View Full Version : The Greek economy is in full shutdown mode
Greek healthcare system collapses, hospital workers now working without pay
Friday, June 22, 2012 by: Jonathan Benson, staff writer
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(NaturalNews) The economic situation in Greece is only continuing to worsen, as reports indicate that hospitals and care centers throughout the nation are running completely out of medicines, and many healthcare workers are now voluntarily providing care services without pay.
Strapped with spiraling debt, the Greek healthcare, which is government-run, has had to receive gobs of international financial aid just to keep operating with some semblance of normalcy. There has also been plenty of IOUs issued, and desperate patients quietly forking over cash "gifts" to doctors to receive treatments. All in all, the healthcare situation is in utter chaos, save for those that have sacrificed their own time, often free of charge, just to help those in need.
As we reported here at NaturalNews back in 2010, Big Pharma had already been withholding drugs from Greece because of the country's inability to pay for them. Greek authorities had tried to negotiate with drug companies to lower the exorbitant costs associated with drugs, and some complied. But many others simply stopped shipping in medicines, leaving thousands of ill patients without any options. (http://www.naturalnews.com/028922_Greece_Big_Pharma.html)
Today, the situation has gotten even worse, particularly because the Greek healthcare system heavily relies on brand-name drugs rather than far-less-expensive alternatives. Since the entire system is clogged because of unpaid bills, many pharmacies, for instance, have had to simply close their doors. Those that still remain and continue to supply drugs on credit -- these are few and far between -- are being overwhelmed by long lines of desperate patients seeking life-saving medications.
"We're not talking about painkillers here," said one Greek woman, a cancer survivor, to Reuters. "We've learned to live with physical pain. We need drugs to keep us alive."
MSNBC reports that many hospital workers have been working for a many as five months without pay, including at the Henry Dunant Hospital in Athens, which is owned by the Hellenic Red Cross Foundation. These workers hope to one day receive the backlog of pay they are owed, but because the crisis only appears to be worsening rather than improving, this may not ever happen.
As of this past weekend, the New Democracy Party's Antonis Samaras claimed victory as Greece's new prime minister, ending a seven-week period in which the nation was essentially being ruled by nobody. Much to the chagrin of many Greeks, this new regime plans to stick with the eurozone and pursue more financial bailouts (http://www.nytimes.com).
Sources for this article include:
http://www.reuters.com
http://www.cnbc.com/id/47792705
Learn more: http://www.naturalnews.com/036257_Greece_economic_collapse_hospitals.html#ixz z1yVDGPtdy
Boomhauer
06-22-2012, 04:14 AM
What does the Greek political situation have to do with the Red Cross not paying employees for 5 months?
It really shouldn't be a shock since the Red Cross hasn't been about helping for decades, only profitting off suffering.
Red Cross = Corporate contracted International aid
http://img2-cdn.newser.com/square-image/55487-20110331225929/red-cross-med-workers-complicit-in-gitmo-torture.jpeghttp://img1-cdn.newser.com/square-image/117326-20110427120653/gitmo-doctors-covered-up-torture-study.jpeg
Blackwater = Corportae contracted International goons
http://www.lastexittonowhere.com/media/images/uploads/productimage-picture-ocp-200.jpg
UN assembly = Corporate contracted International commitees
http://i.ytimg.com/vi/gDokSJ1SbzQ/0.jpg
peacepipe
06-22-2012, 05:18 AM
another sky is falling thread.
orinjkrush
06-22-2012, 09:57 AM
rather than being the villains in this (as the banksters would want to portray), the Greeks should be pitied for their plight. it might only be time until it reaches our shores.
rather than being the villains in this (as the banksters would want to portray), the Greeks should be pitied for their plight. it might only be time until it reaches our shores.
That is what these jokers fail to realize.
Question is will they be as innovative as the Greeks. Will the serve their countrymen without pay for six months? Will they pull together and create a barter economy?
Going by the responses here I doubt it.
pricejj
06-22-2012, 10:56 AM
Socialism at it's finest...
How many here want the U.S. to continue going down the same road Europe is on?
How many civilizations and men must fail from deficit spending before you realize just how destructive it is?
cutthemdown
06-22-2012, 11:10 AM
Hell no Baja we go out American style with guns, zombies, looting, death, rape and mayhem! Oh yeah! First things first is we come to Mexico and loot your friggin freedom garden. At least we will be stoned.
Hell no Baja we go out American style with guns, zombies, looting, death, rape and mayhem! Oh yeah! First things first is we come to Mexico and loot your friggin freedom garden. At least we will be stoned.
