The Eurozone has told Greece there is no negotiation to be done on its bailout. As Phillip Inman has put it in the Guardian:
And let's face it, the terms are for a full and total surrender. Not only will Tsipras give up his economic project, he will effectively be telling the Greek people something many have felt since the first bailout in 2010 — that they are governed from Brussels, and how they vote is irrelevant.
I think Phillip has got that right: the message here is clear and is that bailing out the bankers who lent to Greece (for this is what the bail out actually does) is more important than democracy, the people of Greece and the dashed hopes of a nation.
I am not for a minute saying Greece did not have a price to pay and reforms to deliver: Syriza accepts that too. But the message from the Eurozone is blunt. It is that democracy does not matter and bankers do.
The options left to Syriza are limited. Exit seems very likely indeed. And with it there will be massive uncertainty for Greece, bit also a chance to be a nation.
The European dream will have been sacrificed to bankers.
The consequences are not clear. But in history this refusal by the Eurozone may look to have been a pivotal point when instability was chosen over the chance to hold Europe together.
This is a deeply worrying moment.
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You know the eu’s attitude to syriza mandate leads me (a pro European) to wonder if I should vote to leave the eu when.if cameron delivers his promised referendum?
I think exit from the Euro is actually the best strategy for Greece and it’s probably what the Greek government has been playing for all along since being elected a few weeks back. They have to go through the motions of trying to secure a deal because they were elected on a manifesto commitment to stay in the € but in fact, Greece will have far more flexibility and in the medium term will be a lot more economically successful outside the €. And then watch the stampede for the exit as the other countries that have suffered as a result of Troika austerity policies (Italy, Ireland, Spain etc.) head for the exit. In 10 years I think there will only be a few countries left in the Euro.
Howard
You’re right
If one goes the Euro is over
Eventually at current rates Germany and Luxembourg may be the last in. When it might as well be called the Mark
Richard
And of course, the ECB will say that markets are neutral and that money and credit are just transactions and equally neutral as Greece comes out of the Euro and (hopefully not) rips itself apart. So, the idea that economic union was there to bring peace by spreading wealth is well and truly over, because the ‘wealth’ was actually debt (the new definition of wealth in the West as determined by the Banks and American culture).
But then again, they’ll be plenty of market vultures circling to make the best use of the opportunities of the chaos that will ensue.
The big challenge for Syriza is to have an organised withdrawal from the Euro and some sort of plan going forward. It could appeal to other EU nations for a loan perhaps (unless the ECB steps in and says no, like the Banks stopped Japan lending to other nations in the Asia crisis). Or it could approach another nation for that cash.
As someone who was very pro-European and was even once keen to see central banks free of direct political control I am very chastened by these issues. I feel that I’ve been ‘had’.
there are two main casualties: the Greek people who have suffered enough and the aim of European countries working together after the wars of the past. The result is a growth of the sort of resentful nationalism we hoped to leave behind after 1945.
Correct.
With war raging in the Eastern and Southern Mediterranean and in Ukraine, the EU is forgetting its founding purpose when it clings to destructive dogma, rather than seek compassionate pragmatism.
How much of the Greek debt is owed to bankers?
The vast majority of the debt is owed to the ECB
I have the utmost respect for the Greek people and their new government. It’s a shame that Mario Draghi’s policy of ‘doing whatever it takes’ extends to the bankers but not to ordinary people. It was the same in the UK in 2008 when Gordon Brown showered unconditional cash on the banks while the non-bankers suffered cuts and increased poverty. I have never felt so completely disillusioned with the political
system before. The financial crash should have been a wake up call to reform the entire system and put people first. Instead it was an opportunity to just enslave us even more.
Syriza is being alienated and the Greek people punished for not voting, to quote Cameron, ‘the right way’. An article on Paul Krugman’s blog the other day describes how the European elite feel no obligation to help Syriza because they are not part of the ‘Davos crowd’, where favours are exchanged and plum jobs dished out. Similarly the ‘elites’ (it pains me to use this term as it implies superiority) can afford
to ignore the demands of their own people as to do so may involve annoying their cronies. As long as their billionaire-owned media enterprises can engineer another stitch-up to get them re-elected the gravy train will just keep on rolling.
