GREEK AND EURO PROBLEMS SOLVED, SAYS SARKOZY !!!

Nicolas Sarkozy asserts that the euro problems have been solved, but I am not certain in my mind that this is the case.  I resume the events briefly as I see them.


Two years ago Greece informed the EU that it needed 30 Billion Euros to repay loans falling due shortly and thus avoid a national bankruptcy.  This Greek crisis quickly became an EU crisis because the Greek national money was the Euro.  A default by Greece could lead to an attack on the Euro in financial markets worldwide !!!


It was then that further studies revealed that more loans would soon fall due, so the decision was taken to loan Greece not 30 but 110 Billion Euros.


Other serious economic imbalances were then discovered including errors in the financial statements relied upon originally and which permitted Greece to adopt the Euro as its national money.  These new imbalances forced Greece to ask for a second 110 billion Euros of loans a year later.


Now in his election campaign Nicolas Sarkozy says that  the Greek problem has been solved. Together with the help of Chancellor Merkel they have saved the EURO !!!


The ultimate Question is "Who paid the cost of saving the EURO ?".   Is the answer not  "The European Taxpayers" ?


In the private business world when there is a bankruptcy creditors have no choice but to book their losses. 


In the case of Greece, Euro countries chose to make loans through their banks, then wrote down the loans by about 75% in the hope that Greece will repay at least the last 25%.  Finally, the banks booked their pre-tax losses against profits and paid less tax.  Capital increases replaced any remaining loss of net worth.


It is my opinion that Greece should have been left to go through the devaluation process.  This has still not yet occurred although severe measures are ongoing.


What is much more worrying for the taxpayers is that there are other countries which are also in dire straits.  The EU or EUROZONE cannot afford to repeat the same Greek process.


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