Sirtaki original Greek version.
The story of Greece’s exit from the Euro has been written many times. In fact there will be no single moment when this world-changing event happens, and they admit that the Euro’s all over. The event is happening in stages, with the political world in complete denial of what is going on. The EU cannot begin to cope with the humiliation. So much so that crucial events are hardly mentioned in the media.
Today, reports that Greece is hoping to raise money in the USA get the headline, but what is not mentioned, or at least is not being emphasised, is that these Greek bonds will not be denominated in Euros. The Greek Euro game is up. These Greek bonds will be denominated in US Dollars. If there was to be a moment of truth, when the scales fell from the eyes of dewy eyed europhiles, this must surely be it.
Yet while the media ignores the real story, politicians across the world will prefer to save face and not notice. The facts however couldn’t be simpler.
Greece, a eurozone country, has given up on the Euro. As of now, Greece is planning its future as a US Dollar-linked economy, and is abandoning attempts to borrow money in Euros, which the markets don’t want to hold or lend long-term. At this critical moment for the future of the Euro, this could hardly be more significant.
The Euro’s over, and at least as far as Greece is concerned, is no longer a credible currency. The US Dollar’s stepping in to fill the gap, and Greece is being reclassified from a Eurozone country to an ‘Emerging Market’ to attract dollar investors.
But shhhh! Don’t tell anyone. OK. The first rule of journalism must be obeyed – save the faces of the powerful. But even through the thick fog of EU-face saving, the picture is clear. Greece is a dollar economy now.
The FT today writes –
Greece will this month launch a multibillion-dollar bond in the US in its hunt for new investors, selling itself for the first time as an emerging market country as demand for its debt dwindles in Europe.
Morgan Stanley is being considered to handle the deal after Goldman Sachs’ plans to sell Greek bonds to US and Asian investors this year fell through amid rumours that the Chinese had shunned Athens’ debt.
George Papaconstantinou, Greece’s finance minister, would lead a roadshow to the US “after April 20” but in contrast with plans at the start of the year he would not travel on to Asia, one official said.
Greece is seeking $5bn to $10bn from US investors to help cover its May borrowing requirement of about €10bn to roll over maturing debt and meet interest payments.
The fact that Greece will default is now recognised – See Walter Munchau in the FT. But what is not recognised is that the Euro’s reputation as a reserve currency is going to take one almighty hammering as a result. Who wants to hold a currency in political disarray? The Greeks know the answer to that one.
Bloomberg – LINK.
Video above. Book your flights and get ready to enjoy the coming Greek devaluation. I can guarantee your foot will be tapping while you watch, listen and dream of Greek islands. May is looking tricky financially according to the WSJ, so maybe the real crisis and default proper will happen sooner than we think.