I see Osborne is stirring it up as much as he can, hoping to prove that a vote for the left is a vote for disaster when in reality it was disaster that precipitated the result. Best to ignore him, after all he thinks ‘most Today listeners’ would pay the mansion tax.
Hopefully Greece can survive and prove to the rest of Europe that there is another way. If this movement were to spread across southern Europe perhaps, finally, the game is up for austerity and crony-finance capitalism.
The problem arises at the moment when any government decides to borrow money, knowing that the duty to repay it will largely be the responsibility of those who are too young to vote. And in this way, benefits for those who are old are bought at the cost of those who are young.
When the young are old enough to vote, they realise there is no money left and they have to work all hours to service the debt interest on monies that their parents and grandparents borrowed instead of paying tax for a few decades.
It seems disingenuous to blame the lenders for this. Surely the truth is that the idea of a country as a legal counterparty to a contract which can be enforced by placing the (future) citizens of a country in servitude for perpetuity is the problem here.
Perhaps this is not the end of democracy but the essence of democracy: a succession of governments making short-term promises based on self-interest to win the favour of a short-sighted electorate, knowing that it will be 20 years before the bill needs to be repaid.
I would suggest the true solution is to have a global debt jubilee and then require countries to run balanced budgets. Otherwise, there is a clear risk that the people who borrow money are not those who have to repay it, and when the demographics show a growing retired sector and a shrinking working one, the risks are obvious.
Government debt is not repaid in absolute terms and I suspect never will be
Stop talking nonsense
I’m sorry Roger but I do not understand this business about us ‘loading debt on the younger generation’ at all. This is yet another market bourne myth.
And even if this was the truth, would it matter if that was seen as the deal between each generation – I pay for the elderly now on the basis that when I am old, I too will be looked after by the earnings of the younger generation and they too will benefit from this cycle when they get old (as we all do)?
If that is the deal, what is so wrong about it? That is one of the purposes of society – to subvert the laws of nature and instead of casting the weak aside – protecting them.
However, because in this country we have neo-lib politicians masquerading as Tories, they compete with other parties on taxation – offering lower taxes that actually beggars the Government in the long run so it is unable to meet its obligations – so the private sector comes in and charges more!! So any such inter-generational deal as above is effectivley broken because those who have yet to make their mark will have to endure a harder life than those who came before them and resent contributing to the the upkeep of those who had it better than themselves!
What is really loading debt onto the younger generation however Roger is tuition fees for university; ending education support grants; not enforcing the minimum wage; unpaid internships; reducing the opportunity to better oneself; robbing children of their childhoods by making going to school more like being put through an assoault course; putting young people into poverty because of zero hours contracts and cutting benefits for their parents.
And what about housing? A useful product priced as an asset so that it appeals to those who already have built up wealth, therefore pricing it out of reach of new households (young people Roger) whose wages are likely to be much lower than those who came before them and have built up that wealth.
And what about the levels of debt that have been normalised in this younger generation by dint of the fact that they borrow to keep up because of higher prices and lower wages?
So your talk of Government debt that is being used to invest is not really the source of the problem is it? If we all benefit from the investment of Government debt (safe and well-maintanied roads, effective security) what is the problem? And if that borrowing is cheaper than it would be if a private company took on such a debt – is that bad thing too?
Well I’ll tell you what the problem is – it’s because balancing the budget is really just a way of;
1) Creating a surplus to (wait for it) fund tax bribes (cuts) to the electorate so that you get voted in again or
2) Creating a surplus to enable you to bail out your mates in the banking sector next time they get too greedy (oh and they will Roger, they will – you watch).
Thanks Mark
Your third para very powerful
Richard,
Quite frankly, I can not agree more with your assessment. Given that most Greek debt is now held by the ECB, I fear we have already missed the bus in terms of framing the argument as a bailout for the banking elite. It will now be European taxpayers left holding the bag, the bankers having been bailed out straight away in 2010.
Returning to the theme of the blog, watchers can go back at least a decade to chronicle the EU’s crippling blows against the European demos, their reaction to the votes against the proposed constitutional treaty. Brussels did not like the negative results, so they ignored them. A very galling reaction, and truly an affront to civil society.
