Those Germans Are Efficient

The pace of market events is stepping up rapidly (very 2008-esque) as I posted last week, Angela Merkel's ruling Christian Democrat or CDU party was looking at ways to "allow" countries in the EU that didn't want to stay in the coalition or monetary union, to "voluntarily" leave or if they could not keep the fiscal rules. Then there was some language later in the week about "Forced exits". Of course either way it doesn't matter because all Germany needs to do is exert some influence and the bond buying in Italy, Portugal, Spain, Ireland or whoever, automatically stops and those countries face default and "Know" that the EU will not ride to their rescue as the EU is effectively the one putting them out on the street. The only choice they have and the only thing that may have saved Greece, would be to issue and control their own currency and deflate their way out of debt, something they can't do now as all countries in the monetary union do not have the choice, only the main hub, the ECB, can make that choice.

I also mentioned last week that although we were just hearing about this new plan from Germany to effectively kick certain members out of the club and it was alluded to first at the G20 meeting in France when "Mer-Kozy" said that "Greece" was free to leave the union or words to that effect.

As a brief aside, Hungary, a country that I have visited 7 times and was married in one time (I'm married to a Hungarian) is about to have their credit rating cut to junk status. I just wonder if Sarkozy plans to help at all being that Sarkozy IS A HUNGARIAN LAST NAME AND HE IS OF HUNGARIAN DECENT!!! Bet you didn't know that!

In any case, the point being, the seeming "new" news, as I said and as released by Wikileaks two weeks ago, was most likely not just recent talk, but plans that are well under development. Well the CDU just voted in favor to "Allow" Eurozone exits with "Allow" being quite sarcastic. Ultimately the language of voluntary or forced, I think doesn't matter as they can make the situation so bad that they fore a voluntary exit.

You are seeing the core of the EU being infected by contagion and you are witnessing the first steps toward the dissolution of the EU as it has been known. This is a big deal and there are very real reasons it is happening, furthermore, as always, the unintended consequences and the EU's recent lack of any thoughtful plans are sure to make this a new nightmare.