Greece continues to star in the headlines because the financial crisis is reaching a boil visually as Molotov cocktails explode in Athens and anarchists break into a hospital where one of their wounded comrades was in police custody. The city is in the grip of a general strike to protest the current austerity measures.
Representatives of the IMF and the EU are flocking to Athens to impose yet more austerity measures in a desperate attempt to plug the financial dike.
The Cassandras are increasing in stridency and volume and have become mainstream.
The Wall Street Journal features a column claiming that the Euro at its current level of 1.44 to the dollar is overpriced given the financial storms on the way, while another headline spoke of financial panic. The Economist is using the "D" word denial to describe the European financial establishment. Forbes basically stated that the choice was either a Greek default or Greece leaving the Eurozone.
Jonathan Weil in Bloomberg summed up the situation as follows: There’s a point in almost every financial crisis when pretty much anything anybody says about it can take on a ring of truth, because the leaders responsible for dealing with the disaster have squandered their credibility.
There are other telltale signs. The hints coming from Germany that Greece should be ejected from the Eurozone have become clear statements. The Finnish parliament is delaying approval of the Portuguese bailout and Commissioner Ollie Rehn is warning Greece not to contemplate a debt restructuring that would have disastrous consequences for Greece and the Eurozone. Angela Merkel warns against easing repayment terms for Greece and Ireland and is awaiting the report from the IMF before deciding on further steps for Greece.
Christine LaGarde, the French finance minister, is saying that the EU is going to have keep funding an insolvent Greece as the alternatives are worse. This however will not be accepted by the taxpayers in the richer countries who will balk at paying nor by citizens in the recipient countries who will refuse to live in permanent austerity.
Eventually someone always comes up with a theory that this is not madness but a calculated policy. This is what Anatole Kaletsky has done in the (British) Times. He claims that Brussels is using the bailouts essentially as a full dress rehearsal to acclimate public opinion within the Eurozone that control of national tax, spending and social policies will move from the nation state to centralized control.
When the European Common Market, the forerunner to the EU, was formed in 1955, the federalists predicted that once a particular area was removed from national control other areas would inexorably follow as part of a spillover effect. The ultimate destination will be a European super state.