“Greece versus Europe: who will blink first?” asks the Telegraph. I care not who blinks, or who wins this contest of braggarts. All that matters is that for Greece to be ejected from the Euro would be good for Greece, good for Germany, and a good example for all the peoples of Europe yoked together in this vainglorious folly. Go on Germany, give that Marxist fool Alexis Tsipras a demonstration that your gullibility is not endless. Go on Greece, plough your own furrow and while you are at it give the Eurocrats a demonstration that their most public and cherished commitments can fail. Remember “Black Wednesday”? Far from being a disaster for Britain, that was the day its fortunes began to recover.
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Eject, eject, eject!Natalie Solent (Essex) · Balkans · Economics, Business & Globalization · European affairs · European Union January 6th, 2015 |
 23 comments to Eject, eject, eject! |
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Yes Natalie has it right.
A plague on both their houses.
The E.U. and the leftists in Greece.
Henry Kissinger: “It’s a pity there has to be a victor.”
Englanders and Germans should feel privileged to pay for the largesse heaped on Greeks otherwise they’ll pout and riot.
Perhaps the Greek Civil War is entering a final phase, the fires of hatred that burn in the Left are never extinguished, they just smoulder. They do not, will not and perhaps cannot learn from ‘mistakes’, but poverty, ruin, chaos and murder are not mistakes but features of the Left, so perhaps it is time for Greece to face up to reality, whatever the consequences might be, even if it perishes altogether.
With the General Election in the UK this May, just under 800 years after Magna Carta, we might see England’s liberties finally perish, or be mortally wounded, just short of the anniversary. However, King John’s rule was a darkness before a dawn, let us hope for a similar dawn.
(*assuming the translated date comparing the Julian and Gregorian calendars).
As one who would love to see the EU put back in its place it is easy for me to cheer Greece on to an exit. But I wonder if I’m blinded by my prejudice on this?
Truth is that we don’t actually know what a Grexit would cause. We often mock leftists for their revolutionary zeal; that desire to sweep all the crap away and let the chips fall where they may, without any thought to the destroyed.
Despite having read millions of words on what might happen after a Grexit, I still have no strong gut feeling one way or the other as to whether it will usher in a better, saner, less authoritarian Europe, or just send us all over the edge into a new age of revolutionary lunacy with Prime Minister Brand and Environment Secretary Monbiot, and the Minister for Greenpeace.
Anyone have a strong reasoned argument for one outcome or the other???
BTW, I don’t get the impression that the leftist mutters in Greece even want to leave the Euro. It seems to me they just want more money. Bit like the Occupy protesters : What do we want? MORE ADULT SUPERVISION! When do we want it? STOP TRYING TO CONTROL ME, MUM!
This reminds me of this article by Detlev Schlichter a few years ago. Greece’s problem is not its currency. Greece’s problem is its debt.
Schlichter got it exactly right: there are 2 fundamental problems at play:
1. successive Greek governments have spent too much money and
2. the present Greek government is still spending too much money.
Pace Hannan and Farage, neither of these problems is directly caused by euro membership; and actually the Greeks themselves probably see this more clearly than Hannan+Farage do, witness their unwillingness to replace the euro ith funny money.
And yet, leaving the eurozone could solve the 2nd problem, as i suggested in a comment sometime last year: if the public sector uses drachmas while the private sector uses euros, then public spending would be substantially reduced without the Greek gov. having to renegotiate salaries, pensions, etc.
Greece’s problem is it is Greece. Even the colossal debt is a symptom, not a cause.
All true, Snorri and Patrick et al, but people only spend more than they earn when there is an incentive to do so – and it seems to me that the EU membership served as at least part of the incentive in the case of Greece, and this probably applies to the rest of the PIIGS.
Yes Alisa is right, the membership of the supposedly ‘hard’ currency the Euro gave Greece an opportunity to borrow not on the basis of repayment in the Drachma but on the ‘full faith and credit’ to borrow a term, of its Euro membership. Dr Schlichter is quite right, Greece simply spends money it hasn’t got on welfare schemes and scams. Someone has to pay or else it will have to stop.
Hear! Hear!
(to the original post of course)
Greece has regularly defaulted on its debt since it gained independence from the Turks, so this is an ongoing, never ending soap opera.
However, Europe is structurally incapable of solving the problem of the PIIGS and of the Mittleuropans who will soon join them. Unlike the US, Europe does not have a central bank or government that can impose a uniform economic program on all its member states. Nor does it have any mechanism to transfer funds from weathy states (like New York) to impoverished states (like Mississippi). Finally, European labor is not mobile because of differing languages and cultures and because of very strong attachments to homelands. US workers have long-established traditions of migration all over the country, speak a common language and have a common culture.
It is almost certain the European Union will survive and that Greece will stay in it. However, the Euro is another matter, and it is likely that Greece and several other countries under stress will abandon it. Attachment to the Euro has pushed several countries into economic depression and has dragged the entire EU into recession. The Eurocrats will have to be over-ruled.
A comment on Marginal Revolution from the dark ages of 2011: “Describing Greece as “austerity-hit” is a creative bit of blame shifting. That’s like proclaiming a sick person as being antibiotic-hit.”
After lunch at an almost-Greek restaurant (Bulgarian actually) i have a couple more thoughts.
