EU Exit Will Now Be “Threat To Those Who Don’t Behave The German Way,” BofA Says

While the Greek “compromise” deal may have averted an outright economic collapse in Greece in the short-term (although one would be hard pressed to describe the current situation on the ground as anything other than a depression) and may for the time being allow EU officials to cling to the notion that the euro is “indissoluble,” the fraught negotiations that took place over the weekend in Brussels laid bare for all to see the unbridgeable gap between EMU nations.

If there were any doubts about who runs the show, German FinMin Wolfgang Schaeuble erased them on Sunday by pushing through a term sheet that effectively strips Greece of its sovereignty on the way to seizing state assets and relegates its people to perpetual debt servitude. If this is the meaning of a currency “union”, it’s not entirely clear why any state would want to be a part of it.

From BofA

Temporary exit: think twice

Although the idea seems to have been dropped, the draft of conclusions the Eurogroup circulated to the Heads of State contained a temporary exit from the Euro as an alternative to a deal. Exit from the currency block is now officially something that can be used as a threat to those that don’t behave the German way. More importantly, it can be temporary which, in principle, would make it more feasible relative to a permanent one. This is a bad idea in our view. It would mean the return of convertibility risk to spreads in the medium run. If the idea of an exit was bad, a temporary one is even worse. The ECB would be there as first line against contagion in the short run. But we had argued in the medium run a move towards more integration would be needed. If we have learned something today is that there is little appetite for more integration.

Full article: EU Exit Will Now Be “Threat To Those Who Don’t Behave The German Way,” BofA Says (Zero Hedge)

One response to “EU Exit Will Now Be “Threat To Those Who Don’t Behave The German Way,” BofA Says

  1. Enforced exit may have been an option right until Greece got their way..
    Other European countries have effectively stopped any Grexit and what a mistake that is because a precedent has been set.

    Other poor countries will be thinking “if they can get away with everything, why can’t we?”
    Then when (or if) they are threatened with “exit”, they’ll simply say

    “You let Greece get away with it and stay in so why not us?”

    The scene has been set for MASSIVE defaults on “loans” and I find that really funny.