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What’s Next For Greece and the EU?

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  • Description

    Stratfor Eurasia Analyst Marko Papic weighs in on the Greek financial crisis.

  • Duration 4:59
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Well for more what lies ahead for Greece and the European Union we want to welcome Markel patent cheesy Euro and Eurasia analyst.

Was -- for and I guess it's it felt like Marco like everyone believes something -- Happen and yet there's always a new stumbling block right now what's the biggest obstacle in the way of resolving this issue.

Wald there's probably two obstacles on the two biggest obstacles really are -- domestic politics.

And now -- third Greek domestic politics and so the real difficulty really since last year in May.

Has been how do you speak to d.s to problems and how do you speak produced two audiences.

Angela Merkel the chancellor of Germany -- -- both satisfy.

Her own that conservative.

Somewhat humorous skeptic of base.

In and social needs to present these bailout -- is as packages that don't -- really feed into moral hazard.

That they aren't sufficiently tough enough that not not everybody thinks that they can just live off of book bailouts for the rest of eternity.

On the other hand -- these bailouts can't be too tough because they will look.

They -- of course cause riots in the streets of Athens in Lisbon and all the other cities and so that's the balance of house to really be maintained.

But you know looking at your notes one thing that's sort out to me as you're saying -- recess to take a bigger role in its own bail -- in other words what we call -- in America putting more skin in the game.

What some of the things that you think Greece must absolutely do -- put more skin and again.

This is this is the strategy that was used with Ireland were Irish pension fund actually chipped -- to want to bail out of its own state.

Would Greece what's being what's being.

Demanded is that they really ramp up these privatization efforts -- -- these public assets and if you know Greece you know that very little is actually privately held.

A lot of the assets are public companies are that you wouldn't even really think that they are publicly owned a you have utility -- you have airports you have ports.

You have property so literally -- Germans and other eurozone countries.

Are now seeing it's time to sell your islands but it's not a joke anymore now -- serious -- this also means that the privatization agency there would undergo.

That that would implement this plan would be somewhat independent of the government.

What this means when translated and from the Euro speak means that the Germans will decide.

How Greek public companies are going to be sold off and this is a very contentious issue not just on the streets of -- but also for -- and -- because his own party.

And his own party allies expect -- would -- of these public enterprises for political patronage.

-- so let me ask you know so much -- why we pay attention to what's happening in Greece here in the United States is seems like Greece is the beginning of a long row of dominoes and that potentially knocking down Greece are any troubles in Greece is gonna create a cascading effect.

Across then -- across the region.

What's the worst case scenario here what could happen next if the Greek.

Situation does not resolve itself who's next.

Well if -- if let's say Greece decided that it's had enough and it decided that somehow magically if you will.

Leaving the eurozone and defaulting and getting -- with 2.0 which sold its problems which should wouldn't and -- know it but let's say that.

You know the political -- -- simply untenable.

And to decide to do this.

The problem would immediately before the holders of Greek debt.

Odd their deaths would essentially be you defaulted on and this would put into question almost immediately whoever's holding Portuguese and Irish show.

That the government bonds but also private sector liabilities as -- And then of course the bigger question would be it'll.

Italy and though also Spain.

These two economies are too large and Italy certainly cannot be bailed out Spain could be but not -- -- all the other peripherals -- first.

And so it could calls and other financial meltdown just like the Lehman Brothers however one thing to really remember.

Is that everybody is looking for a silver bullet for that one reason why you know this is going to cause Armageddon.

Two recent -- reasons that have come across my desk have been CDS.

Are basically credit default swaps would be activated and everything would go.

On everything would collapse and the other one has been.

You know this idea that there's some sort of a mechanism that ECB is using to regulate current account deficits.

And you don't a lot of this stuff is not really that dangerous ultimately what people have to understand is that the UCB and the Euro -- they have the tools.

To perpetually mobile through.

They really do have those tools available today however the question then the long term is where is the -- -- Right exactly when you use the word perpetual that scares the heck out of me because I want this thing to go away at least from our point of view I know from recent won't.

Markel Pappas thanks a lot from -- -- we appreciate your time yeah I mean actually.

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