If you’ve even remotely paying to the news, all the chatter among our financial betters is over whether their campaign of shame and blackmail will cow the Greeks into voting for the referendum:
With the polls closed, Greek voters — angry, tired and scared — waited anxiously Sunday to learn the verdict on a high-stakes referendum that many said they did not understand, but that could nonetheless redefine the country’s place in Europe and shake the Continent’s financial stability.
Even preliminary results of the balloting were not expected for several hours.
The poll comes after a week in which voters were barraged with ads that warned that if they did not vote yes, they would soon be without medicine and gasoline.
With Greek banks closed, the nightly news was filled with images of retirees lining up to get only a fraction of their monthly pensions.
Yet it was hard for many Greeks to know exactly what they were voting on. The ballot asks them only to say yes or no to the terms of a deal with Greece’s creditors, which is no longer even on the table.
Prime Minister Alexis Tsipras has told them that rejecting the deal will give him more power to negotiate and urged them to do so. But European and opposition leaders have tried to frame the vote as a yes or no to staying in the eurozone and avoiding economic collapse.
Mr. Tsipras voted late Sunday morning in his working-class neighborhood in Athens. Afterward, he said the vote was a “celebration of democracy.”
“Not only will we remain in Europe,” he said, “but we will live with dignity to prosper, to work as equals among equals.”
Of course, no one is blameless in this mess- the Greeks have a lot to answer for regarding their refusal to collect and pay taxes like a first world democracy, but from my naive perch, it’s hard to not want them to reject the deal and tell the Goldman Sachs jetset to go fuck themselves. Krugman has a lot of great analysis, including noting once again that the austerians are like a monkey with a hammer:
Austerity for a country in Greece’s position appears to be an unworkable solution even if debt is all you care about.
And just to be clear, I’m basically doing textbook macroeconomics here, nothing exotic. It’s the austerians who are inventing new economic doctrines on the fly to justify their policies, which appear to imply not temporary sacrifice but permanent failure.
Personally, this is one of the most informative pieces I have read on the subject (h/t to Chris Hayes):
With respect to Greece, the precise thing that European elites did to set the current chain of events in motion was to replace private debt with public during the 2010 first “bailout of Greece”. Prior to that event, it was obvious that blame was multipolar. Here are the banks, in France, in Germany, that foolishly lent. Not just to Greece, but to Goldman’s synthetic CDOs and every other piece of idiot paper they could carry with low risk-weights. In 2010, the EU, ECB, and IMF laundered a bailout of mostly French and German banks through the Greek fisc. Cash flowed into Greece only so it could flow out to rickety banks. Now, suddenly, the banks were absolved. There were very few bad loans left on the books of European lenders, everyone was clean, no bad actors at all. Except one. There were the institutions, the “troika”, clearly the good guys, so “helpful” with their generous offer of funds. And then there was Greece. What had been a mudwrestling match, everybody dirty, was transformed into mass of powdered wigs accusing a single filthy penitent (or, when the people with their savings in just-rescued banks decide to be generous, a petulant misbehaving child). [antidote]
Among creditors, a big catchphrase now is “moral hazard”. We cannot be too kind to Greece, we cannot forgive their debt with few string attached, because what kind of precedent would that set? If bad borrowers, other sovereigns, got the idea that they can overborrow without consequence, if Spanish and Portuguese populists perceive perhaps a better deal is on offer, they might demand that. They might continue to borrow and expect forgiveness, and where would it end except for the bankruptcy of the good Europeans who actually produce and save?
The nerve. The fucking nerve. Lenders, having been made nearly whole on their ill-conceived, profit-motivated punts, now fear that if anybody is nice to somebody who doesn’t deserve it, where will it end? I’d resort to that cliché about chutspa, the kid who murders his parents then seeks leniency ‘cuz he’s an orphan. But it’s really too cute for the occasion.
For the record, my sophisticated hard-working elite European interlocutors, the term moral hazard traditionally applies to creditors. It describes the hazard to the real economy that might result if investors fail to discriminate between valuable and not-so-valuable projects when they allocate society’s scarce resources as proxied by money claims. Lending to a corrupt, clientelist Greek state that squanders resources on activities unlikely to yield growth from which the debt could be serviced? That is precisely, exactly, what the term “moral hazard” exists to discourage. You did that. Yes, the Greek state was an unworthy and sometimes unscrupulous debtor. Newsflash: The world is full of unworthy and unscrupulous entities willing to take your money and call the transaction a “loan”. It always will be. That is why responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors. There is one morality tale that says the debtor must repay, or she has sinned and must be punished. There is another morality tale that says the creditor must invest wisely, or she has stewarded resources poorly and must be punished. We get to choose which morality tale we most use to make sense of the world. We do, and surely should, use both to some degree. But if we emphasize the first story, we end up in a world full of bad loans, wasted resources, and people trapped in debtors’ prison, metaphorical or literal. If we emphasize the second story, we end up in a world where dumb expenditures are never financed in the first place.
But don’t the Greeks want to borrow more? Isn’t that what all the fuss is about right now? No. The Greeks need to borrow money now only because old loans are coming due that they have to pay, and they have been trying to come to an agreement about that, rather than raise a middle finger and walk away. The Greek state itself is not trying to expand its borrowing. Greece’s citizens and businesses would like to expand the country’s borrowing indirectly, by withdrawing Euros from Greek banks that the Greek banks won’t be able to come up with unless they are allowed to expand their borrowing from the ECB. That is, Greece’s citizens are in precisely the place France’s citizens and Germany’s citizens were in 2010, at risk that personal savings maintained as bank deposits will not be repaid. Something was worked out for French and German citizens. Other than resorting to the ethnonational stereotypes that European elites have now revived in polite company, what is the justification for a Greek schoolteacher losing her savings that wouldn’t have applied just as strongly to a French schoolteacher five years ago? Because Greeks are responsible, as individuals, for what the governments they elect do? Well, then I deserve to be killed for what my government has done in Iraq and elsewhere. Is that where we want to go?
You should read the whole thing.