The Kroog is right (as usual) on the sheer bitter punitive structure of the EU/Greek deal: it’s a “deal” the same way that signing away your house, car and kids while standing on a trap door over an active volcano is a “deal”.
Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.
Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.
And the fine print is lethal here for Athens. The five-year Greek “time out” from the euro has been dropped in this morning’s final deal, but in exchange all the other eurozone demands have been capitulated to. Jacking the VAT up from 13% to 23% is just for starters, along with the country having to sign over some $50 billion in assets (maybe a quarter of the country’s GDP) over as collateral. Alexis Tsipras has to sell the rope to hang the Greek economy and get it done by Thursday, and maybe then Europe will talk about when Greece can re-open banks. And those bank capital controls? They aren’t going anywhere.
In a way, the economics have almost become secondary. But still, let’s be clear: what we’ve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line. This has no bearing at all on the underlying economics of austerity. It’s as true as ever that imposing harsh austerity without debt relief is a doomed policy no matter how willing the country is to accept suffering. And this in turn means that even a complete Greek capitulation would be a dead end.
Can Greece pull off a successful exit? Will Germany try to block a recovery? (Sorry, but that’s the kind of thing we must now ask.)
The birthplace of Western democracy is being raided, chopped up, and sold for parts. There’s no way Greece gets out of this without a lot of scars and bits and pieces missing, and frankly I don’t know what happens next if Greek lawmakers tell Tsipras to go jump in the Mediterranean. The one thing I do know is that this double secret probation austerity plan is going to fail like the other two Greek bailouts.
Here there be gorgons.
beltane
Greece could certainly have gotten a better deal from the mob. This is like an ISIS-style “bailout”.
Chris
Yep, I think “coup” is exactly right.
Walker
I don’t see how Tsipras survives this. He holds a referendum and then gets worse terms than he had before the referendum. No way the Greek people continue to support this government.
schrodinger's cat
So this is what happens when Germany is large and in charge.
schrodinger's cat
BTW the purpose of austerity is to make you lean not fat.
jayjaybear
@schrodinger’s cat: Yep. Different instruments, same symphony.
beltane
Wolfgang Schauble is on the record saying he wanted to “terrify” Europe with this bailout. Judging by what I read in the comments section of Italy’s center-left La Repubblica last night, his efforts were a wild success. Southern Europeans are terrified, horrified, and very, very angry. Lots of people saying the Germans should have been buried alive after WWII. If the EU is a family, it is the type of abusive family where the kids need to be removed from the home ASAP.
MattF
I betcha that German tourists aren’t going to be popular in Athens or the islands. Maybe that’ll be the next requirement for a bailout– “You will have to like it.”
Chris
@Walker:
Which I’m pretty sure was the point: the creditors wanted to absolutely demolish Syriza as a warning to others that this kind of left wing challenge to the proper order of things will not and can not stand.
beltane
@MattF: The Germans could always eliminate the Greeks and replace them with some other people.
schrodinger's cat
How much debt do France and Italy have. I would sleep with one eye open if I were them.
beltane
@Chris: The creditors, i.e. Germany, are remarkable thin-skinned about defiance coming from any quarter, right or left. It wasn’t Berlusconi’s corruption or sex scandals that forced him out of office, it was his defiance that did him in: http://www.eurotrib.com/story/2015/7/7/154932/0881
Disobedience is not to be tolerated.
Bobby B.
I suggested to my Greek father that the country send the bones of a Greek deathcamp victim to Merkel with a note saying Paid In Full, The National Review crowd is already doing their Happy Dance at Greece’s demise, saying “nyah nyah hippie commies, arbeit macht Frei!”
cmorenc
The Greek situation is a perfect storm of irresponsibility all-around. Before integration into the Euro zone, the Greek government, economy, and society were irresponsibly dysfunctional, with corrupt, inept government and unsustainable social benefit obligations – and yet post-integration, Western European banks poured loans into the country expecting something to magically be different? And to throw Greek society into debtor’s prison for as long as it takes to squeeze some of that lost money back out of them? The banksters are equally at fault – just like someone who loans an unreformed crack addict big $$$ thinking that will change them for the better and be very profitable as well because of the projected return if their magical thinking works out, and being angrily disappointed and vindictive when the loan doesn’t get repaid.
