In our last posting, we spoke about some of the technical concerns underlying the solution that had seemed all too temporal, in the problems of the Euro.
Today we hear that the Greek government, on whose behalf the Prime Minister had accepted the deal, may itself be close to failure. Apparently, the Greek Finance Minister has now changed his position on the suggested referendum, recently put forward by the Prime Minister. This referendum was proposed, one feels, as a matter of conscience on the part of the PM, in light of the austerity it would continue to impose on the Greek people.
Given that inevitably that question has to boil down to one of principle: should Greece be in the Euro or not? The PM is, at time of writing, looking like he may not survive the vote on whether to proceed with the referendum. The leaders of the Eurozone, notably France and Germany are stating that the first tranche of bail out funds will now not be paid, leading to effective default on the part of Greece, increasingly unable to pay its debts.
Some thinkers have now begun to rationalise what many of us have been saying all along – that the Eurozone will be little worse off without the Greeks. No bail out fund until a decision on the referendum, and if the answer is the wrong one, then no bail out fund period: Greece will default more legitimately than this slow strangulation, and return to the Drachma.
With the loss of its weakest member, the Eurozone could consolidate and strengthen…or unwind completely. We are at the end of the beginning, but of exactly what, remains to be seen…