The Real Fear Is Political Contagion


CIpwaIQW8AExlDL Athens, Greece this morning

What’s worse than a run on the banks?

Letting the Greek people decide their own fate.

Dr Julien Mercille writes:

Tomorrow [Tuesday June 30], the Greek government is supposed to pay back an IMF loan of €1.5 billion. But Greece doesn’t have enough money for that. So it needs to receive new loans from the European Union to pay it back along with some other loans that will have to be paid in the near future.

However, the EU says it will only lend Greece the new money if Greece agrees to a series of austerity measures. But Greece is not ready to do that to the extent that the EU wants to.

Of course, the whole drama is a scam because austerity measures do not work to revive an economy in a downturn – they actually make it worse. So why are the EU and IMF insisting on those measures, if everybody knows they don’t work? Because they want to restructure the Greek economy in a way that benefits corporate power.

This involves a range of things like privatization of state assets that can be taken over by private interests, cutting salaries and pensions to make labour cheaper for employers, enacting low corporate tax rates, etc.

Therefore, it goes without saying that the troika is very much opposed to ordinary people having any say in this, because it knows full well that such policies would not be accepted. The troika thus has to oppose democratic forces.

This became clear when, tired of negotiating with the EU governments, Greece pulled off a nice trick: a popular referendum. Greek people will vote, next Sunday July 5, on whether they want to accept or reject the latest offer from the troika.

The fact that the very idea of a referendum was greeted as a bombshell in the media shows how unaccustomed we have become to resort to democratic decision making in Europe. In fact, there is nothing wrong in letting people decide on matters that will affect their lives. This should be the norm, not a surprise.

But elites everywhere are horrified, in particular, the Irish government. Enda Kenny reiterated once again that Syriza should get serious and that Ireland wouldn’t support debt write-offs, even though it is obviously what is needed.

Joan Burton said that Syriza is just interested in lecturing the rest of Europe about economics than being serious. Michael Noonan said emergency funding to Greek banks could be cut off unless a deal is reached. And you can safely bet that many other politicians thought the same.

The reason is a classic one in power systems in which a minority of elites seek to control the majority of the population: the threat of a good example. This means that if Syriza is seen to be winning and provide a clear and working alternative to austerity, this is likely to embolden similar forces elsewhere in Europe and could ultimately spell disaster for conservative forces like the Irish government.

Those who think that’s a conspiracy theory don’t understand how power works. For example, Stephen Collins, the conservative Irish Times commentator, does understand, and says exactly the same thing. He wrote a piece that pointed to the threat of “contagion”, i.e., the threat of a spreading Syriza example in Europe:

“If Syriza gets a substantial debt write-off and further financial aid with no serious commitments to political and economic reform, the response of the main Irish parties to the crisis here will be utterly discredited. The political implications of that are obvious. Sinn Féin in Ireland, Podemos in Spain and any number of populist left and right wing parties would be on the march in Europe. Political contagion rather than economic contagion would become a real threat to the euro and the future of the EU itself.”

Since our leaders are opposing the Greek people and Syriza, the only hope to change anything is an international campaign of solidarity and action at the grassroots level.

The Greek Solidarity Committee has just been formed in Ireland and needs members. This week it will organize a series of events and protests. Its facebook page will provide all details. Last week some of its member conducted a sit-in at the offices of the European Union in Dublin in which I participated (only to report for Broadsheet, of course).

Finally, the media has become filled with scare and horror stories of a potential Greek exit from the eurozone. Of course, the potentially destabilising consequences of Grexit are real. However, there are two main reasons why such fears might be exaggerated.

First, in my opinion, it would be very unlikely to see Greece exit the Eurozone because this could well mean closer relations with Russia or even China, for example to obtain needed loans. Greece might leave NATO. Greece could participate in Russian pipeline projects, etc. I find it hard to believe that the United States (and Germany and Europe) will tolerate that.

In fact, there have been press reports that yesterday President Obama spoke to Angela Merkel and that the two agreed that it was “critically important” to find ways to keep Greece in the eurozone.

The White House has issued a statement: “The leaders affirmed that their respective economic teams are carefully monitoring the situation and will remain in close touch. The two leaders agreed that it was critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the euro zone”.

Moreover, the US treasury secretary, Jack Lew, urged the IMF and European finance ministers to find a “sustainable solution” to Greek recovery in the eurozone, including debt relief is necessary. Lew said it was “important for all parties to continue to work to reach a solution, including a discussion of potential debt relief for Greece, in the run up to the 5 July referendum” planned by Syriza on Sunday.

Second, let’s assume I’m wrong and that Greece does exit the eurozone. Well, that most likely won’t be as catastrophic as we’ve been led to believe. For the first few months, sure, it will be tough and chaotic. But after that, growth could finally kick in and things should get at least better than they are at the moment.

Argentina, which did default and de-pegged its currency from the US dollar in 2001-2002, saw years of strong growth in the years that followed. If Greece even sees half of that growth, it would be amazing compared to the pain austerity has inflicted onto it since the troika got involved.