SiubhanDuinne
We are in Scylla and Charybdis territory here.
C.V. Danes
I guess the troika would rather deal with Golden Dawn, because that’s who is up next.
dubo
They had to know what the outcome of the referendum was going to be before they held it, so it’s not like the referendum was an attempt to save face that backfired. So I don’t get the reasoning or politics behind holding a referendum you’re just going to ignore???
beltane
@schrodinger’s cat: Italy should be printing Lira like crazy right now. Unlike Greece, they have a highly developed industrial sector and are in a position to cause Germany some pain if pushed too far.
As to France, God help me but this business with Greece has almost make me hope for a Le Pen government.
MattF
I’m posting a repeat of the link to the Interfluidity post about Greece. So much good stuff there. Note particularly his discussion of ‘moral hazard’ towards the end.
beltane
@dubo: The referendum was very useful. It tore the mask of civility right off the faces of the creditors. Now we see the fangs. Now we know what they are.
Elizabelle
Why does Tsipras not just take the Grexit? Recall, he and parliament have a few days to agree yes or no. He may be making conciliatory noises now, but might the Greek government decide to tell Germany and the banksters to shove it?
They’ve given him a yooooooge “principle of the thing” argument.
Also, I am not a world traveler, but this would get me to avoid Germany at all costs. Also its products. (Remind me what I’ll be missing …)
eric
repeat after me “bankers are not your friend” and “German bankers are no one’s friend”
mai naem mobile
Watch the financial networks and see how the anchors are getting hard ons from this deal.and want to do the same thing here with social security and Medicare. Quite disgusting.
Comrade Dread
Assuming the PM can get this passed, I imagine the xenophobic fascists will be the next in line to replace his government. I’m sure that will be fun for Europe.
debbie
@SiubhanDuinne:
In other words, the bankers have won again.
boatboy_srq
@Chris: @schrodinger’s cat: Not sure about “coup” wrt Syriza. The original negotiations were with the previous government, which a) gave Syriza and Tsipras the landslide they got at the polls and b) says this is less about the party than about Greece as a nation and Eurozone member. The terms are at least a little better than what was offered Samaras and New Democracy, so while this is very bad for Syriza it was worse for prior governments and Syriza has at least wrung a few concessions from the negotiators. Greek fiscal policy is the target: Syriza is just unlucky enough to be there for the negotiations.
Germany has to know, though, that any future grand agreement like Maastricht is probably dead: if Greece is the example of what happens to states that aren’t performing the way the bankers think they should, then there’s little incentive to get into the same sort of situation. It’s probably also the end of discussions about folding the British Pound, the Hungarian Forint, the Romanian Leu or the Bulgarian Leva into the Euro.
At least nobody in the ECB is talking of selling Greece back to Turkey…
SenyorDave
@schrodinger’s cat: Actually, France and Germany have pretty similar debt levels, although France’s is about 50% higher per capita. Greece, unfortunately, has spent a significant amount of time (90 years) in period of default in the modern era. France last defaulted in 1812.
I agree with everything in this post, and think it’s mostly punative, an attempt to show Greece and the rest of the world how they handle anyone who doesn’t toe the line. That being said, a person would have to have their head examined if they were thinking of buying bonds issued by the Greek gov’t. It would make slightly more sense than buying a bond issued by a company having a business relationship with Trump.
Walker
@Elizabelle:
Krugman thinks that Tsipras has never made the preparations for Grexit, and therefore cannot on short notice. Some people believe he held the referendum to get a Yes vote, which did not happen.
Gavin
The unfolding Greek drama is watching an episode of Confessions of an Economic Hit Man play out in real time.
