Angela Merkel is report to have once said that if the euro fails so does Europe. I wasn't sure about that for some time. But she was right, that's what's at stake today but not, I suspect for the reasons she imagined.
The difference is that the Euro need not fail today. Technically all problems with Greece are as soluble as those with Cyprus were. There is a need for debt restructuring, a deposit haircut, and economic reform in Greece that will need to be carefully monitored whilst being flexible enough to address unforeseen developments, of which there will be many. Such arrangements are well within the wit of the negotiators. But not their will, it seems.
Finland and Latvia have joined Germany in demanding their pound of flesh. It is as if Shakespeare never wrote the Merchant of Venice or Dickens Little Dorrit. It is as if modern statespeople had not learned the pragmatic value of insolvency law. It is as if, as the Pope would have it:
Once capital becomes an idol and guides people's decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home.
These words are poignant. The whole point of the European project has been about creating commonality; about resolving past divides and preventing future conflict. But all this seems to have been forgotten. As I noted recently, if Greece was a state facing imminent collapse the EU would undoubtedly fund it. Because it is in monetary union it will not.
This is a special form of dogmatic blindness, and I am wary of all such dogmatism. It is undoubtedly true that Greece made mistakes and the Greece needs reform. But so did the lenders make mistakes and so are the EU and the euro in need of reform. This is a moment for not just pragmatism but also magnanimity. We're not getting either.
I am worried. I look at what is happening, and what could happen as the EU faces the risk of tearing itself apart and worry about Sarajevo, June 1914 and Munich, September 1938 and worry. I have sons. I fervently wish for peace in their time. Small things destabilise systems. In the grand scheme of things the Greek crisis is small but its power to destabilise is enormous.
I sincerely hope the euro does not fail. But not for the sake of the euro. I think so for everyone in Europe.
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I agree, the big picture seems to have been purposely lost. The lenders all seem to be schooled in the Tony Blair school of history – which is no schooling at all. It will be too bad for them if Greece collapses out of the Euro into Fascism or a coup d’état. But much more important, it will be a disaster for the rest of us – and the Greeks.
It never fails to both sadden and disgust me when I see what ‘Europe’ has become. I was at University studying both economics and the EU’s history & institutions back in the heady days when even the Tories saw the benefits of closer ties with your neighbours. The Maastricht treaty was being finalised and the pound joined the ERM.
The prevailing mood was one of together we are stronger.
Fast forward 20 odd years and all over rich Europe (I moved to the Netherlands after graduating) the prevailing mood is greed, profligate second-rate PIIGS and why must I bail them out – conveniently ignoring the massive bailouts of British, German, Dutch, French, Spanish and Italian banks forced upon us.
Having done Economic History under some top chaps after having been in Germany when the DM was brought in so not that long after The Great Crash and acquiring an interest in financial crashes and crises down the ages when the Euro came up there were obvious weaknesses and risks. I once met a gaggle of international bankers who, on the other hand, were convinced that it was a wonderful idea and opportunity (read racket). And so it came to pass. I will not go into the detail.
A report in the Washington post said that Greece collects as little as 10% if it’s tax. Goldman Sachs and the government of the day is I am led to believe must have known. How on earth has Greece paid for its services all these years. Their kept accounts are poor, is auditing non existent. Am I being too simplistic. Thr rich after 2008 I understand took their money out of the country as reported.
The EU must take some blame for being complicit surely. Regardless of blame, we have to help. how will it be monitored though to be sure that everything is properly done. My heart tells Greece to go it alone and take that daring step, but my heart ruling my head has got me in trouble many times.
That Washington Post report was hopelessly wrong
http://www.bbc.co.uk/news/magazine-33479946
But there is still a lot to put right
And that would appear to be confirmed in this article
http://www.telegraph.co.uk/news/worldnews/europe/greece/11731242/Greece-is-a-victim-of-its-own-cronyism-and-corruption.html
One does have to ask how on earth Greece was allowed to participate in the Euro in the first place.
I have heard that a good few US financiers have derivative bets on Greece staying the way it is and that they stand to lose a great deal of money if they default.
That may give some clue as to why the EU is imposing such brutal sanctions on Greece. It has nothing to do with justice, it is, in part, looking out for US business interests.
This straight from a Guardian update and few minutes ago, Richard.
‘European leaders have confronted the Greek government with a draconian package of austerity measures entailing a surrender of fiscal sovereignty as the price of avoiding financial collapse and being ejected from the single currency bloc.
A weekend of high tension that threatened to break Europe in two climaxed on Sunday night at a summit of eurozone leaders in Brussels where the German chancellor, Angela Merkel, and President François Hollande of France presented Greece’s radical prime minister, Alexis Tsipras, with an ultimatum.
In what a senior EU official described as an “exercise in extensive mental waterboarding”…’
How in the world Tsipras can go from the position he took before the referendum, or indeed the fact that Syriza won power on the back of no more austerity and escaping the clutches of the Troika, is beyond me. Particularly when the report continues:
‘The terms are much stiffer than those imposed by the creditors over the past five years. This, said the senior official, was payback for the emphatic no to the creditors’ terms delivered by the snap referendum that Tsipras staged a week ago.’
So the referendum meant nothing. And it looks like democracy means nothing either. And of course, as we all know, these terms fix nothing. The country will simply be more destroyed in another year than it already is. Meanwhile the credibility of any radical political party will have been completely destroyed.
Utterly, utterly, appalling.
I agree
I have been worried that the economic orthodoxy we now follow always ends in war. I used to find it difficult to see where the war would arise and who would fight. In recent years I have believed it would be the same nations as last time. I had little I could point to in concrete terms, in support of that view. But that is less true today. I find this terrifying
If Greece is push out of the Euro-zone it could become a really nasty situation, a possible low level civil war could breakout between extreme right wing and extreme left wing parties, bombings, shooting, financed through crime, drug dealing and kidnappings.
Where are the Colonels when you want them?
Waiting. As I see it a military take over in Greece is now much more likely
That’ll be fun. Germany forcing a coup, by a Greek army armed with german weapons.
What price NATO.
And Turkey won’t like it a lot.
Maybe the EU should just throw Germany out?