Wednesday, July 1, 2015

Euro's Flexibility Clause Will Hamper Grexit

Bank holidays, capital controls consistently used by central planners to 'manage' panic and/or crises from Greece to the United States, won't do much other than frustrate a nervous public.  While the majority of Greeks believe July 5th vote will determine their fate within the Euro, the German Finance minister, Wolfgang Schauble, states that Greece will stay in Euro regardless.

Article 352 of the EU Constitution, also referred to as “the flexibility clause” allows member states to take measures to achieve EU “objectives” not yet provided for in the EU treaties. While 352 could allow Greece to leave the euro but stay in the eurozone, it also allows EU the 'flexibility' to supersede the sovereignty of any EU nation with a unanimous vote. The headline that Greece will stay in the Euro regardless implies the German believe a unanimous vote can be achieved.

Pure and simple, this is an ego-based battle for power and control that supersedes the will of the people of Greece. History shows us these battles end badly for all.

Headline: Long lines at Greek banks as new rescue proposal weighed

ATHENS, Greece (AP) -- Crowds of anxious elderly Greeks thronged banks for hours from before dawn Wednesday, struggling to be allowed to withdraw their maximum of 120 euros ($134) for the week, after Greece reopened some banks to help pensioners who don't have bank cards.

The often chaotic scenes came hours after Greece's bailout program with European creditors expired and it failed to repay a debt to the International Monetary Fund, the first developed country to do so. The last country to miss an IMF payment was Zimbabwe in 2001.



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