That’s the option being openly talked about:
Europe may need to pull a Chapter 11 – a US-style bankruptcy, which would permit a market shutdown and Euro Zone reorganization before reopening for business.
The EU desperately needs a break from market pressures in order to allow the political apparatus to really gather its forces and finally move Europe and its debt crisis ahead of the curve. Here we are just a couple of weeks after the feeble attempt to apply an EFSF plaster on the problem and we’re already back to Square One: the EU debt crisis has reached the point at which none of the readily available tools or institutions are sufficient to match the magnitude of the crisis. This dictates the need for an out-of-the-box solution.
EU policy makers played the extend and pretend game for as long as they could – but now the writing is on the wall: popular outrage is on the rise and putting increasing pressure on the political process – as we are seeing increased demonstrations and grass-root activity taking over both the political agenda and the media. And markets are now balking as empty promises and now a real lack of funds are seeing bond yields beginning to spike out of control. The self-reinforcing cycle of downgrades and austerity and recession are taking us to the very brink of a full scale Crisis 2.0.
Or, alternately, the EU could just jetison all that inconvenient democracy to keep the Ponzi scheme going just a little bit longer, trying to hide the fact that Europe has run out of money.
Says Walter Russell Mead: “Right now the world’s largest economic bloc is running around like a chicken with its head cut off.”
So how could Europe possibly display the terminal bankruptcy of the high tax, high spending, highly unionized, cradle-to-grave welfare state, European/Blue State social model? How about if EU staffers went on strike?
Dear Greek Citizens: I hope you weren’t so foolish as to believe that the Swiss bank accounts containing the money you earned actually belong to you, do you? You’re going to have to return them to Greek banks so we can steal them. Love, the EU.
The Euro may have been great for Greek elites, but not necessarily great for average Greeks.
How are things in the rest of Europe? In Spain, unemployment is 22.6%.
The EU may crack before the Euro.
China is not coming to the rescue, as China is suffering from the same demographic maladies afflicting Europe: “A population that is no longer growing very fast and is quickly aging. The proportion of the population that depends on the state for pensions and medical care is overwhelming the proportion that works and pays taxes to the state.”
Plus, Chinese rating agencies just downgraded Greek debt.
The IMF has quitely changed its rules to make it easier to bail out Europe. With your tax dollars.
(Hat tips: Ace, Insta, and the usual suspects.)
Tags: Euro, Europe, European Debt Crisis, Greece, IMS, PIIGS, Spain