There's no way Greece can leave the Euro quietly.
The people of Greece have suffered too much for too long at the altar of monetary union for them to be forced out without associated anger.
The EU will lose face if Greece goes: it's not possible to predict what steps it might take to recover it.
And we know financial markets are overly volatile and, despite their supposed clairvoyance, almost always caught by surprise by actual events.
Something will give if Greece is forced out of the Euro when the reality is that once the scale of the issue was recognised it was always clear that Greece could not repay its debts.
I do not know what will give: I worry for the people of Greece.
But I also worry that projects like the Euro show the capacity we now have to create structures so large that they are beyond the scale of human management, given how frail that is.
Our inability to handle the compromises needed to make progress when mistakes are discovered without recrimination and punishment being on the agenda is the biggest issue arising from the Greek crisis, in my opinion.
And I have not got an answer for that.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
It’s clear that the EU wants to punish Greece
while “paying off” Greece’s debts
so that the Crash can be avoided,
simply because career politicians
do not want to risk a stain on their records.
the Crash could be end of their careers.
So, Greece “has to be kept down”,
and yet,now, refuses to be kept down.
Interesting times.
keep up the good work
Indeed one should feel sorry for the people
oh but for a corageous state !
It’s much more complicated than that
You use the word ‘inability’, Richard, but I think it’s a combination of that and unwillingness – and maybe more of the latter than the former.
Of course, reaching any compromise agreement – on pretty much anything in my experience – becomes more and more difficult the more agents are involved in a negotiation. And of course we don’t know exactly what gets said and done in the negotiating sessions that have taken place between Greece and the various “troika” members.
But, thinking back to what was said on this blog at the time of Syriza’s success in the Greek elections, we discussed whether the Greek government would be allowed to succeed in its endevours given the ideological divide (actually a chasm) that exists between it and the neoliberal bent of every other European government and EC, IMF et.
I suspect most other EU governments and the IMF assumed that the Greek government would do what pretty much every other government on the planet has ever done when confronted with the neoliberal bully boys – capitulate – and let their ideology float away in exchange for a form of words that made it look as if the settlement reached was nowhere near as bad as it actually was.
But to their credit they haven’t. So now we are in the endgame of who blinks first and there’s certainly no way that the troika can – if they did what a precedent it sets. And I suspect that not only every neoliberal politician, but behind the scenes all the neoliberal corporate puppet masters are “reminding” whoever needs reminding that no deal can be done with Greece, precisely because of its impact on the wider neoliberal project of subjugation, division, inequality, exploitation and control.
So, as I say, ‘inability’? Perhaps a little. But largely unwillingness, and an unwillingness that has been there from the outset unless the Greek government turned out to consist of exactly the type of cowardly politician we’ve become so used to. They haven’t. But what comes after exit is, as you say, likely to be very messy indeed.
All totally fair comment
You use the word “capitulate”, whereas I would say “compromise”.
If Syriza were prepared to compromise on austerity then I think they would get more debt relief (they’ve already got an offer for zero interest debt for 8 years). A compromise deal is still possible if Syriza were prepared to give something up.
Politics should not be about banging the table and making demands, and particularly in the EU it is not about that.
That’s not the starting point.
The first question is this: “Can Greece operate within the Eurozone?”
If Yes, then discussions can be had. If No, then what’s the point?
What’s good for politicians in Brussels, Greece, Germany or wherever is completely irrelevant.
Adam COMPROMISE-Ye Gods -the people of Greece have gone through something akin to an Old Testament plague! Do you think you can compromise an people committing suicide,not receiving health care for major illnesses, barely being able to eat, 50% youth unemployment ans mass emigration, HIV cases multiplying due to the abandonment of support programmes-and you say COMPROMISE?
I’d be bloody banging a table if that was happening to me and my family! Tsipras has, in my view, been mild and gentlemanly in the face of all of this financial terrorism of the ghastly IMF promoting asset-rape and pillaging. For God’s sake this is a human disaster and we talk of COMPROMISE with those who would further it? You couldn’t make it up.
“This Is What Capital Controls Will Look Like In Greece” – Zero Hedge article citing Barclay’s research. The banks have it worked out, as we’d expect – the various scenarios have been thought through.
http://www.zerohedge.com/news/2015-06-04/what-capital-controls-will-look-greece
“Our inability to handle the compromises needed to make progress when mistakes are discovered without recrimination and punishment being on the agenda is the biggest issue arising from the Greek crisis, in my opinion.”
With all due respect Richard, the possibility of “recrimination and punishment” at the outset, rather than the mindless triumphalism seen at the time, may have concentrated minds a little and resulted in a more successful project.
Or is that 20/20 hindsight? I think not.
