Greeks to Decide Their Own Future

Over the last year there has been extensive discussions on Greece at WOWS. My initial feelings on the subject were that Greece would have been much better off if they were not part of the E.Z. In fact, I've never liked the idea of the EZ. When traveling across the pond, the strength of the Euro was always rubbed in my face. Yeah, it kind of sucked being a traveller with a weaker currency, but as far as the economic perspective, I don't think they quite understood that a strong Euro wasn't exactly in their interest in many way.

One thing about Europe is the fact that you can drive about 4 or 5 hours in any direction and be in a totally different country, a totally different culture and the economic/industrial differences were astounding. For example, Hungary, where I've travelled the most, was once part of the Austo-Hungarian Empire. The basic deal was Hungary provided for the agricultural needs while Austria was a more industrialized nation. To this day, travelling across both countries, the differences are still pretty amazing.

The question that seems to be at the heart of all EU problems is that of, "Can one size really fit all?" I never thought so. While they are all Europeans, the similarities stop right about there. Imagine if Greece controlled it's own currency? Imagine the options that would have been available to them.

Over the last month or so as the demands of the Troika have stepped over the line and crossed into questions of sovereignty. The demands being made just to get the next tranche will put even more Greeks out of work, saddle them with higher taxes and fewer services and if there's one thing Europeans seem to love, it's the social programs. Just look at the riots in France when such programs were put up for debate. Just look at the protests in Greece, some of which have turned deadly for protesters and police.

Since the rumor was floated that Greece would exit the E.U. (and all of the contradictory statements out of the EU on the subject) and despite subsequent denials, I feel it was truly threatened. That hasn't helped much as Germany is still demanding private sector loss participation if it comes to that while the ECB is on the other side worried that any change in terms is tantamount to a default/credit event.

So what are we to make of THIS? You don't even have to read the article, just the title, "Greek PM: Major Reforms Need Referendum"

And how do you think a referendum vote among the Greek people will go down? Although the PM softened the blow by making a case to the people that reforms are urgently needed, it's thinly veiled and once again Greece is saying to the EU, "We will depart, reintroduce our own currency and leave European Banks and other holding the bag for the April 2010 bailout.

This is no small thing. I wish I could find the article I read that laid out the chain reaction of events that would take place if Greece made good on the threat. The bottom line was once all was said and done, Europe would enter an even deeper recession. Ireland and Portugal would have enormous leverage over the Troika and the EU would likely crumble.

I personally feel this is the end game unless the Troika plays ball in a manner the Greeks can tolerate and even if that comes to pass, a credit event will almost certainly be triggered and the result may not be much better. For now, I would pay very serious attention to the headlines out of Greece, Germany and the ECB. This could be an event in which we cannot even fathom the repercussions.

When the time comes, we'll have our short on the euro, but probably most importantly will be the European banking system.