Ha ha good luck with that.
Hell no Baja we go out American style with guns, zombies, looting, death, rape and mayhem! Oh yeah! First things first is we come to Mexico and loot your friggin freedom garden. At least we will be stoned.
BTW I wasn't talking about you. Judging from your posts I think you will be fine.
Oh and now is a good time to buy gold again.
Requiem
06-22-2012, 11:13 AM
Socialism at it's finest...
How many here want the U.S. to continue going down the same road Europe is on?
How many civilizations and men must fail from deficit spending before you realize just how destructive it is?
You do realize that Greece is not a Socialist country, correct?
Hey I have a solution -- spend trillions of Americas dollars to bail them out, so they can continue their entitlement programs and so they can get early retirement. Then after we go under assert that we went bankrupt because of capitalism and "austerity" programs...
You do realize that Greece is not a Socialist country, correct?
When do folks think they can retire in Greece? Yeah, there is no degree of socialism going on there....:thumbsup:
Hey I have a solution -- spend trillions of Americas dollars to bail them out, so they can continue their entitlement programs and so they can get early retirement. Then after we go under assert that we went bankrupt because of capitalism and "austerity" programs...
You can pass fake money around for only so long. Sooner or later the bogus system will crash and burn. Unfortunately for all of us it is going to be sooner.
Requiem
06-22-2012, 11:19 AM
When do folks think they can retire in Greece? Yeah, there is no degree of socialism going on there....:thumbsup:
Anyone trying to encapture their political system as socialist really doesn't know what they are talking about and probably should avoid discussion on the topic at hand.
cutthemdown
06-22-2012, 11:28 AM
You can pass fake money around for only so long. Sooner or later the bogus system will crash and burn. Unfortunately for all of us it is going to be sooner.
So would you be surprised if it doesn't happen with in 5 yrs?
So would you be surprised if it doesn't happen with in 5 yrs?
I will be surprised if it doesn't happen by the end of Sept 2012.
BroncoBeavis
06-22-2012, 01:28 PM
BTW I wasn't talking about you. Judging from your posts I think you will be fine.
Oh and now is a good time to buy gold again.
I always wonder what good gold is going to do in a true financial cataclysm.
I always wonder what good gold is going to do in a true financial cataclysm.
Eight billion people will still need a currency (means of exchange/trade) that everyone has faith in. Gold has filled this role throughout history.
cutthemdown
06-22-2012, 03:58 PM
I will be surprised if it doesn't happen by the end of Sept 2012.
Will you ever stop talking about it? If it doesn't occur by 2016 or so? Because it's as old and tired as waiting for the Chiefs to win a Superbowl.
Will you ever stop talking about it? If it doesn't occur by 2016 or so? Because it's as old and tired as waiting for the Chiefs to win a Superbowl.
OK if it doesn't happen by, let's say the end of next year (2013) I will be very happy to say I was wrong and be glad to, as you say, stop talking about it.
I am fully aware this is not info you want to hear, it's scary as hell. Trust me I hope I am wrong
Requiem
06-22-2012, 04:23 PM
I get all the Benjamin's in 2013.
orinjkrush
06-22-2012, 04:37 PM
When do folks think they can retire in Greece? Yeah, there is no degree of socialism going on there....:thumbsup:
I "had" to retire from the USAF at 46. Does that qualify me as a socialist?
or maybe my 26 years of military service doesn't count as a capitalist enterprise?
when you retire is irrelevant. elites NEVER work and are perpetually retired.
you think the Kennedy's or the Bush's EVER worked at honest jobs?
sure.
Boomhauer
06-22-2012, 08:20 PM
I will be surprised if it doesn't happen by the end of Sept 2012.
Cali has at least until the Nov elections --
Next year's budget; Cutting Welfare, education, especially ed grants, health services, especially at home and single mom health services, road projects, parks and rec services.
Added taxation; increased state sales tax, income tax on highest earners.
But the fundamental problem - state employment and unions - that's the cause for their strife is unaddressed.
You do realize that Greece is not a Socialist country, correct?
California is Greece, whch is Spain, which is France, which is death through socialism
Idiot.
Greece is still not a socialist country (nothing has changed since Req pointed this out).
Spain's financial problems stem largely from the fault of its smaller banking system. Half the country had its money in small banks. These small banks had little to no oversight and were blowing 90%+ of their investments in risky endeavors (guess which ones).
