover debts.....require some focus on the future.  Without the figure of the Greek President.....more loans are questionable.

What the German media is laying out is a dangerous scenario where people in Greece get hyped up and worried over their banking sector....and make a run on the banks.  As one banker accurately described the simplicity of the problem.....you could have a couple of ATM machines in key neighborhoods which might fail one evening, and give off a false impression of a lack of money.  The next day.....a rush to the local banks gets picked up by the news media and suddenly in two or three days.....the whole banking sector is crushed by this demand to remove cash (lots of cash).....which the banks simply can't provide.

What happens on 25 January?  This next election will likely result in the current seven political parties still being around, but in differing numbers.  Some people think the Radical Left Party will move up from second-place where they stand currently (52 members of the 300)......overtaking the New Democracy Party (108 members of the 300).  There's a fear that the New Dawn Party (resembling the Nationalists Socialists of the 1930s) might also pick up another dozen-odd members.

The odds of stability coming out of this election?  So far, you don't get that impression from any journalists.....it's more like 'round-2'.

Why does any of this matter to the typical German?  There is this scenario of Greece reaching a point of despair and the right political mechanics to leave the Euro, and return to their old currency.  The stability of the Euro will be called into question and the anti-Euro skeptics within Germany (probably five-to-ten percent of German society) will have more reason to discuss their own views on a national stage.  On the list of topics for the 2017 German election.....this is one that both the CDU/CSU and SPD political parties would prefer to avoid.  It only helps AfD.

So, when you settle down and view German news and the Greek election episode figures prominently....there's a good reason for telling this story.  The events of 25 January 2015 might lay out one of the top stories of the year, and generate more skeptical views of the Euro.

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