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June 18, 2012

Never Mind the Elections, Greece Is Bust

By Spear's

The Greek elections are almost irrelevant as soon as they are over: Greece is bust, whether it is inside or outside the eurozone

The Greek elections are almost irrelevant as soon as they are over: Greece is bust, whether it is inside or outside the eurozone. More importantly, the eurozone itself is essentially finished as a completely unworkable dream, as time will surely tell, and possibly sooner rather than later.

So, why did the Greeks, apparently, vote for the eurozone? Simples: so that they can go on sucking on the euro-teat for as much debt write-off and as many new advances as possible. If in doubt, consult Virgil.

By the time you read this, any market euphoria at the result confirming the Greeks appear to have voted for economic asphyxiation will probably have evaporated, as attention soon returns to the intractable problems of Spain, and Italy, and Portugal et al. The market won’t get much comfort either from the fact that the presidency of the EU soon passes to the mighty Cyprus, which is more bust than the Greek mainland.

Then there is the euro-summit of finance ministers, which will achieve sweet FA, preceded by the G20 Summit in Mexico which will achieve even less. Meanwhile, a banking crisis is brewing across Club Med as depositors continue to head for the exit. It’s beginning to sound like bucket ’n’ spade time has come early this year.

The crisis, or crises, will rumble on through the summer, with Europe at the centre of attention, as the politicians show themselves to be completely incapable of realising the significance of events around them, let alone any viable plan to deal with them. The country silently laughing at it all is, of course, Germany, as she charts her course towards a political union run from Berlin, to match the ECB in Frankfurt.

The late Rt Hon Nicholas Ridley MP was forced to resign from the Cabinet when he said the Maastricht Treaty was ‘a German racket designed to take over Europe without firing a shot’. He was completely right, but he would never have guessed that within twenty years a Conservative PM would be running off to Berlin in his grey flannel shorts and telling the German chancellor to get on with it!

The real problem for the global crisis, however, is America. The May figures showed unemployment rising and job creation falling, along with industrial output and retail sales. Then president Obama said that the private sector was ‘doing just fine’, as he handed Mitt Romney the keynote sucker moment for his campaign, as no-one now has to justify what this column has long since claimed, namely ‘Obama doesn’t do economics’. It was a gaffe that may well yet cost him the White House, as the GOP’s ad campaign repeats it ad nauseam.

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But what is the next president going to do in January? What can he do, other than kick Uncle Sam’s leaky can further down the road? That is the conclusion, at any rate, of the best book to come out analysing where the global crisis is heading, namely Richard Duncan’s The New Depression.

The style is crisp and clinical, the graphs highly relevant and you can read it in a three-hour session. You will be much wiser than any of the world’s so-called leaders long before you get to the end, which should not surprise anyone at all, least of all Spear’s readers.

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