France is doing alright. Quite a ways away from "death." (So, too, are other social-markets like Germany's and China's, but I digress.)
The economic recession that landed in '07 was not a production of socialism, but of deregulated and unregulated free markets at work... unless you think banks pooling enough money in bad investments to literally kill themselves is an act of "socialism," which you probably do.
pricejj
06-23-2012, 05:59 AM
You do realize that Greece is not a Socialist country, correct?
Public spending is at or over 50% of GDP, so yes, Greece is a Socialist country (along with most of Europe).
DenverBrit
06-23-2012, 06:27 AM
Public spending is at or over 50% of GDP, so yes, Greece is a Socialist country (along with most of Europe).
Here's a list of 'actual' socialist countries.
http://en.wikipedia.org/wiki/List_of_socialist_countries
pricejj
06-23-2012, 08:00 AM
China, Vietnam, and a couple others Communist countries are the only one's that "claim" that they are Socialist.
Despite the fact that Greece was run by a dictatorship until 1974, ruled by a Socialist government for the past 30 years, and has a majority of their industry nationalized (including health care, banking, air transportation, and soon to include energy, and telecom) (much of the rest is controlled by unions)...you still think it's not a Socialist country.
Cuba, France, and Denmark (Nordic Model) all have public spending > 50% of GDP...I bet you think their not Socialist either.
China, Vietnam, and a couple others Communist countries are the only one's that "claim" that they are Socialist.
Despite the fact that Greece was run by a dictatorship until 1974, ruled by a Socialist government for the past 30 years, and has a majority of their industry nationalized (including health care, banking, air transportation, and soon to include energy, and telecom)...you still think it's not a Socialist country.
Cuba, France, and Denmark (Nordic Model) all have public spending > 50% of GDP...I bet you think their not Socialist either.
Using your criteria (which I agree with) the US must be pretty close to socialist and you can add Canada to that list.
pricejj
06-23-2012, 08:15 AM
Using your criteria (which I agree with) the US must be pretty close to socialist and you can add Canada to that list.
Yep. All we're lacking is nationalized healthcare (which the left desperately wants) to push us over the edge, both towards Socialism, and towards permanent slow growth.
The funny thing is, the U.S. is nowhere close in tax revenue to being able to sustain public spending >50% of GDP. To do that, the tax code would have to be reformed to eliminate ALL the loopholes and raise ALL the tax brackets...but don't tell the Obama supporters who continue to live the fantasy that only "rich" people would see a tax increase.
It's no coincidence that the BRIC countries have much lower public spending (~20%) than the U.S. and Europe, and are not in a permanent recession.
barryr
06-23-2012, 08:44 AM
Yep. All we're lacking is nationalized healthcare (which the left desperately wants) to push us over the edge, both towards Socialism, and towards permanent slow growth.
The funny thing is, the U.S. is nowhere close in tax revenue to being able to sustain public spending >50% of GDP. To do that, the tax code would have to be reformed to eliminate ALL the loopholes and raise ALL the tax brackets...but don't tell the Obama supporters who continue to live the fantasy that only "rich" people would see a tax increase.
It's no coincidence that the BRIC countries have much lower public spending (~20%) than the U.S. and Europe, and are not in a permanent recession.
But the liberals believe we need to spend even more and that somehow improves the economy. But no question, when taxes are raised, everyone ultmately pays for it.
mhgaffney
06-23-2012, 08:45 AM
Using your criteria (which I agree with) the US must be pretty close to socialist and you can add Canada to that list.
Sorry -- I don't get this. Unless you view corporate subsidies and bail outs as socialism for the 1%.
But I don't think this equates to socialism. IMO, a plutocracy is the antithesis of socialism.
Spider
06-23-2012, 08:47 AM
But the liberals believe we need to spend even more and that somehow improves the economy. But no question, when taxes are raised, everyone ultmately pays for it.
LOL you idiot not so much as spend more but make cuts in other areas like military spending .....gotta admit things kicked ass under clinton and getting better with Obama
Sorry -- I don't get this. Unless you view corporate subsidies and bail outs as socialism for the 1%.
But I don't think this equates to socialism. IMO, a plutocracy is the antithesis of socialism.
Would you agree we are growing closer to socialism as time passes.
Would you say we are more socialistic now than in 1950, 1970, 1990.
I see a trend toward more entitlements, bigger government, more government control at the federal level. These are all features of a socialist state. American citizens are being lead down a path of government dependance, just take a look at the growth of the food stamp program for example. When I say socialism in this case I am referring more to central control than the actual state owned business' but even that is changing. Look at Fannie May and Freddie Mac for example. They are huge federal institutions that exercise great control over what happens in the housing market, one of our last industries.
