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It’s all unravelling

Published Tuesday, February 17th, 2015

The only surprise yesterday was the speed with which the Ukrainian ceasefire is unravelling and the Greek talks broke down. That the ceasefire would unravel and a Greek deal would not materialise was never in doubt, but the rapidity of the breakdown and acrimony involved is alarming. Mrs Merkel, no doubt catching up on her sleep, will have woken up this morning to very depressing news.

The Greek finance minister described eurozone finance ministers’ demands as “absurd and unacceptable”. He accuses them of treating Greece like a “debt colony” and warns that Greece is not bluffing. As a supposed master of game theory, by continuing to claim that a deal will be reached he must believe that it is finance ministers who are bluffing and will capitulate.

The problem is that, if the eurozone acknowledges that the Greek government has been given an electoral mandate to renege on the terms of the bailout deal, it is acknowledging deals are only good for the term of the government that agreed them. You cannot run a successful currency union with such unstable foundations. The stage is set for a Greek exit or an awful compromise that everyone will see for the charade that it will be.

to read the rest of the report, please click here

Posted by David Hufton