The EU is at fault here.
The Euro was supposed to be governed according to agreed rules, but all were flouted.
The Euro should have been restricted to those countries eligible to join (Luxembourg).
Greece was the worst example of illegal admission, but by no means the only one.
Neither have Eurozone governments had to abide by Eurozone rules (Germany, ironically, was the first to ignore them).
Regardless of whether the EU and the Euro are good ideas in theory, we must all agree that this is massive governmental failure.
If the EU cannot operate within agreed rules, then we should leave (along with Greece, Spain, etc).
I think that you are demonising Greece unfairly here Deidre. It has democratically chosen to build Social Justice into it’s model of government. It is highly undemocratic for countries which could support them to do this (such as Germany) to insist on imposing a Neoliberal/Neocon (they are essentially the same thing) model.
Let us remember that Greece brought us democracy, but it also brought us the Colonels. Which would we prefer? I know my answer. No pasaran!
So it was Germany that lied about the real financial state of Greece when it joined the Euro?
The Greek politicians have no blame for inflating assets, not bothering to collect taxes, allowing rampant corruption.
And then its the EU’s fault for trying to stop them go bankrupt and asking them to change their ways and act like a responsible state.
The Greeks should look at their ex-leaders for the ones to blame.
You all blog on here about banks doing the same and deriding them for it, calling them eveil and all the names under the sun, but the Greeks do it and it’s everyone else’s fault?
Such hypocracy
There is no doubt Greece did the wrong thing
Aided and heavily abetted by bankers – especially Goldman Sachs
No one is saying the Greeks got things right. Punishing Greece now for that is, however, absurd when there economy has already been devastated by the punishment imposed to date
Please do not ignore that. That would be real hypocrisy. I’m not accepting your charge
Sue,
You must have misunderstood me.I am blaming the far-right, neo-Liberal EU, not the land of democracy.
My heart is breaking for Greece, even if I didn’t think that possible after the 8th May. If only I wasn’t so caring, so empathetic.
May Gaia save us.
I did think you were being out of character Deidre. Regarding May’s event I do understand – it has given a hard blow to my faith in human nature and I confess reduced my postings here.
My one consolation is Corbin on the ticket for Labour leadership. He is the only man in British politics who can bring back the left’s glory days of the 1970s and 1980s when everything felt so much more alive and possible.
Does Greece still subsidise agriculture at a multiple per hectare of the UK rate of subsidy? I believe so.
Why does this continue? The theory is to ensure food security. In the long term, unless you take the subsidies away after a suitable interval, you get dependency and no security at all.
Why hasn’t it been stopped? My guess is because stopping it would crack the whole EU crock of subsidising anyone who has land on which anything can grow or graze. The result is that giving up the agricultural subsidies that benefit the landed isn’t and never has been one of the options available to Greece while it remains in the EU.
So pure speculation on your part, without any substance?
From a 2013 bbc article:
“The average annual subsidy per farm is about 12,200 euros (£10,374). But payments per hectare range from 527 euros in Greece to just 89 euros in Latvia”
There’s plenty of scope in that for spending cuts. The question I was really asking is why hasn’t it been done?
Do you know it has not been?
As Richard Wolff points out Greece’s debt should be classed as ‘odious’ and the creditors deemed to have lent foolishly. He points out that, in the 50′, when German debt was halved, debt relief was possible because a bulwark was needed against the Communist East – it can be done but people dying and suffering seems not to be enough in itself, there clearly has to be some political benefit for those in power.
I agree with him
A fair analysis although as the learned Michael Pettis and others have argued the Euro is like a gold standard on steroids and absent a massive transfer by Germany the imbalances it has created (including giant surpluses to Germany) can only be remedied by abolition so that Grexit is inevitable.
We live in a world wrought by excess savings.
“Stournaras (Governer of Gree Central Bank) warned that failure to reach a deal would result in a deep recession and soaring unemployment in Greece, and force it to be “relegated to the rank of a poor country in the European south”.
hasn’t someone pointed out to him that this is already the case!!!! More evidence that bankers live in a parallel universe? perhaps he never walks past the rough sleepers of Athens and/or the tinted glass of his limousine is too opaque.
I believe that Syriza has to negotiate from a position of strength, that is, threaten to totally default unless there is significant concessions, ie, lowering interests rates and allowing more time for the debt to be paid.
It is not realised that when the Greeks have received a bailout, only 5% actually goes to the Greeks, the rest goes to their creditors.
This is an odious debt and should be written off, anyway. Probably defalting the debt (with the result being exiting the EU) may well be the best thing the Greeks could do.
Staying in the EU is like the Greek government fighting with one arm tied behind their back.