DenverBrit
06-23-2012, 09:23 AM
China, Vietnam, and a couple others Communist countries are the only one's that "claim" that they are Socialist.
Despite the fact that Greece was run by a dictatorship until 1974, ruled by a Socialist government for the past 30 years, and has a majority of their industry nationalized (including health care, banking, air transportation, and soon to include energy, and telecom) (much of the rest is controlled by unions)...you still think it's not a Socialist country.
Cuba, France, and Denmark (Nordic Model) all have public spending > 50% of GDP...I bet you think their not Socialist either.
First, you need to know what 'socialism' means. Cuba is a good example.
so·cial·ism (ssh-lzm)
n.
1. Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
2. The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.
Requiem
06-23-2012, 10:03 AM
Boomhauer and Price, riding the short bus together.
Meck77
06-23-2012, 10:55 AM
Meanwhile millions of Mexicans are living in third world conditions in much worse conditions than the greeks.
Up to 20% of the Mexican population isn't even meeting basic nourishment standards.
http://en.wikipedia.org/wiki/File:Percentage_population_undernourished_world_ma p.PNG
Meanwhile millions of Mexicans are living in third world conditions in much worse conditions than the greeks.
Up to 20% of the Mexican population isn't even meeting basic nourishment standards.
http://en.wikipedia.org/wiki/File:Percentage_population_undernourished_world_ma p.PNG
What does poverty in Mexico have to do with economic collapse in Greece?
If you are so worried about undernourished people in Mexico maybe you should have donated the $500 you paid Eye Patch to stop exposing you for what you are here on the OM. I still can't believe you paid someone to stop picking on you.
You truly are a classless individual meck. Have those ranchers pegged you yet? Is that why you move back to the city? They ran you phony ass off didn't they.
pricejj
06-23-2012, 11:58 AM
First, you need to know what 'socialism' means. Cuba is a good example.
Cuba is Communist.
Would it make you feel better if I called Greece a "Socialist Democracy"? And Democratic in the sense that they get to pick from a few Socialist "political parties" for their leaders?
Any country who gets to pick between two hand-picked "candidates" for President, instead of one, makes it a "Democracy".
The ruling class has figured out, that you can keep the same political parties in power (with very similar agendas), while making the people believe they actually have a choice, by giving them two candidates. From here on out, when I talk about "Socialist" countries, please understand that I am talking about "Socialist Democracies" like Greece, France, and Denmark, not "Socialist Dictatorships" like Cuba.
Does that clear it up for you?
pricejj
06-23-2012, 12:04 PM
Boomhauer and Price, riding the short bus together.
How's your new government job going, Req?
I worked for government services a few years after I got out of the army. I was an electronics specialist repairing radars and tank radios at Fort Carson. I got called in to the boss' office one day. He sat me down an proceeded to explain how government work was conducted. He told me I was fixing too many pieces of equipment and was eroding the back log of busted innovatory. He told me I needed to slow down because I was making the other tecks look bad. He told me if I would slow down I could call in sick and he'd never question it.I quit about a month later.
Meck77
06-23-2012, 12:25 PM
The point is you are worried about the rest of the world yet their is suffering in your own back yard. Don't worry about the Greeks. They'll be fine.
Baja I'm a snowbird. I live in multiple places if you really want to know you angry bitter old man. BREATHE my friend. BREATHE! ahhhhhh:)
Requiem
06-23-2012, 12:29 PM
How's your new government job going, Req?
Good. They like what I do. I kick ass at my work.
BTW, I don't see how your 50% GDP statement indicates that Greece is Socialist. That is not their political system, nor their economic. In fact, they have taken a lot of measures over the past decade privatizing many parts of their economy. The kicker with Greece is that they have disproportionate contributions to their tax system, which is a primary reason they are in this mess.
The point is you are worried about the rest of the world yet their is suffering in your own back yard. Don't worry about the Greeks. They'll be fine.
Baja I'm a snowbird. I live in multiple places if you really want to know.
Not that it's any of your business but I do more than you will ever know for the people of Mexico.
The issue with Greece is it will effect the whole world. We are in the mist of a global economic break down that is subject to a domino effect. Something very different than long standing poverty.
DenverBrit
06-23-2012, 01:03 PM
Cuba is Communist.
