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Destroy Greece to Save the Euro as Merkel Makes 'Growth Proposals' Whilst Asking for Referendum on Euro

Politics / Eurozone Debt Crisis May 20, 2012 - 07:21 AM GMT

By: Mike_Shedlock

Politics

Best Financial Markets Analysis Article...Elections Provide Yet Another Attempt to Snatch Defeat From Jaws of Victory; New Democracy Leads Latest Poll

Greek elections are set for June 17th following the impasse of the last election where no majority government formed.

The "Destroy Greece to Save the Euro" clowns led by German Chancellor Angela Merkel are out in force hoping to turn the vote into a direct referendum on the Euro. The election is of course a direct referendum on the Euro, but Greek citizens are under three Fantasyland ideas.


Three Fantasyland Ideas

  1. The euro is a good thing for Greece
  2. It is possible for Greece to stay on the euro but default on debt
  3. Greece can recover in the eurozone

Merkel is doing her best to convince Greeks that number 2 is not possible and she is correct on that score. She is also promoting the Fantasland positions numbers 1 and 3.

Merkel Asks For Greece Referendum on Euro

MarketWatch reports Merkel Asks For Greece Referendum on Euro.

Germany's chancellor reportedly proposed on Friday that Greece hold a referendum on its membership in the euro currency area, increasing pressure on the nation just as Group of Eight leaders are set to discuss the region's debt crisis this weekend.

In a phone call with the Greek president on Friday, German leader Angela Merkel suggested that Greece could have a referendum on the euro when it holds national elections in June, according to media reports, citing a Greek government spokesman.

Whether she actually did make the proposal is in doubt -- her spokesman denied it, but the Greek official then reiterated that Merkel made such a request.

Merkel Yields on Growth Measures

As a matter of political expediency (or do I mean political suicide) Merkel-Hollande Meeting Yields Greece Growth Signal

German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters there committed to the austerity demanded to stay in the euro.

Requests for measures to bolster growth will be "considered" and the European Union may also "approach Greece with proposals," Merkel said late yesterday at a joint press conference with Hollande during his first official visit to Berlin. "Greece can stay in the euro area," and "Greek citizens will be voting on exactly that."

Is Merkel's Strategy Working?

The idea that Germany is going to consider anything for Greece but still more austerity measures is yet another Fantasyland notion. Is proof of her strategy in the polls?

The latest polls show pro-bailout conservatives leading

Greece's conservative New Democracy party, which backs the country's international bailout, has retaken the lead from the anti-bailout radical leftist SYRIZA, a poll showed on Thursday, the first published since a new election was called for June 17.

If elections were held now, New Democracy would win 26.1 percent of the vote compared with SYRIZA's 23.7 percent, according to the MARC/Alpha survey conducted on May 15-17.

Based on this result, New Democracy would win 123 seats, the pollsters said. Combined with the 41 seats projected to be won by the Socialist PASOK, Greece's two major pro-bailout parties would command a 14-seat majority in the country's 300-strong parliament.

Support for SYRIZA appears to have declined after the party refused to join a national unity government with all the other major parties, the MARC poll showed. In the previous survey by the same agency before the coalition talks collapsed, SYRIZA led with 27.7 percent, up seven points on New Democracy.

Money Will Flow Along With Propaganda

For those holding the common-sense position Greece needs to leave the eurozone to recover, this may be a bit disconcerting. However, There is likely to be movement in both directions on the polls and I think this is just a temporary snap-back.

Moreover, Greece is likely to run out of money before the next elections. Then again, if the polls show the Troika-clowns have a good shot at pulling this off, the money will flow right along with the propaganda.

To understand what the battle to "save Greece" is really about, please consider Euro area official sector exposures to Greece in excess of EUR 290bn Total; EUR 84bn Germany, EUR 63bn France, EUR 55bn Italy, EUR 37bn Spain

That link shows this has nothing to do with "saving" Greece, rather it is about saving German, French, and Italian banks (further destroying Greece in the process).

The irony is every bailout attempt so far has done nothing but increase European banking losses. This attempt should it succeed in another bailout will do the same: increase losses. Three years ago total losses might have been on the neighborhood of 40 billion euros.

Look at the losses now. The increased losses were caused by arrogant Troika-clown euroxcrats with asinine positions willing to repeatedly throw good money after bad.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2012 Mike Shedlock, All Rights Reserved.


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