Entries Tagged as 'Greece'

What’s Germany Thinking?

David Frum November 16th, 2011 at 8:49 am 4 Comments

A friend involved in the Euro crisis writes this about the most recent German actions to rescue the Euro:

This is a selfless act on Germany’s part actually. A reversion to the drachma would lead to a massive devaluation & hurt the competitiveness of German exports (and it’s tourism sector – everything tradable). As more countries leave the eurozone, the German competitive situation deteriorates further, especially as the Euro itself would likely rise.

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Greek Referendum Tempts Economic Disaster

November 3rd, 2011 at 2:33 pm 32 Comments

It’s understandable why Greek Prime Minister George Papandreou wants to hold a referendum before implementing draconian financial restraints that will cause riots, drugstore clashes with police, thumb car burnings, acts of vandalism, and anarchy.

He knows what has to be done, but undoubtedly supposes that if a majority of Greeks support austerity measures, that will neutralize hostility on the streets whenever the government takes unpopular but necessary action.

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It’s Germany’s Mess as Much as Greece’s

David Frum November 2nd, 2011 at 3:50 pm 45 Comments

In my column for The Week I argue that Germany bears a lot of responsibility for creating the current European debt crisis:

The other day, a financial friend repeated a joke. “A Greek, an Italian, a Spaniard, and a German walk into a bar. Who pays? The German of course …”

Bzzzt. Let’s stop the tape right there.

That joke — and many comments like it — reveals a broad misunderstanding in the U.S. about the currency crisis destabilizing Europe. Since that same crisis is ravaging U.S. financial markets, Americans ought to understand better.

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Greece: The End of the Beginning

David Frum October 27th, 2011 at 12:40 am 17 Comments

A deal on the Greek debt may or may not be helpful, but it certainly is clarifying. Now we can begin to understand: the Euro crisis is not about Greece, and it’s not even really about European government overspending.

It’s about the negative consequences of building a monetary union without a political union – and about Europe making the awful decision whether to move forward towards the latter or giving up its hopes for the former.

Save the Euro? Could be Illegal

October 25th, 2011 at 5:34 pm 8 Comments

At some point in this crisis, medical the eurozone is going to have to decide whether it wants to have a solvent euro for the moment in part of the Union, malady or a lawful and democratic Union in all of it.

The EU is groping for ways to bail out a list of states that includes Greece, treatment Italy, Portugal, Spain, or Ireland – or potentially all of them. The trouble is that since 1998, such action is expressly prohibited by the Maastricht Treaty.

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Will America Pay for Europe’s Bailout?

David Frum October 3rd, 2011 at 12:00 pm 39 Comments

In my column for CNN, I discuss what sort of bailout Europe will need when it finally confronts the full scale of its debt crisis:

It’s been obvious for some time now what has to be done to avert the bank run: a European Super TARP, a version of the Troubled Asset Relief Program that was used to bail out Wall Street in 2008

The European Union will have to assume responsibility for the debt of southern European countries. In return, the EU will have to take control of the finances of those countries — cutting their spending and raising their taxes.

The debt assumed by the EU will have to be serviced somehow. That means the EU will need its own revenue stream sufficient to pay for and ultimately retire the southern European debt.

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The EU’s Big Fat Greek Mess

September 30th, 2011 at 3:49 pm 9 Comments

Herman van Rompuy is neither a “poet lost in politics,” nor “charismatic,” but rather a timid church mouse – precisely the sort of leader that a lowest common denominator institution like the EU requires. This reputation has dogged Von Rompuy ever since his contested appointment as President of the European Council in 2009.

Van Rompuy’s ignorance seems to not only cover his dull personality but also the magnitude of the Greek crisis. Rompuy on his recent New York visit suggested that Greece will not default because it cannot be allowed to default.

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Greece Defies Reform

September 20th, 2011 at 2:57 pm 35 Comments

Back in May of 2010 it became clear that Greece could no longer finance her debt and her budget deficit through the markets. Since then the nations of the European Union (and the IMF) have covered the borrowing needs of Greece with new loans.

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Let’s Call it Hurricane Euro

David Frum September 1st, 2011 at 12:09 am 20 Comments

In my Marketplace column, I ask why no one is preparing for the coming collapse of the Euro:

But why is it only weather stories that command such breathless attention?

Meanwhile, the world’s largest currency union — the euro — continues to careen toward disaster. The euro’s travails weigh heavily on the United States’ economy too. Yet just try getting anybody interested in that outside specialized financial media.

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Greece’s Tough Deal

David Frum July 25th, 2011 at 9:04 am 4 Comments

A friend’s weekend quip:

“Anne Mansouret described her sexual affair with ex IMF chief Dominique Strauss-Kahn as ‘consensual but brutal.’ That’s also a good description of Greece’s deal with its bondholders and other EU countries.”