Would it make you feel better if I called Greece a "Socialist Democracy"? And Democratic in the sense that they get to pick from a few Socialist "political parties" for their leaders?
Any country who gets to pick between two hand-picked "candidates" for President, instead of one, makes it a "Democracy".
The ruling class has figured out, that you can keep the same political parties in power (with very similar agendas), while making the people believe they actually have a choice, by giving them two candidates. From here on out, when I talk about "Socialist" countries, please understand that I am talking about "Socialist Democracies" like Greece, France, and Denmark, not "Socialist Dictatorships" like Cuba.
Does that clear it up for you?
You just described the current state of US politics. Is the US now a socialist country??
You just described the current state of US politics. Is the US now a socialist country??
Socialist may not be a perfect word to describe what the US has evolved into but it sure ain't what the founding fathers had in mind.
DenverBrit
06-23-2012, 01:17 PM
Socialist may not be a perfect word to describe what the US has evolved into but it sure ain't what the founding fathers had in mind.
Socialist isn't the perfect word to describe many countries.
'Social Democracies' have somehow been turned into 'Socialism.' Not the same.
peacepipe
06-23-2012, 01:44 PM
Socialist may not be a perfect word to describe what the US has evolved into but it sure ain't what the founding fathers had in mind.
corporatocracy is the perfect word and isn't what the founding fathers intended.
corporatocracy
A type of government in which huge corporations, through bribes, gifts, and the funding of ad campaigns that oppose candidates they don't like, become the driving force behind the executive, judicial and legislative branches.
cutthemdown
06-23-2012, 03:37 PM
Really peace? Founding fathers felt women and people who didn't own land should not even vote. Their thinking was the people who make the money, who have the money, better to choose the leaders. If we voted under their rules Obama loses big.
cutthemdown
06-23-2012, 03:47 PM
Obviously America is a hybrid. We believe in a free market but really no market can be totally free of regulations. So they tweak things here and there. Mostly you make your own way, capitalism, but we do have some socialism as a safety net. Mostly for poor or old people etc etc. When Republicans say that guy a socialist. What we mean is he wants to add more social programs and expand the safety net. We don't think they want to end capitalism all together. We understand that Democrats also believe in free enterprise and the marketplace. Just like Republicans understand their should be some safety net. Sure we have fringe both parties that believe all the way. That we should either be totally socialist, or be no safety net, no govt regulation free for all capitalism.
Our system works, its our politicians that don't. They used to make deals, now they don't. Repubs IMO need to give in some on the tax raising for the rich. Trade a bit higher % for 250 grand and over, in exchange for a lowering of the corp tax rate, and the payroll tax rate. Then come to a mutual agreement on the student loan thing. Wham bam made some progress.
It's obvious though after having the dems push them around first two yrs they are dug in. Heels so far into the ground you need a shovel to get them out. I give equal blame to both sides. Dems for saying things like we have the majority, the people spoke, stfu and watch us legislate health care, and the repubs for shutting down govt this last yr to make sure Obama can't improve the economy.
Boomhauer
06-23-2012, 08:33 PM
If you (Meck77) are so worried about undernourished people in Mexico maybe you should have donated the $500 you paid Eye Patch to stop exposing you for what you are here on the OM. I still can't believe you (Meck77) paid someone to stop picking on you.
Must
hear
more
Must
hear
more
Not from me. Not my style.
mhgaffney
06-24-2012, 10:22 AM
The author of this well thought out piece argues that a European bank run has already started. He explains why it won't be staunched.
MHG
JUNE 22-24, 2012
Germany's Constitutional Conundrum
How the Euro Might be Derailed
by MARSHALL AUERBACK
http://www.counterpunch.org/2012/06/22/how-the-euro-might-be-derailed/
The European financial officials are preparing their policy package to deal with the current crisis for the meeting scheduled next week. It is not clear whether any of the proposals will be able to stop the ongoing bank run. Here are some of the rumored proposals:
* Euro member jointly issued short term bills – in effect, short term euro bonds.
* A debt redemption fund as proposed by economic advisors to Merkel.
* New procedures for euro area banking supervision.
* Using the ESM to purchase peripheral nations’ bonds in order to reduce their sovereign interest rates.
French President Hollande is advocating the ESM purchase program. He is also advocating that the ESM be given a banking licence linked to the European Central Bank’s balance sheet. This makes sense as it addresses the solvency issue.