It isn’t capitalism: “capitalism” would be Greece telling its creditors “we’re sorry but we can’t pay so we are writing off all of our debts and starting over.” Followed by the creditors saying; “you are starting over using what cash you have because we are not loaning you any more of our money.”
Botsplainer
I’m trying to figure out why privatization is part of this, and I’m scratching my head. I guess it is because reasons.
The Greeks would be better off giving a cushy island, a dozen hotties and lifetime Ouzo, spanakopita, souvlaki and dolmas to a team of ex-Spetznatz mercs to assassinate every German banker and finance official of note. I’m especially interested in the now-withdrawn demand to place €50B with some organization headed up by Schnauble.
Davis X. Machina
@cmorenc: A list of who missed European Growth and Stability Targets and when….
It’s interesting to note that three of the four countries who have never been out of compliance — Sweden, Denmark, and Finland — have what are generally considered to be very robust social provision. (Luxembourg is just Hong Kong without the ferries…)
dedc79
@Elizabelle:
Some of us never stopped
MattF
@Elizabelle: It’s hard to avoid German manufacturing. My Whirlpool washer/dryer was built in Germany– which I discovered only by getting into the weeds wrt the serial number.
Corner Stone
@Elizabelle:
He may see that it doesn’t matter if he tries the exit. Germany is going to destroy Greece whether they stay in the EU or not.
boatboy_srq
@Walker: Tsipras cannot possibly have been that naïve: “No” was written all over that referendum. I’d bet he got exactly what he wanted before going back to the table (i.e. “give us something to take home or we’ll listen to our constituents and bail out”), and (given that the ECB negotiators did give a little) it may have worked as intended. It may not matter in the long run: if Syriza rode to victory on a “say No to Austerity” campaign, and the voters are as POd with the new deal as with the old one, we may see snap elections and a new(er), (further) leftist government for whom Grexit will be a mandate.
Corner Stone
@mai naem mobile:
They love them some bullyboy tactics, don’t they? The idea of punishing someone makes their voice register a few shades higher when they start talking, and you can see them visibly lean in toward the camera.
Corner Stone
@schrodinger’s cat:
Almost like they want to go for the hat trick in about one century period.
Barry
@cmorenc: “The banksters are equally at fault – just like someone who loans an unreformed crack addict big $$$ thinking that will change them for the better and be very profitable as well because of the projected return if their magical thinking works out, and being angrily disappointed and vindictive when the loan doesn’t get repaid.”
From what I’ve heard, Greek loans carried a risk premium (i.e., higher interest rates). However, they could be booked at standard EU sovereign debt risk rates, which meant that the banks had to keep lower reserves (i.e., less cost).
And when things went to sh*t, the EU government bailed out the banks, and then started their BS about ‘moral hazard’.
Lurking Canadian
@Botsplainer: Privatization is always on the list when the structural adjustment people tell you what to do. It comes right after “starve granny”.
Count me among those who are baffled by Tsirpas. Why hold the referendum to get a mandate to reject Deal A, then accept Deal B, which is WORSE THAN A? I’d understand if he were now saying, “See, there’s no reasoning with these people, we have to leave the Euro!”. It seems staying in the Euro AT ALL COSTS is his primary objective, which means the referendum was kind of a dumb move.
beltane
@Corner Stone: Greece is on its way to being another Gaza.
Omnes Omnibus
@boatboy_srq: It might not be a party of the left that gets in.
Barry
@C.V. Danes: “I guess the troika would rather deal with Golden Dawn, because that’s who is up next.”
You mean a nice, right-wing fascist party, who will enforce the imiseration of all Greeks except themselves?
I’ll bet that the Troika and Golden Dawn are looking at each other……..
Scott S.
If you’re a European nation other than Germany, shouldn’t this be your wake-up call to vote yourself out before it’s too late?
Chris
@C.V. Danes:
My impression for some time has been that the powers-that-be in Europe are a lot more worried about viable left-wing challengers like Syriza than far right movements like Golden Dawn.
beltane
@Corner Stone: Maybe we need a “3 strikes and you out” approach with this country. One wonders what things would look like right now if the Morganthau Plan, and not the Marshall Plan had been implemented.
