It started a couple of weeks ago with people talking about a group of 5 EMU members which were putting the euro at risk. The worst offender was Greece. That Greece would be in such a position shouldn't surprise anybody; most people who thought about the subject couldn't really explain how a country with the fiscal disciplin of the Greeks could be a member of the EMU at all.

As the days went by the pressure on the Greeks became higher and higher and talk of a Greek debt default became louder and louder. Right up to the point that a special meetings of EU leaders were held about the Greek situation. Out of this came a statement which didn't say much more that Greece wouldn't be left out in the cold if it came to a crisis. Added to this was a remark that Greece so far hadn't asked for financial assistance yet.

Which was just as well because in the countries that should pick up the Greek bill the enthousiasm for paying for the Greek excesses was less than encouraging. In Holland the lower chamber of parliament accepted a motion which stated that the government was forbidden to use any dutch tax money for a bail out of Greece. It was carried by all parties. There were no votes against. In Germany people are angry that the Greeks expect Germans to pay for the costs of Greeks retiring at 60 where they (the Germans) just had to swallow a raising of the retirement age to 67. A majority of Germans Greece should simply be chucked out of the EMU.

Then some more news seeped out; Greece was to impose an austerity program to reduce the budget deficit with a full 4% within this year and should report back on implementation in March. Greece was also told to submit extra measures as it was expected these might be necessary to reach the goals of reducing the Greek deficit to EMU standards in a reasonable number of years.

It was then that the Greek government started to mutter about Greece being used as a guinea pig. Officials said they didn't think extra measures were necessary yet. Then a little bomb exploded; news was published about previous Greek government not only being creative with the numbers, but outright fraudulent with the help of investment banks.

And then today a bigger bomb albeit a more symbolical one; Greece will be stripped from its right to vote on the austerity plan next month. Having a vote wouldn't make much of a real difference. But actually stripping a member of a vote is unheard of in EU circles.

What I am really curious about is if this is just a one-off situation or that we're seeing the beginning of a fiscal authority in the EU that together with the Lisbon changes could lead to a real federal government.

source