Monday, June 15, 2015

The EU’s Greek problem--and measure-for-measure

In the European Union, there’s been an ongoing problem with Greece. Greece faces national bankruptcy. By a June 30, 2015 deadline, unless the EU extends its credit line to Greece, Greece will have to cough up 1.6+ billion euros to the International Monetary Fund (IMF) (Graeme Weardon, “Greek default fears hit markets after talks break down - live updates”, The Guardian, June 15, 2015). According to at least one report, it’ll also have to pay off another 6+billion euros to the European Central Bank and other eurozone central banks (Ferdinando Giugliano, “Investors eye consequences of a Greek default”, ft .com, May 20, 2015).

Greece doesn’t have the money. Instead, to stay afloat, it has to borrow money from other EU nations. But it can’t pay anything back. It also won’t institute additional austerity measures to reduce government spending. It says it’s already gone too far.

Its EU partners, meanwhile, say they do want to help. But both the EU and IMF have already read Greece the ‘riot act’. Greece has to tighten its belt even more than it has.  

Greece won’t budge. Default talks broke down late Sunday night, June 14, 2015 (ibid). Greek Prime Minister, Alexis Tsipras, has become defiant (ibid). He says Athens will not cave in to creditors’ demands (ibid). He wants debt forgiveness (ibid), not more austerity.

In a battle of words, Greece tells its creditors they have to “return to reality” regarding those austerity measures—and the German MK Volker Krauder tells Greece it has to “return to reality” regarding the actions it must take to keep afloat (ibid).

The markets in Europe are extremely unhappy—and that’s not a good sign. As of mid-morning June 15, 2015, the stronger EU creditor nations have stopped feeding the weakening Greece. Rumours fly and markets fall.

When markets in Europe opened on June 15, 2015, rumours of a Greek default on loans had an instant effect. Stock markets in London, Paris, Amsterdam, Milan, Madrid and Frankfurt all fell (ibid).

This negative stock response was more than matched by an even more severe reaction on EU money and bond markets. Greece’s refusal to budge has created a ‘flight to safety’. Money now flows heavily into German bonds [arguably the strongest in the EU] out of the weaker economies of Italy, Spain and—obviously--Greece (ibid).

In addition, as a result of this movement—and rumours of a national Greek default--the yield on two-year Greek bonds opened on June 15 at 26% and then, within an hour, rose to 28% (ibid).

Within the day’s first hour, the Greek stock market plummeted 6% (ibid). Banking stocks fell 12% (ibid).

A collapsing Greece has the potential to create catastrophic consequences, both to Greece and the EU. In Greece, banks could collapse, the government won’t be able to pay its bills and the economy could well collapse. There’ll be riots in the streets.

Depending exactly on how Greek defaults on its debts, the consequences to global markets promises in any event to be significant. The worst-case scenario approaches the unthinkable. The best-case scenarios suggest that the EU itself will be shaken perhaps to a point of collapse—or not (Cyrus Sanati, “End of the line: what a Greek default means,” Fortune, June 14, 2015).

The unknown here is this: if the Greek economy catches double-pneumonia, will the EU just get the flu—or its own pneumonia? No one knows. Everyone is frightened.

This brewing story of potential economic turmoil in the EU should interest you, especially if you follow Israel news. This EU economic story might in fact be connected to the EU’s demand for economic boycott and sanctions against Israel.

Independent of the Greece problem, the EU demands economic measures against Israel (Benjamin Weinthal, “Europe’s economic war on Israel”, New York Post, June 11, 2015). Europe is angry over a failure to achieve peace in the Arab-Israel conflict—and it blames Israel for that failure. Foreign Ministers from 16 of the 28 members of the EU have signed a letter seeking economic sanctions against Israel (ibid). Israel considers such a move to be hostile to the Jewish state. One Israeli diplomat says, “It seems European nations now want to put a yellow patch on Israeli products. We know that what begins as marking Israeli products quickly deteriorates into an overall boycott of Israeli goods” (ibid).

The EU clamours to turn against the Jews. It seeks to join the Boycott, Divestment and Sanctions (BDS) movement’s economic war against the Jewish state. It seeks to imitate what the Nazis did in 1930’s Germany: begin a war against the Jews by turning first against Jewish businesses (ibid).

If you know the Jewish Talmud, you know about measure-for-measure. This is how, in many instances, the G-d of Israel punishes (and gives reward). For example, the ancient Egyptian Pharaoh sought to harm the Jewish nation by having all Jewish male babies drowned in water—in the Nile River. He was therefore himself punished by having his national army—his might—drown in the Sea of Reeds (Sotah, 11a): measure-for-measure.

There are many examples in our Talmud about how measure-for-measure works. Does the economic threat facing the EU over Greece teach us something? Is it a signal from the G-d of Israel that measure-for-measure hangs over the head of the EU because of its call for economic war against Israel?

Stay tuned.




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