Corner Stone
@MattF:
Or maybe that each German tourist gets his own manservant for their stay.
MattF
@Scott S.: The British, in particular, might view this situation as a timely warning. Fortunately for them, they avoided joining the euro.
Zandar
@MattF: That’s a very good read there, Matt.
MDC
@boatboy_srq:
How? The new deal is far worse than the one that the referendum was about.
Davis X. Machina
@Chris: True enough. The present government in Hungary doesn’t seem to have anybody running around with their hair on fire….
Lamia mi
I very rarely comment but tsipras will buy a few weeks then grexit will happen. There’s no other choice
beltane
It was another, proposed referendum on a austerity/bailout deal that led to the ouster of center-left PM George Papandreou in 2011 https://en.wikipedia.org/wiki/Greek_proposed_economy_referendum,_2011. The takeaway from this is that the EU is an anti-democratic entity with deeply held authoritarian principles, especially when it comes to dealing with the untermenschen of Southern Europe.
El Caganer
@C.V. Danes: Not necessarily. They might get the military instead.
Corner Stone
@cmorenc:
I disagree with this kind of thinking. The bankers knew what they were doing, and it was not with good intent they loaned out the phat cash. The banksters knew they would get paid and took the cream off all the deals. They certainly weren’t looking to help anyone get better.
Mandalay
@boatboy_srq:
What discussions? Britain is halfhearted at best about being a member of the EU at all – they have a referendum on leaving it completely next year – so they would hardly have been contemplating a switch to the Euro.
Gordon Brown persuaded Tony Blair to stick with the Pound about twenty years ago, and since then the idea of switching to the Euro has not been an issue.
Bruce K
@El Caganer: There’s also a third extremist option. KKE, the old-guard Greek Communist Party, is still out here, and they wouldn’t hesitate to try to fill up a power vacuum here.
KKE, Golden Dawn, or another junta. It’s like choosing between getting eviscerated, drawn and quartered, or burned alive.
Bobby Thomson
@schrodinger’s cat: among other things.
I hate German Nazis.
Chris
@Bruce K:
Am I being overly dramatic, or would the resurgence of an actual communist government in an EU/NATO member immediately bring back the old rule-by-coup/Support Your Friendly Dictator approach to life? Not necessarily from the Americans, but European nations have intelligence agencies too.
Keith P.
Given how shitty the Greek economy is, what is the upside of them staying in the EU? I’m completely ignorant on the issue other than I could have sworn that Greece voted to default a couple of weeks ago (kind of like how the TPP died, and then a few weeks later, there are all these news stories about it being signed)
Elizabelle
@MattF: Wonderful blog. Steve Randy Waldman. Turns out Waldman is originally from Baltimore, now in California. Will enjoy catching up on his posts.
OT, but his post on the Baltimore riots after Freddie Gray’s death by police: [fits this thread, because who knows what we will see in Greece, or elsewere?]
Elizabelle
Apologies for such a long quote. Tried to edit it down, but FYWP intervened.
Steve Randy Waldman is a find.
Keith G
The recent evolutionary development of the apex species bankerus internationalus (and its mutualist species, G7 governmentus) is a most distressing stepping stone in our descent into dark times for the concepts of, liberty, equality and fraternity.
With fewer and fewer constraints on its behavior, bankerus will continue to elevate the harm it is doing to all who are not part of its ownership class.
Mandalay
@Keith P.:
They upside is that they can still borrow money – billions and billions of Euros – which they desperately need to do.
If they leave the EU then they will have to have their own currency, their banking system would probably collapse, and the value of personal savings (in drachmas) would plummet. Nobody except Tony Soprano would lend them money, and his repayment terms would be far more severe than anything the EU can dream up in its darkest moments.
