German Finance Minister Wolfgang Schaeuble floated a proposal to their bosses at a July 12 summit to suspend Greece from the euro along with the prospect of a debt restructuring.
The “monster”, as Greeks called him, was not wrong and not really thinking in the interest of Germany or Europe. A Greek exit would cost more to European than the 86 billion euros third bailout. When Alexis Tsipras said “I had a choice of a deal I did not agree with or a disorderly default”, he did not get the full picture.
An exit would give to Greece the option of restructuring, the option of devaluation limited to some extend with the help of ECB. At the opposite, an exit would cost to the creditor around 240 billion euros to 250 billion euros , according to Gianluca Ziglio, a fixed-income strategist at Sunrise Brokers LLP in London.
Instead, Tsipras choose to stay in the euro at any cost without really measuring the consequences for his country. Most of the observers and some beautiful minds as Paul Krugman or Stiglitz criticised Germany for their opposition forgetting the last five months of the chicken game made by the Greek government.
French and Italian played the nice guy looking for a deal at any price, imagine the message for other Euro members tempted by such ways. Fortunately for Europe, Germany was strong enough to maintain the cap but not enough strong to impose the right solution for Greek people, a temporary exit from the Euro area.
So, today a Greek Prime Minister is in charge of applying a deal he does not believe in. A Prime Minister, who lost the full confidence of his own people. By chance, nobody in Greece today can stand him and Greece has no choice, but the population has not trust anymore in Alexis Tsipras. On the other side, repeating that he does not believe in a plan agreed, playing a chicken game with the European leaders, Tsipras has not credibility whatsoever throughout the European community. So this guy is in charge to implement the tougher reforms never seen in Greece and reform the country.
What do you think? How much would you bet on the success of such enterprise? This not considering that the initial plan imposed to Greece is unrealistic. For instance, where Greek are going to find 50 billion euros asset to sell? How is he going to implement the new reforms and how, regarding the effectiveness of the Greek administration?