Gorilla's Blog

In Greece, that’s real money fleeing…

At this point, leaving the Euro is Greece’s only viable solution, given that the country’s German paymasters would rather see the country destroyed than have to admit lying continually to their own voters.

Unfortunately for Greece, leaving will make things much more difficult in the short-term. A drachma devaluation of roughly 50% is needed to make the economy more competitive. The banking system will be destroyed, with no prospect of financing from anywhere for at least a decade. Unemployment and social upheaval will increase. Civil war is not out of the question.

Once Greek leaves, it’s very likely that Portugal, Spain, and Ireland will follow quickly. Bond yields in those countries are unsustainable, as is the utterly stupid pursuit of austerity at a time of vast unemployment. It’s not out of the question that Italy and France will also be forced to leave Euroland.

How to put out the fire? The ECB must become the lender of last resort for all sovereign debt, the Northern Europeans need to engage in big-time stimulus to promote consumption, and a higher inflation rate must be maintained to bring make competition more competitive within Euroland.

Gorilla says: “It’s back to 1939: Germany torching a whole continent in pursuit of a morally bankrupt, confident dream!”