Walker
@Keith P.:
Whether they are in the EU is irrelevant. They have to drop the Euro and go back to their own currency. And they have to do it wholesale. Pegging a new currency to the Euro will not solve any problems. For anything less than a new currency they might as well take the bailout.
Walker
@Mandalay:
We don’t know this. What you say never happened to Argentina or Iceland.
The great unknown here is switching currency, rather than devaluing it. No one has ever done that successfully before.
Chris
@Keith G:
This.
Corner Stone
Looks like Cole may need to suit up for the 11th armored again. This time they’ll be on the other side of the Fulda Gap.
J R in WV
I have to say this seems like Germany attempting to take total control of Greece again, without the Panzer divisions this time. On the cheap, as it were.
If I was Greek I would be printing Drachmas right now, or even just going full electronic at first, allowing credit cards to operate but telling everyone that the € symbol is Greek for Drachma, while printing the paper bills somewhere post haste.
Sending Wolfgang Schauble, the German banker who seems to be in charge of Greek Submission, the bones of a Greek who died in a “work camp” and calling all debts paid might work, if you could get him to open the package on live TV. If it didn’t work, it may still be the proper thing to do. From the Greek point of view, I mean.
I have some sympathy for the German people, but their leaders seem to be authoritarian monsters once they get into office. If they don’t get into politics because they want a chance to be monsters, that is. I wish I could get out of German products, VW and other German car manufacturers build their cars so that I like driving them, and I have a new one that we intended to use out for much of the rest of our lives. Oops.
I hope the Euro sign above works… ETA: Hurray, success on the Euro code at least!
Mandalay
@Walker:
Argentina gets a little closer to the precipice every day. It’s just not happening in as dramatic a fashion as in Greece, but almost every week over the past few years the value of their currency falls. I have friends in Argentina and the collapsing economy manifests itself in many ways. Living standards are falling, the government’s failure to honor debts has killed its ability to borrow money, kidnappings and muggings are rising, there is a shortage of imported toilet paper (which people can no longer afford anyway), and there are brutal restrictions on changing money and sending money overseas. Having fallen out with the west, the government is now sucking up to China and Russia. It’s only a matter of time.
The parallels with Greece are not exact, and the Argentina’s economy is much stronger that than Greece’s, but the core problem is the same: the Argentinian government is spending more money that it is collecting, the country is up to its ass in debt, and lenders won’t lend them money.
Cluttered Mind
@Lurking Canadian: If your goal is to do something “at any cost” then that’s exactly what you’ll be charged. It sucks for the Greeks.
Bitter Scribe
@Walker: Some people believe he held the referendum to get a Yes vote, which did not happen.
Except that he explicitly told everyone to vote no.
catclub
I thought this was a fairly balanced view.
http://www.bloombergview.com/articles/2015-07-13/europe-s-insane-deal-with-greece
Mandalay
@Bitter Scribe:
That is true, but he only did that after being vehemently accused of being two-faced, and selling out. He was eventually forced to be clear about how he thought people should vote, but he certainly wasn’t doing that initially.
Given that he was elected because he was telling everyone he would tell the EU to shove it up their ass, his initial silence on how people should vote lends credibility to the argument that he was secretly hoping for a “yes”, but YMMV.
rikyrah
it’s absolutely horrible – what they’re doing to Greece
MomSense
It’s so depressing.
catclub
@J R in WV:
My understanding is that Merkel is very clearly being led by german public opinion here. They have zero sympathy for Greece.
C.V. Danes
@Chris: Yep. The only thing that bankers hate more than losing money is losing money to lefties. If they’re going to lose money, then they’re going to kill the leftist government too. It’s a point of policy with them, because a leftist agenda of helping the poor is a total waste of money that could be better spent on hookers and blow, in the banker’s eyes.
Paul in KY
@schrodinger’s cat: Old French joke: ‘I love Germany so much, there should be 2 of them’.
