Saturday, April 24, 2010

News: German parties wants Greece out of the eurozone. Bad times for Greek government

Christian Social Union of Bavaria, sister party of Angela Merkel party (CDU), wants to expel Greece from the eurozone, as Greek Prime minister asked for €45 bn in help from EU and IMF

Christian Social Union in Bavaria (CSU), sister party of Christian Democratic Union (CDU) stated that Greece should abandon European Monetary Union (EMU), as the financial crisis they have makes them inappropriate to belong to the Eurozone.

Hans-Peter Friedrich, member of CSU's executive, said today at Der Spiegel newspaper that Athens authorities should study the possibility of leave the Eurozone.

Werner Langen, head of Christian Democrats group, said aid isn't a lasting answer to crisis and Greece only alternative is leave the Eurozone and recover capacity with big structural reforms.

Germany's finance Minister Wolfgang Schaeuble rejected any suggestion.

On the other hand, some part of Greek population don't think that IMF help will be nothing but a future burden to their economy, as the "IMF go home" posters at Greek streets manifest.

Greek protestors can be found today marching against IMF 'aid' at Athens streets.

Greek analysts said that Greek market is waiting for the aid asked, even if will be too short, and European Central Bank (ECB) believe that Greece financial needs are €80 bn, not 'just' €40-45 bn.

'Greek aid will spike the Dollar up, making exports more expensive for the US', said Alan Valdes floor trader

Tomorrow we'll post a summary all Goldman Sachs latest news with explanations for newcomers to the Economy Field. Stay with us.

See also: Yahoo News - Greek PM defends EU-IMF debt plea

Related articles:

Special: Greek crisis


Economy Lesson: Saving the X Industry, by Henry Hazlitt

The lobbies of Congress are crowded with representatives of the X industry. The X industry is sick. The X industry is dying. It must be saved. It can be saved only by a tariff, by higher prices, or by a subsidy. If it is allowed to die, workers will be thrown on the streets. Their landlords, grocers, butchers, clothing stores and local motion pictures will lose business, and depression will spread in ever-widening circles. But if the X industry, by prompt action of Congress, is saved—ah then! It will buy equipment from other industries; more men will be employed; they will give more business to the butchers, bakers and neon-light makers, and then it is prosperity that will spread in ever-widening circles.

It is obvious that this is merely a generalized form of the case we have just been considering. There the X industry was agriculture. But there is an endless number of X industries. Two of the most notable examples have been the coal and silver industries. To “save silver” Congress did immense harm. One of the arguments for the rescue plan was that it would help “the East.” One of its actual results was to cause deflation in China, which had been on a silver basis, and to force China off that basis. The United States Treasury was compelled to acquire, at ridiculous prices far above the market level, hoards of unnecessary silver, and to store it in vaults. The essential political aims of the “silver senators” could have been as well achieved, at a fraction of the harm and cost, by the payment of a frank subsidy to the mine owners or to their workers; but Congress and the country would never have approved a naked steal of this sort unaccompanied by the ideological flim-flam regarding “silver’s essential role in the national currency.

To save the coal industry Congress passed the Guffey Act, under which the owners of coal mines were not only permitted, but compelled, to conspire together not to sell below certain minimum prices fixed by the government. Though Congress had started out to fix “the” price of coal, the government soon found itself (because of different sizes, thousands of mines, and shipments to thousands of different destinations by rail, truck, ship and barge) fixing 350,000 separate prices for coal!* One effect of this attempt to keep coal prices above the competitive market level was to accelerate the tendency toward the substitution by consumers of other sources of power or heat—such as oil, natural gas and hydroelectric energy. Today we find the government trying to force conversion from oil consumption back to coal.