Mark and Ian, see above, are correct in their thoughts of being ‘had’ and the genesis of non-traditional political parties rising across Europe. These parties owe their very existence to the complete lack of democratic legitimacy coming from Brussels. What we seek is not necessarily concrete demonstrations of democracy but a narrative which makes those of us in civili society comfortable enough to then sell said narrative.
As a firm supporter of the EU, I despair.
I understand that it might not seem like democracy for the Greek voters here. But what about the German voters? Surely, their view is equally as valid as the Greeks? This is one of the problems (but also benefits) of being in a larger group – your vote can be outweighed by others.
What about partnership?
And did anyone vote for austerity for Greece in Germany?
Laurence,
I will assume your crass reply was meant for me and not Richard. As such, I certainly ask for Richard’s indulgence in my reply. While I doubt I will match you in your pedantic shrillness, and obvious disregard for the human toll of Greece’s subjugation, I hope that, perhaps, you will take away a little bit of humanity with you as you scurry off to your clubs in the City.
While it is doubtful that you understand, your odious comment precisely makes the point of the blog, above, and the more thoughtful comments, below. German bankers and fat cats will never allow their citizenry the opportunity to vote to provide modest assistance to the Greek people. They know there would be a thundering “Ja!” by such comfortable margins (I have personally seen estimates as high as 85% of the German citizenry begging to assist their Greek counterparts) as to shake the banking/political structure to it’s very existence. Note the title of this blog, “The end of democracy?” ……… taken with this reply, and those of other commenters, what further evidence to you need in terms of questioning your neoliberal dogma?
We all know that you City types have no use for the citizenry, but the breadth of your attack is both breath taking and galling. That sort of thing has absolutely no place in civil society.
Apologies for the length Richard, I just felt it had to be said.
You were welcome to say it
I think the reply was meant for RM?
How do you know the poster will ‘scurry off to the City’?
Worst type of ad hom attack.
I assure you, that’s not the worst type of ad hominem
And what is more, t’s likely to be right
As I noted on this blog a couple of weeks ago now, Richard, never in a month of Sundays was the troika going to allow the Greek goverment to get its way, except on terms that could be clearly seen to be the will and way of the troika. So, they’ve had their fortnight in the sun, touring the TV studios and shaking hands with an endless succession of prime ministers and other government officials. And all that time, behind the smiles, the knife was ready to be plunged. Austerity, with all the despair and suffering it brings to ordinary citizens, IS THE WAY, or there is no way. Neoliberalism cannot be challenged.
Still, as you note in your blog, at least we now see European democracy for what it: a charade of proportions that the generations that came before us would have believed unimaginable unless imposed by military force. A dictatorship of the rich, by and for the rich. Inter governmental organisations, such as the IMF and ECB, turned into pimps for banking and finance. And the men and women of the democratically elected governments of the EU/Eurozone who are involved in this affair exposed for what they really are – the puppets of the servants and masters of wealth. Many of us have suspected as much for a long time. But how ironic that the extent of the hegemony and power of the 1% should finally be exposed in crushing the cradle of democracy that was Greece.
Indeed
The Greeks needed to negotiate from a position of strength, that is, if there is no meaningful renegotiation of the debt, then they will default on it.
The troika obviously has no intention of letting Greece cancel or renegotiate their debt, even though this would make perfect sense.
If they have to exit the EU, so be it.
If Greece fails and Tsipras abandons his promises, it will be bad sign for all the Western World – that the bankers and financial elite truly do run the roost and that our democracy is a sham. I don’t wish it, but at that point, we can expect trouble. When people have no voice…I pray it doesn’t come to that.
Have none of these autocratic fools noticed that Vladimir Putin, keen to extend the influence he is already carefully cultivating in the EU, is quietly waiting in the wings with his cheque book? A new drachma could be very much more stable than anyone predicts. And not just Putin…
China’s aspirations for a new silk road would make Piraeus a target worthy of substantial investment.
Like all ideologs Schäuble (and Merkel for that matter) is a fool.
How grateful, I wonder, will be Europe be for Germany’s ‘fiscal responsibility’ when Greece slides uncomfortably into bed with Moscow and Beijing, while the European project crumbles around their ears.
Don’t forget the bail-out to Greece was 95% to the failed bankrupt banks, like the rest of the banking system, all built on number debt pumped into a computer