In the Eurozone we have a solvency problem and a crisis of deficient aggregate demand. Unfortunately, within the European Monetary Union these twin crises ultimately fall entirely in the realm of the issuer of the currency- the ECB, and not the users of the currency- the euro member nations. So without the ECB, directly or indirectly, underwriting the currency union, solvency is always an issue, whether that be Greece, Portugal, Spain, Italy or, indeed, Germany. Likewise deficient spending power has been exacerbated via the austerity imposed as a condition of the ECB’s help. It is akin to putting a patient on a drip feed, allowing him to recover, then breaking his legs again so that he remains bed-ridden.And that includes the banking system, which, to serve public purpose, requires credible deposit insurance, again meaning support from the issuer of the currency.
Chancellor Merkel says the Hollande proposal “is not up for debate”. She is also resisting the alternatives involving euro member jointly guaranteed financings. Why? Perhaps because they may be in conflict with the German constitution and the odds of a challenge are on the rise.
There has been much discussion recently in Europe of seemingly arcane technical details, such as ”Target 2” and other forms of ECB Lender of Last Resort activity, such as the Emergency Lending Assistance program (the “ELA”, which has largely kept Greek banks afloat over the past several months. We won’t go into the details here except to say that they have all become germane in the context of Germany’s constitution. All of the ECB’s lender of last resort programs have built up large contingent claims in Germany (as the largest creditor economy in the Eurozone), and these claims have been the subject of much heated domestic political debate.
Thus far, there has constitutional challenge in Germany to these programs specifically.This may be because Target 2 financings in particular are not well understood. They are a “back door” bailout financing. Their volumes are not widely appreciated. Many think they are simply financings of current account deficits on the periphery and are not debtor bailouts. In fact, the cumulative current account deficits are small relative to now prevailing Target 2 imbalances. No one so far may have dared to bring a challenge to the court. Once someone does the extent of Target 2 bailout financing and, for that matter, additional ECB back door bailout financings (via ELA and ECB repos) will be brought to light. Once there is a challenge there might be an adverse court ruling. That could end ECB lender of last resort financings. That prospect would imply that some banks with runs would have to suspend payments on deposits. The bank run could then become explosive. That could be sudden death to the euro.
As the Target 2 and other ECB lender of last resort positions increase, the contingent loss exposure of the German banking system increases if the euro zone blows up or one country defaults.. Perhaps that increases the odds of a constitutional challenge which would vastly intensify the current bank run. That is a major unrecognized risk to the euro arrangement.
Now policy makers in the Eurozone are talking about solving the bank run with a program of deposit insurance. That makes sense, but the problem is that a deposit insurance program would be a new initiative. That might be more readily challenged before the constitutional court. Chancellor Merkel may realize this. She may realize that a challenge to a deposit insurance initiative might bring to light the issue of the constitutionality of Target 2 and thereby threaten an even more intense run on the banks of the periphery of Europe.
It may be these considerations that have so far delayed any move by the EU to arrest the current bank run with the only truly effective bazooka – jointly guaranteed insurance in euros for bank deposits in all euro member nations.
In the end I believe there is already a bank run and it is escalating. The Europeans are working on a deposit insurance scheme. I expect this to go forward with German approval. The stakes are too high.
But a mere challenge to the constitutionality of Target 2 or euro wide deposit insurance could create fears of a cessation of ECB lender of last resort financing and subsequent bank suspensions of payments on deposits. That would intensify any bank run.
Why? Because if I’m a depositor in a Greek, Spanish or Italian bank and I think there is even the slightest possibility that an ECB-directed deposit insurance scheme could be nullified by a German court ruling, then I’ll raise to take my money elsewhere as quickly as I can. No wonder the issue of capital controls is now being quietly discussed in Brussels.
This is the real reason why Mrs Merkel says that there are limits to what Germany can do on its own and why she continued to take such a hard line with Athens over the course of the Greek election campaign.. Of course, she rejects the alternative proposals because they are politically unpalatable, in part because she hasn’t been honest with her own electorate in spelling out what the real implications of Germany’s position is if the Eurozone blows up. She’s in a corner. This also explains why the Germans are so keen to involve entities like the IMF, because it helps get around this legal conundrum.
So we have a crisis in which what makes sense economically might prove politically and legally impossible for the Germans to swallow. But what is legally possible is insufficient to forestall Europe’s mounting banking and solvency crisis. We have truly entered the waters of Scylla and Charybdis.
MARSHALL AUERBACK is a market analyst and commentator. He is a brainstruster for the Franklin and Eleanor Roosevelt Intitute. He can be reached at MAuer1959@aol.com