Hola amigos!

Well what a week to have been part of the European dream!.

Even Freddie Kruger walking down Elm Street would have got a warmer reception than the way the Greeks have been treated. The ongoing saga reminds me of 2 things:

1) When all the weedy kids in school ganged up on the really weedy kid…
2) When I use to cry and my mother promised to give me a smack so I had something to really cry about…

The 16 euro zone members who for the past 10 years have built the European dream on low productivity and high debt and appalling fiscal management have decided they have had enough and the Greeks are squarely to blame. On the face of it, yes the Greeks have completely mishandled their own affairs with a tax collection rate of only 30%, but they have done this under the eyes of their 15 European neighbours and they are not alone and will certainly not be the last to have their fiscal affairs laid out in full view of a global audience.

So what to do?

Well, as ever, the remaining Europeans will try to ignore the problem and hope it goes away. It won’t though. What is needed is for savage cuts in the Greek economy and…wait for it…..this bit you’re going to love:

Last Monday 70% of the Greek population backed the tough measures needed, on Thursday the other 30% went on strike, you couldn’t make it up… well, you could …. It’s known as the European dream.

The answer: Greece will not be allowed to go to the wall, the Euro will survive, you will see a large dose of European fudge, a bit of rule re-writing and then the finger pointed at someone else to blame for all their problems. Ironically what the euro zone needs is a much weaker currency and the Euro has only dropped a few cents on the back of these supposed apocalyptic events.

Deep budget cuts and a huge increase in productivity is also required…we wont get it.

Pass me the Ouzo……

Please feel free to contact me at keith.s@currenciesdirect.com and I will reply to all your questions promptly.

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