GREEK CRISIS STARTS TO BITE

Two leading German bankers have recently resigned, apparantly as a protest at the way the European Central Bank (ECB) is handling the EURO crisis.

Mr Axel WEBER  was, until he resigned in February, the expected successor of Jean-Claude TRICHET, the ECB President.  Mr Jürgen Stark is also leaving before the expiry of his term of office.  In both cases it would seem that they were strongly opposed to the ECB bond buying plan to reduce the interest costs of further loans sought by Spain and Italy and perhaps other countries as well.

These resignations were due to the basic principles which the ECB has adopted and as such are more than just understandable. Let us not forget that the Greek crisis led EU leaders blindly to adopt the principle that the EURO must be defended at all costs !!!  Greece was accorded 110 Billion Euros credit very quickly, in spite of the fact that the reasons for the Greek bankruptcy would not be cured.  One year later another 110 Billion Euros were again necessary !!! 

Now the ECB bond buying plan is in motion. Its aim is to reduce the cost of borrowing by Spain and Italy but this will not solve the inherent Greek or Italian problems either.  It will only put off the day when Greece declares itself bankrupt and the EURO countries in the EU count their losses !!!

Greece needs to declare itself bankrupt, to adopt its old Drachma, declare a Drachma value of all foreign value debts and then devalue the Drachma !!!  This will hurt all Greeks and there will be a mini revolution, but at least the cherished EURO and EU could survive in spite of the losses !!!

The EU leaders could then order a rewriting of basic conditions which are at present lacking in the EU TREATY.