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Elliott’s Paul Singer Says Eurozone Needs To Trim To Just Economically Healthy Nations

The “euro experiment” was falsely marketed by participants on both sides and, with Greece as the leading example, membership in the EU society should ultimately revert “to include only countries that have similar economic strength and productivity,” Elliott Management’s second quarter letter to investors advised.

Paul Singer

Paul Singer: Eurozone banking elites have not dodged a bullet, they have just delayed the pain

While there is a falsely held general perception that euro elites dodged a bullet in the recent Greek negotiations, the situation is “fixed,” Elliott’s founder, Paul Singer sees the opposite. This situation isn’t fixed, he writes, the obvious problem still exists has just been delayed. The real problem is that as the can has been kicked down the road the core issues, obvious to many observers, are likely to come back and haunt markets, potentially sooner rather than later:

There is a widely-held perception that Greece, the euro bloc and the world dodged a bullet in the last-minute “fix” of the Greece situation, and global elites are expecting a long period of calm. We, in contrast, think that the Germans traded less pain and disruption in the near term for an ultimately bigger set of problems down the road. And “down the road” may not be too far, and might actually be just beyond the next bend.

Those at fault in the situation are all around the table. The Greeks, for their part, have been accused of “faking the numbers” on their debt upon their initial application to enter the euro. What Paul Singer doesn’t mention in his report is what BlackRock, Inc. (NYSE:BLK)’s Peter Fisher confirmed on a July 13 CNBC interview: those inside the situation knew about Greece’s true debt when they were admitted into the euro currency experiment.

Not only did Greece misrepresent facts when applying to enter the euro, once it got in Greece played its cards like an amateur, particularly when it came to default. Paul Singer’s prose outlining the situation could not be clearer:

The government of Greece, for its part, played the situation incredibly badly. Heading into possible default with no money is a terrible way to...