First, i agree with Mr Ed @12:06 pm, and actually i think i said as much last year in yet another of my comments on this blog: the euro compounded the problem by letting the Greek gov. borrow at low interest rates. (Also, the euro prevented the Greek gov. from inflating away pay increases to “civil” “servants”.) It remains true, however, that euro membership did not cause the Greek crisis: the Greek gov. had the option of keeping spending in check; they had agency, and therefore bear the responsibility.
Second, a prediction that i actually made soon after the 1st bailout: what will destroy the euro will be a smaller Northern country leaving the eurozone: Finland, the Netherlands, or Austria. That will be because the voters there have few inhibitions about voting for “xenophobic” parties, and also because these countries, unlike Germany, have practically no say over the terms of bailouts: they have to take it or leave it, and eventually they will leave it.
Please note that i am not at all confident about this prediction. Should it turn out to be correct, i’ll take pleasure in saying: i told you so! Should it turn out to be wrong, i’ll do some handwaving.
PS: yet another thought: the analogy to Black Wednesday is faulty because the UK did not face a public debt crisis. Otherwise, i sympathize with the OP.
I agree with one of Snorri’s earlier comments: “if the public sector uses drachmas while the private sector uses euros, then public spending would be substantially reduced without the Greek gov. having to renegotiate salaries, pensions, etc.” That would be the best solution to what is otherwise a seemingly intractable problem. So I second Natalie’s motion: Eject!
Bob Sykes’ comment about the EU lacking a true central bank (in the modern sense) is obviously correct. However, the ECB is inexorably inching toward that status; certainly Mario Draghi is doing everything he can to engender such a change. And I think it is inevitable, as a last spasm of a failing experiment. The result will not be good. (But as to his comment about the US having a “common culture”, he obviously hasn’t lived here!)
Snorri, I agree about responsibility in principle, but not all of it (although certainly most) can be laid at the feet of Greece – as we can be sure that the governments of Germany and France had their own interests in mind when pushing towards common currency. Also, we are talking about governments, not the peoples of the relevant countries – who, while not being free of all responsibility, are certainly not liable for the main bulk of it either.
Alisa:
This is another misconception of the Hannan-Farage consensus: that Germany imposed monetary union and now prevents Greece from getting out. In reality, monetary union was a French project, which the Germans only accepted because they believed that a piece of paper (the “stability” and “growth” pact) could be used to impose fiscal discipline; and the German gov. did not want Greece in. (Don’t know about the French gov. but probably they didn’t want them in either: Chirac did not even want Italy in!)
Indeed, i tried to make that clear. A related question: have there been any riots in Greece outside Athens? if not, why not? (The 2nd question is of course rhetorical.)
Thanks for the clarification, Snorri.
Yes, there were riots outside Athens back in 2010 – as an example, I heard a first-hand account from someone who happened to visit one of the larger islands, but I can’t say how they compared to the latter in scope or severity.
There is a strange contradiction in the Maastricht treaty that created the euro. Membership is compulsory – that is the political project, coming from the French – but membership would only be permitted if a country satisfied very strict “convergence conditions” – this was the Germans going along with the project as long as fiscal discipline could be achieved. At the time, this was reported as a model designed largely to keep the Italians out. Nobody seriously imagined that the Greeks would ever satisfy these conditions.
Then something strange happened. The German budget deficit became very large due to the high cost of German reunification. This meant that one of the countries that did not satisfy the convergence conditions was Germany. The idea of the project proceeding without Germany was ridiculous, so a fudge was written into the rules stating that the budget deficit condition did not have to be satisfied as long as this was “temporary”. In the case of Germany it genuinely was temporary, but that allowed other countries to claim that theirs were”temporary”, too, without really defining what that meant. This made it relatively easy for those who wanted the euro to include everyone for political reasons to allow Italy, then Spain, then Portugal to join too. It was hard for the Germans to object, as they did not satisfy the deficit conditions themselves. By the time things got to Greece, so many rules had been broken by so many people that everyone just shrugged, although the idea that they satisfied the conditions was ridiculous. Nobody seriously wanted Greece to join the euro when it was proposed. However, by the time the euro was launched, a lot of other stuff had happened that made it impossible to say no to them.
One (small) good thing that did come of the convergence conditions is that they in effect made euro membership optional. If you don’t want to join the euro, you just – quite deliberately – fail to satisfy them. The Poles and Romanians understand this well.
Stuck record speaks wise words. Temper your wishes with caution.
If Greece goes, Spain & Italy are going to be sitting in the markets’ crosswires. The Euro might be wounded, might even be dying but there’s going to be a great deal of thrashing around before its last breathe expires.
And it’s more than just a currency. It’s the money in people’s pockets. Or not in their pockets.
I did a lot of prophylactic cogitating on a Spanish debacle a while ago & it wasn’t a pretty prospect. As usual, the people less able to weather the storm will be hit by the highest waves. And if the deluge gets going & is repeated around the bloc there’s a few politically precarious countries it’ll wash through.
I’m all for an end to the current incarnation of the EU but I’m not kidding myself these’ll be pleasant times to live through.
Apparently the German government considers a Grexit to be “manageable“. More and more this seems to be becoming a self-fulfilling prophesy.
There is a subtle but important relationship between the 2 latest comments in this thread.
It is indeed the case that we don’t know what might happen after Grexit.
OTOH the best way to ensure Grexit is for the German gov. to say that they will do anything to prevent it; just as the best way for the Chamberlain government to ensure war in Europe was to promise peace in their time.
Hence the German gov. letting people know that Grexit would be manageable.