Kool-Aid wins again
However, it is the tendency of most people (and entities) to continue to trust in things which support their belief system over even glaringly apparent reality. As a Financial Times opinion piece by the estimable Wolfgang Münchau of Eurointelligence also noted last week, “Another untold truth is that Germany will never forgive Greek debt. This is because the German parliament will not accept it, and the number of MPs hostile to Greek debt relief will be even higher after the September election.”
There is little appetite for approving Greek debt forgiveness that would further damage Angela Merkel’s party into the elections, and will very likely be a greater presence of those opposed to it (and even German Euro-zone membership) after the election. As such, there is no other politically viable position for any of the EU players than to grudgingly accept the canard of the potential for higher Greek growth than is at all reasonable in the current circumstances…even including the Greek government.
Kool-Aid encouraging next crisis?
So pass the Kool-Aid and drink hearty…at least unless the IMF finally bites the reality bullet and refuses to participate in the charade. It is going to be very interesting to see whether another significant Greek Debt Crisis can be avoided this summer. This is taking on a familiar sense of "slow motion train wreck" where the engineer is drunk on an “austerity is the only path to growth” Kool-Aid habit he should’ve been able to kick a long time ago. At least insofar as it concerns deeply damaged economies.
Thanks for your interest.