Paul in KY
@beltane: I think they have a name for that…
Vanya
Everyone blames Germany, but Greece has no friends east of Germany either, until you hit the Russian border. General Polish, Czech and Slovak opinion seems to be that the Greeks are lazy moochers. It is definitely a north-south divide, not Germans against everyone.
boatboy_srq
@Mandalay: There WAS discussion several years ago, before Cameron, about the future of the Pound Sterling. That future is now secure, thanks to the ECB and German bankers. UK has always had an awkward relationship with the EU: Britain thought they were entering a trade-agreement zone, and most of the rest of the EU agreed to much tighter integration. The UK was very unhappy about Maastricht, but they were completely outvoted.
Added minus here (for the Eurozone): Romania, Bulgaria, Hungary, Czech Republic, Poland, Sweden and Denmark all have solid reasons not to join the Eurozone precisely because of how Greece has been treated: unless their economic conditions precisely mirror Germany’s, then they’re BLEEPed if they can’t effect their own monetary policy.
boatboy_srq
@Vanya: The “lesson” the bankers were trying to teach wasn’t just for Greece, but for Spain and Italy as well. VERY definitely North/South.
schrodinger's cat
@Vanya: True but Germans are the ones with the most power as the strongest economy in the Eurozone.
Corner Stone
@Vanya:
They are all scared to death of Germany. They may hold those views against Greece, but it’s a lot of going along with the Big Bad hoping they can keep that gaze away from themselves.
Corner Stone
Fmr US Amb to Greece Nicholas Burns is an asshole. Just watching him on BloombergTV and he’s a real jerk.
beltane
@Corner Stone: While we’re playing the stereotype game, it’s been pretty funny seeing some of these Eastern European countries live up to their reputations for being none-too-bright lackeys. It’s also been somewhat amusing to see the Baltic states pound their chests, bragging of their poverty relative to Greece’s,as if their first-in-line status in the race to the bottom is something to be proud of. However, there is still quite of lot of fat to be cut. Maybe if Latvia and Lithuania work a little harder they too can be as poor as Haiti. Until then I will withhold my applause.
beltane
@Corner Stone: Being a veteran of Bush’s State Department, it’s a given that he’s a douchebag. More troubling is that fact that Bill Clinton appointed him as ambassador to Greece.
Chris
@C.V. Danes:
It’s the Rush Limbaugh “I hope he fails” all over again. Those in power want a “left” that’s a smiling “compassionate” face rubber-stamping the same neoliberal policies like DLC or New Labour or consigned to the fringes like the communists. The prospect of a left wing government that’s actually significantly different from the consensus scares the shit out of them, which is why they’ll pull out all the stops to make sure that it fails no matter the cost.
Chris
@beltane:
So the Baltic states are the Deep South of Europe. Huh.
Brachiator
Well, that happened a long time ago, when Alexander of Macedon, and later the Romans hoovered up what was left of a depleted Athens.
Krugman is on fire, but I have to think that there are a small band of economists and policy “experts” advising on this. Or is it simply that who? banks? politicians? who insist on austerity are in control of negotiations?
And what of the claims that being hard on Greece is necessary to maintain the euro and the European Economic union? Have the Germans and others clearly dismissed other solutions, or are pundits simply wailing uselessly while being ignored?
And the Greeks would certainly understand this one: Is Europe setting itself up for a pyrrhic victory if they keep putting the screws to Greece and then do the same to Italy and Spain, and this thing ends up collapsing anyway?
catclub
@Chris:
Not quite. They paid IN to at least one of the Greek bailout funds. Unlike the deep south states.
Bruce K
@Chris: Hell if I know with regard to the EU reaction to a potential old-school Communist government. All I know is that when my aunt (who lived through both WW2 here in Greece and the Greek Civil War that kicked off right after) is that the last time the Communists held power in any territories in Greece, they’d make examples of anyone who dared to challenge them … by gouging out their eyes.
