Crisis time for Greece. The long expected clash between the Syriza-led coalition government and the EU is almost upon us. Greece will become the first advanced nation to default on a payment to the IMF. On Sunday, the Greek electorate go to the polls to decide whether to accept the bailout agreement.
Huge implications for the rest of Europe. What do we have to say about their predicament? Which way are they going to jump?
I’ve met some Syriza people. The genuine consensus amongst them (where it can be reached) is that they want reform of the EU, not an exit.
I find that fairly remarkable in itself. A perfectly understandable reaction would be “let’s get the fuck out of this indifferent supra-national organisation that has fucked us all up”, and yet, they’ve not taken that road.
It’s an odd game of chicken to be taking part in. The EU is blindly batting for financial institutions, at the risk of pushing Greece not just out of the community, but into the arms of competing blocs.
Krugman further notes that Greece’s leader, Alexis Tsipras, is doing something else smart. Namely, he’s not making the decision single-handedly. Rather, he is forcing his own government and people to make the decision with him, via a referendum. This will improve Tsipras’ own odds of surviving the messy and scary period to come.
Surprise, I have linked to someone else’s blog. (Actually, a link to Krugman’s blog has been on the front page of my blog since I started.)
As for my opinion, Germany is basically trying to destroy the EU (without knowing it) because they are more scared of inflation as remembered from over 90 years ago than they are from the problems created by recessions and depressions. Germany seems to think that every nation should do what they do which is to operate at a surpluse by exporting more than they import. Anyone with half a brain knows that the math doesn’t add up. Germany being the country with a healthy economy when the crisis hit should have been the country that entered deficit spending and let inflation creep up. Had they done so, the problems would have been over years ago.
Its an interesting one - a lot of Greeks have been through this before with the drachma and know they can blow away a ton of debt by deflating their way out of it. They know this causes short term pain but they also know that they come out of the other side.
In the euro, they know that option is not available but they also know that 5 years of really tough austerity measures have not worked and they are being asked to accept further cuts without any guarentee of those working.
The Greeks want the Euro, but Im not sure they want it at any price.
They tried that bear but the Germans are more persistant than i.e. Barclays. Plus they get really moany about it and keep calling the ECB (something to do with cricket I believe) and now they are getting annoyed at the Greeks as well. This is summer so obviouly greeks are on the beach and clearing up sick in Kavos and they aren’t fussed about Sauerkrauts that keep calling but the ECB have had enough and are telling them to pay up the money they should have borred as the people that shouldn’t have lent it want it back and if they don’t pay it back, they won’t be able to borrow anymore to not pay back in the future.
The IMF’s loans to Greece have not only bailed out banks which lent recklessly in the first place
I would say lending to Greece again would be reckless as they have been in defualt at least half the time since their independence from Turkey. It would be like wonga lending to bear yet again. With that in mind, should they not do it?