From today’s Open Europe news summary:
According to documents seen by Reuters, Eurozone finance ministers are considering extending Greece’s bail-out programme, due to end this year, by six months to the middle of 2015. However, a Greek government official insisted that “Greece can discuss only a technical extension [of the programme], which cannot be longer than a few weeks.”The Bundesbank has this morning halved its 2015 GDP growth forecasts for Germany from 2% to 1%.
Of course, Greece will get its extension! The European Central Bank feels that it really has no choice except to send good money after bad. This is how hyperinflations begin, with the central bank believing that it has no choice except to continue to print money. The European Union has implicitly, if not explicitly, proclaimed that no nation can be kicked out of the EU or the European Monetary Union (eurozone) and that no nation will be allowed to default. This removes all real political pressure for any country to reform, so the only course is to print more money and pretend that reform is simply being delayed.
How long it will take Germany to come to the same conclusion? It may already have, but it has yet to muster the political gumption to admit that it joined a dishonest, impractical, and parasitical organization. Patrick Barron