I seriously don’t know whether KKE, Golden Dawn, or another military junta is the worst-case scenario here.
catclub
@Brachiator:
There was an interview of the fired greek finance minister. It was appalling. He said that discussing economics with the Eurozone finance ministers was like talking to a wall. I.e. pointing out that the present debt was unsustainable.
gian
@beltane:
The Russians are making similar noises about the legality of the independence of the Baltics as they did with Crimea. I expect the Baltic leaders want to keep the Bear from the door and will do whatever to keep the West happy
berliner2
Blaming the problems of Greece on the lenders is like blaming your gambling problem on your loan shark. Greece has been run by throughly corrupt, albeit demoractically elected clientist regimes, which protected the interests of the super rich, the church, an overblown military and an overblown bureaucracy, for 40 years now.Those are the people who created this mess, and it has a been a long time coming. It’s a bitter irony that it is Syriza, of all people, who will have to push through the reforms that neither Nea Demokratia nor Pasok hat any interest or capacity in implementing in the decades before. That said, enough already with Nazi analogies here. Krugman simply does not get it. In any case, the Germans are the least of Greece’s problems. Go talk to some random Slowaks, Finns or Lithuanians for a change.
Elie
@Vanya:
Somehow there is a missed point in the hurry to condemn the Greeks: either there is a union where the member nations stick together in bad times and good, or there isn’t. Both alternatives have real consequences (and here is the kicker), whether you consider your country to be one of the kool countries or not. No matter what, each of the “lower rung” member coutries, and/or those aspiring to be, now know the deal. And all this just to give Germany places to export its stuff to keep ITS economy strong. Germany, you see, needs the captive countries as much as they need the EU. They just don’t seem to understand that yet and the poor cousin countries haven’t figured out how to use that — yet.
Elie
@berliner2:
So maybe you can explain what being a “member of the European Union” means, up and down sides? If it is only in good times for “good countries”, maybe it should be reconfigured to include only the northern tier countries like Sweden, etc. There sure was a rush to include all the second tier with their numerous problems (like Greece), that everyone knew about. Without a doubt, the Greeks were economic and governmental louts, but Germany and the EU knew that before they were given all this money. It doesn’t seem fair to me that they are the only ones being punished for that.
Tree With Water
@schrodinger’s cat: Prior to its reunification, a consistent refrain of my WW2 era father about Germany was: “keep the bastards split up”.
mclaren
Today, Greece: tomorrow the American middle class.
Tree With Water
@dedc79: An American once told me of once visiting a small town in Norway when she was a little girl with her parents, who had grown up there during the country’s occupation in WW2. It was the custom of the townspeople to give a friendly wave to all the arriving ships entering its fiord, which, at age seven, she considered fun. Until the day her mother slapped her across the face after she did. I remember her saying how she was stunned, absolutely shocked at being struck at all, much less out of the blue. “That’s a German ship”, her mother told her, who then explained she was never under any circumstance to extend any ship from Germany a welcome.
Heliopause
There’s been a lot of criticism of Syriza from the peanut galleries of the left — incompetence, criminal negligence, etc. — which I think obscure some of the realities.
1. Syriza have been playing a poker game in which not only are they holding no cards, all the other players can see they are holding no cards.
2. Nevertheless, they were elected specifically to attempt negotiation and remain in the Euro, verified by the plebiscite a couple of weeks ago. From that perspective it makes no sense to either defend or criticize them; the game was rigged from the start and they followed the only path open to them. Possibly a few of the punitive measures thrown at them wouldn’t be there if an accommodationist party had been elected in January, but in broad terms I don’t see how Greece would be in a substantially different position today had that happened.
3. Regardless of whether Syriza are a bunch of morons, which is possible but not really knowable, they’ve at least done the world the great service of unmasking Europe’s leaders, who have shown themselves to be every bit as vile as the ones who drove the continent to the most destructive wars in history. A not insubstantial portion of the American liberal-left have long admired the way Europeans have picked themselves up from those wars and created relatively peaceful, relatively social-democratic states. Turns out the chauvinism, greed, and racism are all still there in spades, barely concealed under the Euro and the EU. Good that we know this.
