Greek Euro-Exit Talk Goes Public as Officials Air Doubts By James G. Neuger - May 9, 2012 From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro. Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes. “If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels today. “They will decide whether to stay in the euro zone or not.” After 386 billion euros ($499 billion) in aid pledges for Greece, Ireland and Portugal, 214 billion euros in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase. The world is witnessing an “important moment in European Union history, a moment of crisis,” EU President Herman Van Rompuy said in Brussels on the 62nd anniversary of the declaration by Robert Schuman, then France’s foreign minister, that launched postwar European integration. Euro’s Drop The euro fell for the eighth day as it dawned on investors that Greek voters’ revolt against austerity, and not the victory of Socialist Francois Hollande in France, was the more significant of the two national elections in the EU on May 6. Bonds of at-risk countries have suffered since the balloting. Spain’s extra 10-year yield over German levels widened to 458 basis points today from 415 at the end of last week. Italy’s widened to 412 basis points from 385 over the same timespan. The euro bought $1.2930 at 5 p.m. in Brussels, bringing its eight-day loss to 2.4 percent. “Politically speaking, Greece is already out of the euro zone,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mailed note. “The only question is about the timing and disorderliness of its exit. The Greek parties running on an austerity-for-rescue platform took one-third of the vote. Top vote getter Antonis Samaras failed to assemble a government, throwing in the towel after a few hours. Second-place finisher Alexis Tsipras of the Syriza party began coalition talks today, handing would-be partners an ultimatum to renounce support for the bailout. ‘Catastrophic Uncertainty’ The response outside Athens left little room for maneuver. Schaeuble said that fiddling with the bailout terms would unleash ‘‘catastrophic uncertainty’’ in financial markets, and the central bank’s verdict came from his former deputy, Joerg Asmussen. ‘‘Greece has to be aware that there is no alternative to the agreed consolidation program if it wants to remain a member of the euro zone,’’ Asmussen, who last year moved from the German Finance Ministry to the ECB board, told Handelsblatt in an interview published today. With polls showing roughly the same proportion of Greeks wanting to stay in monetary union while opposing austerity, the haggling over the future government and possible elections next month put the country before two incompatible options. ‘Very Painful’ Very Interesting Comments Yoma Ma 5 minutes ago You all have blinders on- do you think Greece is any different then any of the other countries in the world? The only difference is they are small and like the rest they cannot print their own money endlessly to buy debt like the FED. Outside of Germany and maybe Turkey what country is not facing this problem? The people voted with their emotions not their heads, when desperate and there is 22% unemployment- they are going to vote for whoever says what they want to hear. They are another example of how government and socialist policies do not work and after all these years of depending on the government they have no idea what to do. Do you think the US is any better, what happens here when reality does set in and IT WILL, when the $3 Trillion + money printed by the fed has to be accounted for, rise in interest rates and inflation, and when buying power is decreased 25-50%- what happens when someone has the guts to reform and fix the entitlement society Obama is trying so hard to push through. Look at the Occu- Losers now and their violence- imagine what happens when their free ride is over. Its not just a greek problem, Spain, Portugal, Ireland and Greece are the worst off, but do you think any of those other countries are going to be any different? Come on- what you see in greece and europe is coming here - its inevitable- and for those who elect this disaster of a president again will be the same as those electing these people in greece out of desperation because they are getting a free ride.He can talk about raising taxes on the super rich over $250K (lol)- but the reality is you can tax the 1% evil people 100% and it would still not solve our problems. Within 10 years our entire budget will be entitlements and interest on our debt. Only 1/4 of our budget is discretionary everything else is debt and entitlements- you need to do both. Why would I be happy to send the government more then the 40% in Fedl, City and state taxes I pay now when it will do nothing to the debt but instead go to the Occu Losers and other entitled ones. Obama is literally buying the election promising endless government money and funds to these people if they vote for him. Romney is no winner, but at least has a business sense and gets finance- Obama only gets his ego. And you can say Romney will go back to the same people that BUsh had- well take a look at Obummers team and tell me they are much better off. French Nostradamus 15 minutes ago The problem is that Germany is like China, an export driven economy with an undervalued currency which in a sense is subsidizing exports. Have you noticed that in Europe many people drive German cars. I'm sure that if there was no Euro they would buy cheap Asian imports. Countries that use the Euro are a captive market that benefits the German economy. So right now within the Euro you have an undervalued currency that favors German exports, and overvalued currencies like Greece that favors imports and the creation of debt. Greece should leave the Euro, declare a moratorium in payments and go back to his tourist based economy since Germany is never going to build industrial plants there. When their economy recover, they should set a sensible repayment plan. In the meantime, they should return to their own currency, which would make vacations in Greece very cheap and would allow them to increase their foreign reserves.