Greece appears unable to be relied upon to keep their budget in honest balance, having manipulated accounts to gain entry to the Euro, appearing reluctant to spend less than they earn even after two bail-outs, and appearing unwilling to collect taxes and eliminate entrenched corruption.
Past European leaders' meetings which finally resolved the Euro crisis did not finally resolve the Euro crisis.
To save the Euro, global sentiment needs to be shifted to believe that Greek and Italian debt will be repaid, that there will be no sovereign default, and that no Euro zone nation will ever again borrow more than it can repay.
Persistent linguistic bullying with the PIGS acronym amplify protests which suggest Greece is unlikely to properly support external fiscal controls.
One of the dilemmas is that either:
- Europe continues to fund Greek spending indefinitely despite ongoing Greek fiscal imprudence, effectively relieving Greece from any need for financial discipline; or
- the Euro is “saved” without Greece, which means the Euro is not saved in its current form.
Some EU leaders might have already accepted that the Euro can't continue in its current form. It is possible that plans are well advanced to implement a controlled restructuring of the Euro, possibly without Greece. A currency restructuring would need to be completed quickly, within a span of hours. It would need to be commenced on a Friday evening after market hours, preferably before a long weekend, to allow a full weekend for announcements, the imposition of emergency financial regulations, and the issue of new currencies while markets are closed, preferably while people are well away from their desks. It would be terrible to inflict such changes on everyone during a Christmas, but market participants are suitably absent over a New Year's break.
Success of the Friday December 9 EU meeting will be measured by Germany’s government bond rate, which can measure confidence in the Euro currency, given that confidence in Gemany's national financial prudence remains high.