JR8 wrote:... the Greeks don't want to be in the Euro; but will Germany let them leave? Not a chance. How to resolve that one? Portugal, Spain, and Italy will be looking on with interest since each of them has strong anti-euro movements that would be markedly empowered if Grexit happens.
I forgot when I'd written the above - as recently as July it seems...
Meanwhile this week Portugal is on the cusp of imploding.
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http://www.telegraph.co.uk/finance/econ ... cency.html
'Defiant Portugal shatters the eurozone's political complacency
Brussels faces a second anti-austerity revolt as the Portuguese Left tears up the script and demands the right to govern
The delayed fuse on the eurozone's debt-deflation policies has finally detonated in a second country. Portugal has joined the revolt against austerity.
The rickety scaffolding of fiscal discipline and economic surveillance imposed on southern Europe by Germany is falling apart on its most vulnerable front.
Antonio Costa, Portugal's Socialist leader and son of a Goan poet, has refused to go along with further pay cuts for public workers, or to submit tamely to a Right-wing coalition under the thumb of the now-departed EU-IMF 'Troika'.
Against all assumptions, he has suspended his party's historic feud with Portugal's Communists and combined in a triple alliance with the Left Bloc. The trio have demanded the right to govern the country, and together they have an absolute majority in the Portuguese parliament.
The verdict from the markets has been swift. "We would be very reluctant to invest in Portuguese debt," said Rabobank, describing the turn of events as a political shock.
The country's president has the constitutional power to reappoint the old guard - and may in fact do so over coming days - but this would leave the country ungovernable and would be a dangerous demarche in a young Democracy, with memories of the Salazar dictatorship still relatively fresh.
"The majority of the Portuguese people did not vote for the incumbent coalition. They want a change," said Miriam Costa from Lisbon University.
Joseph Daul, head of conservative bloc in the European Parliament, warned that Portugal now faces six months of chaos, and risks going the way of Greece.
Mr Costa's hard-Left allies both favour a return to the escudo. Each concluded that Greece's tortured acrobatics under Alexis Tspiras show beyond doubt
that it is impossible to run a sovereign economic policy within the constraints of the single currency.
The Communist leader, Jeronimo de Sousa, has called for a "dissolution of monetary union" for the good of everybody before it does any more damage to the productive base of the European economy.
His party is demanding a 50pc write-off of Portugal's public debt and a 75pc cut in interest payments, and aims to tear up the EU's Lisbon Treaty and the Fiscal Compact. It wants to nationalize the banks, reverse the privatisation of the transport system, energy, and telephones, and take over the "commanding heights of the economy".
Catarina Martins, the Left Bloc's chief, is more nuanced but says that if the Portuguese people have to choose between "dignity and the euro", then dignity should prevail. "Any government that refuses to obey Wolfgang Schauble must be prepared to see the European Central Bank close down its banks," she said.
She is surely right about that. The lesson of the Greek drama is that the ECB is the political enforcer of monetary union, willing to bring rebels to their knees by pulling the plug on a nation's banking system.' [continues]
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I highlighted the above in blue, as I think it is the core contradiction that underlines the growing chaos. You can't govern as a sovereign state and be within the Euro. You have to accept that Germany will dictate your domestic economic (etc) policy. But no one voted for that, and Germany would have to be delusional to imagine any other EU member will accept it.
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