Are Political Suicides Needed to Save Greater Europe?

Greek default drama is much like the movie Groundhog Day. If you prefer a quote from Yogi Berra instead, then please consider It's déjà vu all over again. Every day for weeks we have heard a "deal is close". Moreover, on multiple occasions at the end of the week we were informed Greece "had" to reach agreement over the weekend or Greece would default. Let's hope this time someone really means it.

Via email, Michael Pettis at China Financial Markets makes a compelling case why Spain is destined to leave the euro. For ease in reading, I added the subtitles in bold.

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.This article is a guest contribution by By Paul Sandison*.

By Peter Boone and Simon Johnson The bailout of Greece, while still not fully consummated, has brought an eerie calm in European financial markets.  It is, for sure, a massive bailout by historical standards.  With the planned addition of IMF money, the Greeks will receive 18% of their GDP in one year at preferential interest rates.  This equals 4,000 euros per person, and will be spent in roughly 11 months. 

GREECE faced massive strikes turned riots yesterday as its government passed a new round of fiscal consolidation, designed to shrink the budget €18.5 billion by 2016. The contents of the austerity plan hardly seems like the stuff to drive Greeks to firebomb riot police; among the measures under debate were a two-year rise in the retirement age and measures to make it easier to fire public employees.

Last week was yet another eventful one for Europe. Just hours after the biggest bail-out and debt write down in European history since the war was agreed by the EU leaders to try and finally pluck the bleeding hole in Eurosystem that Greece is, an astonishing newsflash came in. For no apparent reason than political posturing, the Greek prime minister decided to announce a referendum on the deal.

The word τραγῳδία (tragoidia), from which the word "tragedy" is derived, is a portmanteau of two Greek words: τράγος (tragos) or "goat" and ᾠδή (ode) meaning "song", from ἀείδειν (aeidein), "to sing". This etymology indicates a link with the practices of the ancient Dionysian cults.