From friend of Alhambra, Brian Cronin:

“He which hath no stomach to this fight, let him depart; his passport shall be made, and crowns for convoy put into his purse. We would not die in that man’s company that fears his fellowship to die with us”.

So said King Henry V before the Battle of Agincourt in 1415 according to William Shakespeare. Never better delivered than by Kenneth Branagh in his more earthy film version of the play in 1989, and which I prefer over the 1944 Laurence Olivier version. It was, incidentally, one of the very few times that England ever bested France, one of the others being the Battle of Waterloo 400 years later! France usually gets its way – the Anglo-French Concorde was spelled the French way with a “e” on the end.

King Henry could have been talking about Greece. Some in the European Community who have been mouthing off these past couple of weeks as to what Greece should do: let them depart (but without the “crowns for convoy”, copious amounts of which have already been lent to them) or try and persuade them not to go. Far from clarifying things, these individuals have been muddying the waters with their speculation and advice.

They have been calculating the odds of a Greek departure and trying to figure out what that would do to sovereign debt and the loans on the books of Europe’s banks. The question is whether the eurozone banks are sufficiently prepared. You would think they were since the Greek crisis did not spring up overnight. While writedown provisions have surely been made, it is also clear that it won’t be enough.

If those loans are ever repaid, it will be in devalued drachmas, assuming they go, and the creditors will be shortchanged on the difference. Estimated losses across the eurozone banking sector if worst came to worse are conservatively put at over €1 trillion. Depositors in nations under the gun are apparently taking no chances and are withdrawing euros from their bank accounts just in case though the scale of such withdrawals has been played down.

The dilemma for Greece is that it wants to have its cake and eat it too: it wants to stay in the euro but doesn’t want the austerity required to stay in. Opposing EU camps have been offering solutions: after M. Hollande’s victory in the French presidential election, stimulus and growth are being bruited about as the answer though it has not worked too well in the US in the past three years. All the same, Chancellor Merkel’s hand has been weakened now that M. Hollande is riding high.

The German remedy, austerity, is being promoted as the right solution. The Irish just voted yes on the EU Fiscal Treaty which is in effect a vote, with a lot of grumbling, for austerity. The Germans were pleased. There has even been talk of resurrecting the idea of zone wide euro bonds though Chancellor Merkel is less than thrilled about that idea. Germany is not a bottomless pit and, she says, is not economically strong enough. Issuing bonds by amalgamating eurozone debt may actually violate EU treaties anyway.

Germany is of course assuming that the wayward nations of southern Europe will eventually pay their debts, agreeing with Jane Austen’s Lady Russell in “Persuasion”: “a person who has contracted debts must pay them – even if he is a gentleman”. But they could also refuse to pay and that would leave Germany on the hook for more money than they’ve got. With all the guarantees they have given to the various eurozone entities, the ECB, the EU and the IMF, what would happen if it all came due or other nations could not manage their share of the guarantees? Would it all fall on Germany’s shoulders?

Maybe the Germans would just say the hell with it all, we are leaving! And everyone would surmise that they had been looking at the problem all wrong. The European Union worked pretty well before the introduction of the euro and it could again, but this time, everyone would be responsible for their own mistakes and not relying on the Germans to pull their chestnuts out of the fire. Probably won’t happen, but it’s an interesting concept.

Lately, there have been reports of a proposal to revive Greek fortunes by using a plan modeled along the lines of West Germany’s efforts for East Germany 22 years ago: a sort of Greek Treuhandanstalt, or trust agency, a privatization fund of sorts to help sell off state enterprises and bring in some badly needed cash.

The European Council president, Herman van Rompuy, proposed a fiscal union to match monetary union in order to operate properly. Meanwhile, the Organization for Economic Cooperation and Development, the OECD, had earlier said that the eurozone crisis could jeopardize the fragile recovery and tip it and the rest of the world into recession.

The recent Camp David and NATO (No Action Talk Only) summits were inconclusive and trotted out the usual platitudes without concrete solutions. Meanwhile, ministers from affected countries met in Brussels to try and come up with a solution and failed. There was of course a “full and frank exchange of views” but nothing was settled though the talks set the agenda for a formal summit at the end of June.

Fear of contagion gripped the markets in May and investors voted with their feet heading for the exits. Italian and Spanish bond yields marched inexorably towards the danger level of 7.0% where other nations were previously compelled to seek bailouts. On Thursday Spain’s government debt was downgraded three notches by Fitch adding to the angst though eurozone ministers decided to give up to €100 billion to prop up its struggling banks over the weekend. It was characterized as “a loan not a rescue”, i.e. the conditions attached are not as stringent. PM Rajoy called it “a victory for the euro”. Time will tell.

But as for Greece, we will see if France gets its way once more. France, incidentally, holds the second round of parliamentary elections on the same day as Greece’s repeat election. M. Hollande is hoping that his recent win will encourage further gains for his party and strengthen his hand for his stated reforms at home and abroad.

So, lots of voices with lots of ideas, some helpful, some not. With Greece, we are in no man’s land, between the first election on May 6th and the second on June 17th. The Greek political parties must be bemused at EU officials’ reaction and the unsolicited advice as to what they should do. They are the ones doing all the worrying, not the Greek political parties, who sit back and let others squabble over them.

If Syriza, the anti-bailout party, does win a substantial majority, or the results prove inconclusive, then the odds of a Greek departure increase markedly. I have written previously that the Greeks can be stubborn. Well, so can the Germans. I worked for them for five years and I can attest to their hard-headedness so I am inclined to think the Germans will prevail. As a bargaining chip, Syriza is bringing up the possibility of German reparations for World War Two depradations, as a way to mitigate what they owe – but not in the spirit of enmity, they say. I can’t see the Germans agreeing to this, otherwise all of previously occupied Europe will latch on to that precedent and start standing in line with their hands out.

One of my first managers at Barclays Bank in London had a habit of walking up behind the junior staff and whispering “harder and faster”. If chaos does emerge in the eurozone, I suspect that the politicians and the finance officials are going to have to work a lot harder and faster than they ever have before. It might be that a line will be crossed, whether it’s a run on a bank or banks, or violence the like of which we have not yet seen, that will precipitate events more quickly than anyone had ever imagined.

On the other hand, if Greece does pull back from the brink, the short sellers of euros will suddenly find that they are on the wrong end of the trade and will be faced with a sharp pull back. It is probable that there will be a euro going forward but how it is constituted might have to change and the fear of old, that a two tier euro with the strong northerners and weak southerners with different and wider parameters to abide by, will emerge, and what price euro then? Whichever way you slice it, it’s going to be messy. And it will affect us. A Europe which is in turmoil and in recession is in no position to do the United States any good. Time for the flak jackets and the crash helmets.

This mess has rightly been called a Pandora’s Box but the trouble with opening that proverbial container is that there might be lots of Trojan Horses inside. Once Greece departs, if it departs, the genie is out of the bottle. A couple of mixed aphorisms there, but you know what I mean.

In “The King and I”, King Mongkut opines to Mrs. Leonowens: “When I was a boy, world was better spot. What was so was so, what was not was not. Now I am a man, world have changed a lot. Some things nearly so, others nearly not. There are times I almost think I am not sure of what I absolutely know…Is a puzzlement…” I think a lot of politicians, pundits and bankers feel exactly the same way these days. Things were much more certain way back when and now is all confusion. Is a puzzlement indeed!