While it’s many more dark days ahead for Greeks, from an outsider’s perspective this is going to get interesting. Will there be widespread unrest in Greece as a result of this? Will the far right make further inroads both there and in the rest of Europe? How will Russia and China try to take advantage of the situation?
Chris
@Elie:
Yep. I mean, fuck, I can’t say I’m wild about American states that have their shit together subsidizing the heartland, but realistically there’ll always be someone somewhere who’s in trouble and needs that kind of help. Sticking together is what countries do. (Most of my problems with the U.S. arise from us not doing enough of it, in fact).
Which of course is the whole problem… Europe isn’t a country, and it doesn’t look like it’s about to be any time soon.
Corner Stone
@berliner2:
“berliner2”, great handle btw, thank you so much for your nuanced take.
Mandalay
@berliner2:
Well I was blaming Obama, but you are probably right – it’s mostly the fault of those pesky Lithuanians.
Either way, Germany clearly has clean hands, and absolutely nothing to do with the whole shebang.
Mandalay
@gian:
Membership of NATO automatically takes care of that threat quite nicely, so far at least.
Without NATO membership they might have gone the way of Crimea by now.
Elie
@Chris:
Yes, Europe is not a country. That said, it was Germany and France’s vision particularly, that it could unite to stabilize and grow the economy of all Europe and keep them “safe”from the Bear. Now it looks like no one can truly clarify what the union gets anyone except the rich countries Safety, it appears, also has economic as well as military meanings and Germany may be the threat all the weak countries thought no longer existed…
This is a very important confrontation and the winners/losers are gonna take a little time to sort out IMHO.
Robert Sneddon
@Chris: Yes, the EU is not a country. It’s a union of sovereign states, a bit like the US was before the US Civil War. After the Civil War they buried the bodies (recent new historical evidence suggests the death toll was greater than the figure of 600,000 fatalities commonly accepted) and decided that a stronger Federal government might stop it happening again.
There’s no EU military force, no common government, no Federal Reserve. All EU-wide legislation has to be passed by all the state governments in their own legislatures. It’s more of a trade union and talking-shop than a nation-state-in-embryo as some seem to view it.
The Euro was implemented as a currency to avoid the constant revaluation of prices with respect to each other in trade between EU nations. My home town in the UK suffered from this, a major project where the main contractor was a German company who wanted to be paid in Euros, not suprisingly. The city council ended up buying insurance to cover the exchange rate fluctuations between pounds sterling and the Euro when various payments had to be made as the work progressed. A company from California doesn’t have to worry what the exchange rate in Alabama is when it tenders for work there, it’s the same with the Euro.
As for Greece, there are two problems — one is the unpayable debt they owe from the previous two bailouts and the second part, the most important part for the Greeks right now is that they don’t have any money left. No private lenders in their right mind would loan them any more money, not after the last two bailouts so they have to either quit the Euro and face impossible prices for the stuff they export like oil, gas etc. (since no-one in their right mind will take New Drachmas for their products) or the European Central Bank has to step up to the plate and dump another fifty billion Euros into the black hole the Greeks call a banking industry. Not surprisingly the ECB wants the Greeks to be a LITTLE more careful with this 50 billion than they were with the previous two tranches of folding money they were given, hence the terms and conditions attached.
Wold you be happy seeing your pension fund loaning money to the Greek government without conditions? What conditions would you agree would be a good idea if you absolutely had to hand the cash over?
Mandalay
@Robert Sneddon:
This.
The stringent conditions attached to the proposed loans are not the problem. The problem is the the lack of stringent conditions associated with previous loans. Previous Greek governments lied and cooked their books to obtain loans. Those lending them money didn’t care because they knew they would get bailed out if the Greeks didn’t cough up.
Seth Owen
@SenyorDave: I have been wondering along the same lines. Will the troops stay in the barracks or take over, print drachmas and exit the euro? Seems like real coups have happened for much less reason.
It seems to be the consensus of economists that a devalued drachma would actually lead to substantial growth and a drop in unemployment.