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I think they have no understanding of the geopolitical risks - indeed, I don't think they even think in geopolitical terms. Just consider how naively the EU people handled the trade negotiations with Ukraine that sparked the revolution and the Russian invasion.

Nor do I think they understand macroeconomics. They just can't fathom that yes, Greece has had massive structural problems for decades, but no, the Greek depression was mostly caused by the austerity programmes. This means that they are probably still misunderstanding the Greek position and the Greek willingness to leave the Eurozone, if the alternative to Grexit is continued or even intensified austerity.

They probably do not understand that Greece might recover reasonably quickly outside the Eurozone, which ironically would be a destabilizing factor in the depressed countries still using the euro after a Grexit.

And even if some of them understand this, backtracking would mean both confessing that the previous policies were mad, and would strengthen their domestic anti-austerity political opponents.

I also suspect that a lot of them don't understand that Grexit would mean a Greek default on her external creditors, which mostly are the other nations of the Eurozone. Some might consider this, but then dismiss it as they do not really care the most about recovering the funds lent to Greece anyway, or perversely consider the funds already lost in all but name due to the unsustainability of the Greek debt pile.

Even fewer probably understand how fragile the Eurozone might become if Greece is forced out, when the Hotel California logic ceases to hold sway over the minds of the market. The ECB might have to do a lot more QE than it has expected, and might relatively soon find itself holding quite a considerable fraction of emitted sovereign bonds of certain southern European countries.

Most of all I think these people do not understand that just extending the maturities of the current Greece bonds would resolve the current acute crisis in its entirety.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Jul 7th, 2015 at 10:56:37 PM EST

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