Throw the Greeks Out of the Eurozone

That’s what Philipp Rösler, the leader of the junior partner in Germany’s coalition government, is saying.

Now in a recent post on Italy I wrote near the end that:

Angela Merkel, admitting that leaving the euro zone is politically and legally possible during her commentary addressing the Greek referendum in Cannes, has already broken the taboo. Now everyone knows that it is possible to default, leave the euro zone and re-gain competitiveness in a move to a devalued currency.

Merkel was diplomatic in breaking the eurozone exit taboo because she was saying it is Greece’s choice. Rösler is saying ‘throw the Greeks out of the eurozone.’

FDP leader and German Economics Minister Philipp Rösler doesn’t rule out a withdrawal by Greece from the euro zone. “The Greeks themselves have the choice: reform within the euro area or no reform outside of it. There are no other choices, “Rösler told “Bild”.

So, Rösler is saying that Germany calls the shots and that the Germans want reform. Further, he means to say that if the Greeks don’t do what Germany demands, they will be kicked out of the euro club.

“The Greek government must understand that our patience will come to an end”

In another German newspaper, the Frankfurter Allgemeine Zeitung, Barry Eichengreen says that this kind of talk is counterproductive:

FAZ: According to Angela Merkel, the EU is “prepared” for Greece’s euro exit . That sounds more like goodbye.

Eichengreen: I hope not. Greece’s withdrawal from the euro is something for which one cannot fully prepare. The consequences would be enormous destructive potential. Mrs. Merkel should watch what she says.

Why so destructive?

Let me say this: Mrs. Merkel should remember September of 1992. At that time, the Bundesbank President Helmut Schlesinger created chaos with a thoughtless remark about the lira which almost led to the collapse of the European Monetary System.

At the time Schlesinger said a devaluation of the Italian lira would not solve all the problems of the monetary system. Everyone thought about the British pound – and its price crashed. What does this have to do with the euro?

In times of crisis, one should weigh one’s words carefully. At a minimum, Mrs. Merkel’s comments are no cause for hope.

Why?

There has been a change in rhetoric. The euro countries are no longer saying: The monetary union is forever and we will do everything to make it work.

But what’s done is done. The taboo is broken. Merkel and Rösler have ripped the band aid off. Now everyone knows that a eurozone exit is possible. Therefore, it is going to happen.

Sources:

14 Responses to "Throw the Greeks Out of the Eurozone"

  1. osplant   November 8, 2011 at 1:56 am

    Kindly advise Mr. Philipp Rosler to read once more the known agreement "Two Plus Four" where Germany has to forget for good the new-nazis practices and ideologemes. The New Germany is a political entity which has to respect the four(Russia, UK, France and USA) its national independence is based upon the countries where they have massacred and destoyed during the WWII and have not paid yet the required reparations(not material but the ethical and civilised). The criminal neo nazi Germans and the ones who massacred the whole humanity have not the right to decide for the future of people that destroyed.