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Greek Bailout Keeps “United States Of Europe” Dream Intact…for Now!

Underlying much of what we see and don’t see regarding the modern-day tragedy that is Greece, is all about preserving the dream of a pan European nation state, a United States of Europe if you will. Only secondarily is it about the solvency of the Greek nation and about bailing out the foreign bank holders of Greek sovereign debt. Let me explain my perspective. Words: 627

So said Arnold Bock (www.FinancialArticleSummariesToday.com) in an email to Lorimer Wilson, editor of www.munKNEE.com (Your Key to making Money!), which can be found below in its entirety. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

When I first wrote about the Greek debt issue (Greece: a Greek Tragedy or a Greek Comedy (of Fiscal Mismanagement)?) I said it wasn’t about bailing out an insolvent Greece, rather it was about preventing the bankruptcies of foreign banks which held Greek debt. All the talk in the mainstream media at that time focused on the solvency of Greece itself. Now the crisis has mutated into preserving the ongoing European political project of one united European nation, although the mainstream media for the most part still does not understand this reality.

Interest rates on Euro sovereign debt in every member nation were always very low because there was always a misplaced belief in the soundness of the EU and the Euro. In addition, everyone seemed to believe that there was also an implicit guarantee that the Euro currency and Euro sovereign debt would ultimately be backstopped by the European Central Bank, the EU and, if necessary, the IMF and the US Federal Reserve Bank.

More recent actions show that:

  • the prevailing belief in the soundness of the EU and the Euro is misplaced,
  • the European Central Bank, the EU, IMF and the US Fed will go to seemingly any length to protect the foreign banks which hold Euro sovereign debt, and that
  • the collective dream of establishing a single political entity, a pan European nation state, is slowly slipping away.

Indeed, perhaps it is their attempt to salvage the pan European nation state goal which explains so many of the somewhat ‘senseless’ measures that have been taken, or not taken, to preserve Greece. To let Greece out, or to force Greece out, of the Euro zone, would create a precedent for the other weak links such as Portugal, Spain and Italy to follow suit. The domino effect of any measure applied to other ailing Euro member nations would effectively kill any chances of the formation of a United States of Europe. Most policy makers in Europe are not ready to think seriously about discarding that fading dream – yet.

In the meantime, the measures being taken are simply designed to maintain the status quo:

  • don’t let Greece out, don’t force Greece out, of the Euro zone,
  • don’t let Greece become insolvent,
  • don’t let Greece become a negative precedent to apply to the other sick Euro nations,
  • don’t allow the banks which hold Euro sovereign debt be seen to be bankrupt, even though most are if accounting shenanigans and vast infusions of new digital Euros had not become their current salvation.

Conclusion

By bailing out Greece and the foreign bank holders of European sovereign debt, the pan European political dream remains intact…for now. Current and future actions, therefore, are designed to simply buy more time to preserve the political dream of a future United States of Europe.

Editor’s Note: The above article has been has edited ([ ]), abridged (…) and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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