The Chinese Water Torture That Is the Euro Zone Debt Crisis

Here’s the video from last night’s capital Account with Lauren Lyster and Demetri Kofinas. Since we’re sick of the euro crisis, everyone keeps acting like this crisis is about to boil over and take the world economy with it. It certainly could. At least then, it would be over. More likely though, we will continue to get these repeated cycles of crisis, bailout, and liquidity infusions. Remember the Italian crisis? Same thing there. And this is about the third time that a Greek exit from the euro zone has been imminent. See, we’ve been here before.

I’ll let you in on a secret: Greece was never going to hit its austerity targets anyway. Moreover, who says an anti-austerity Greek government could be elected and then go out and reject austerity? If you listen carefully, no one is saying they reject fiscal consolidation in Greece outright. No one. They may be saying they want some stimulus on the side or they want the timetable to be backloaded. But that’s a different story. Even so, Greece could default and stay in the euro zone. Eurozone default is not synonymous with breakup. I know people like Nigel Farage and Geert Wilders are talking about breaking the euro up. But, they’re on the fringe. Show me a mainstream politician talking this way. Most of Europe is still very committed to the euro. Even the most anti-austerity Greek politicians are telling you this. Why do you think Grexit is imminent then? We’re not there… yet. I’m betting on extend and pretend. And remember I’m a eurosceptic. I’m just reading the tea leaves.

As always, my concern is bank runs. That’s how a depression turns into a Great Depression.

This post originally appeared at Credit Writedowns and is posted with permission.