Greek Tragedy rumbles on

So after  all the hype and the terrible scenes of rioting on the streets of Athens , the Greek Parliament has decided 155-138 to pass the latest austerity package in order to be given more bailout money. This is not the end of the whole issue, though, and the vote merely delays what is to come for a few more months. I doubt that the package itself will work, for various reasons, but the obvious one is that much of the new measures involve privatization of state assets. But who, please tell me, is going to buy these state assets when it is entirely possible that Greece could leave the Euro at any stage, resulting in large looses on whoever is going to buy these state assets (which may or may not be of any real value anyway). It is far easier for any potential buyer of these assets to "wait and see" what happens and then make a potential killing if Greece devalued and went back to the drachma.

I therefore suspect that in a few months time we well all be writing and talking about bailout III, by which time I think we will either be writing about the creation of an EU treasury and common debt market or the abandonment of the Euro by the Greeks and then other club med states.  This will happen sooner rather than later, so today is just a holding action, until one of these scenarios is played out. The key matter for British policymakers is not to wax lyrical about 'saving the euro' or whatever, but to plot out how Britain can gain maximum advantage in either event. Sounds harsh, but that is the job of  the politicians we elect to represent us.

Also, given that the world is more interconnected than ever, we may also have the added problem of a US dollar -debt crisis, if  a resolution on the sealing of US debt and budget agreements cannot be reached by the Congress/Executive.  I would not be surprised if we saw another bout of   "quantitative easing" (which will push up commodity prices and having little effect) given that fiscal policy is likely to be deadlocked  (I could imagine Obama, in desperation to be re-elected, ordering Bernanke to start putting those printed dollars directly into citizen's checking accounts).

Troubled times ahead and one feels like putting cash to gold and having it put in a vault somewhere safe....