Such a successful default could actually provide an example to other European countries that exiting the eurozone is not the end of the world, but may actually be the beginning of a better life.

@JulienMercille is lecturer at UCD and the author of The Political Economy and Media Coverage of the European Economic Crisis: The Case of Ireland (2015, Routledge). His new book, Europe’s Treasure Ireland (Palgrave), will be out next month.

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87 thoughts on “The Real Fear Is Political Contagion

  1. Vote Rep #1

    “Therefore, it goes without saying that the troika is very much opposed to ordinary people having any say in this, because it knows full well that such policies would not be accepted. The troika thus has to oppose democratic forces.”

    According to the IT, “One opinion poll, conducted before the referendum was announced and published at the weekend, suggested that 57 per cent of Greeks were prepared to put up with more economic pain as the price of rescuing the economy and staying in the euro.”


    1. bisted

      …well, if that is replicated in the referendum then so be it…it’s called democracy…at least the Greeks gat a say.

      1. AlisonT

        No one in the Greek Left is calling for a referendum by the tax payers who they want to pay for their write off. Do you think the taxpayers around Europe who will have to pay for Greece would vote to throw more money at Greece. I would love to see an end to Austerity in Greece but I don’t fancy paying for it.

        1. SOMK

          Tax payers around Europe weren’t offered referendums on the bailout of Ireland, Greece and Portugal either, they would likely have voted against it, because all that money just went to cover banking losses. Ireland put €65 billion into the banks and got a €67 billion bailout.

          Over the course of the bailouts that private debt was turned into public debt, so rather than Greek banks owing German banks, you have the Greek state owing the German state. If that was put to the Europeans as a referendum do you think they’d vote for that, or would they be more inclined to say “f*** the banks”?

          We’re here because of those decisions, saving the banking sector at the expense of everything else, the bailouts far from making banks weaker has made them stronger because it has tied them more intimately with the machinations of the state.

          Do we begrudge our fellow Europeans having food in their belly, clean hospitals, a roof over their heads, because why? Greece was always insolvent, yet got two bailouts despite there being specific no bailout clauses and restrictions on the ECB lending to insolvent entities, the current European leadership either willfully ignored that fact or were too thick to grasp it, either way this is on them, yet you follow the media (especially in Ireland), this is completely ignored. They done f***ed it up twice, now there’s a government in Europe who’s saying “you done f***ed it up twice,” and they’re the bad guys. Really?

          We all pay for austerity, because it doesn’t work, you drive down wages in country A to make it more competitive with country B, then country B drives down it’s wages, you end up in a race to the bottom, the only people who win are the upper tier, big corporations, banks, and all those incompetent traitors with six figure pensions.

    2. SOMK

      A yes votes is very likely, Greek ministers have said as much. In times of uncertainty people go with what they know rather than what they don’t.

      That doesn’t mean a No vote is the wrong option, the medicine is making the patient more not less sick.

      Syriza have said they won’t resign if a Yes vote is the result, but assuming a Yes vote happens (and there is something to vote on), Syriza will likely break up and there’ll probably be a new coalition of government.

      However this is the first European government to have so openly defied the creditors, when the Greek economy continues to tank, the Greek government will be able to say “well you told us to do X, we wanted to do Y, but we did X and now we’re here”, secondly you have Podermos in Spain and the whole political culture in the Eurogroup could change, there’s a growing trend towards more fringe, extremist parties getting into power.

      It should be pretty clear if there is a yes vote, the creditors demands are forced onto the Greeks and implemented this will have been done at political/economic gunpoint.

      The wound won’t heal, it’ll only fester.

      1. Mark Dennehy

        And if Syrzia fall who’s standing there in the wings, waiting for the population to not want to vote for Syrzia or New Democracy? Hello, Golden Dawn, and we’re back to the bloody Nazis again.

        And everyone knows it.

        Syrzia can’t accept a deal that means more austerity; they’d be ousted and we’d be looking at a chance of a neo-Nazi party running an EU state suffering extreme economic deprivation and who have a long-standing national enemy in Turkey who happen to be a NATO member. That’s a mess nobody wants.

        And for some reason the ECB couldn’t accept a deal that didn’t require more austerity from Greece. Because reasons.

        So we really are living in interesting times now…

        1. SOMK

          From what I’ve read golden dawn support the referendum. It’s impossible to say, but I’d guess the nature of the conflict is not internal but is external, Tsipras’ approval rating is around 70%. Since getting into government you no longer see footage of protesters getting their heads kicked in by police, but so it mightn’t be THAT bad in terms of potential civil war, Syriza’s partner are the Greek equivalent of UKIP, I think they’re well aware of this risk and in part their strategy has this in mind. I’d imagine for the vast majority of Greeks the enemy is external not internal.

          Varoufakis was saying if there’s a yes vote they’ll implement it, and hinted that they might have to reform government, because they said all along they want to stay in Europe and respect the people’s wishes.

  2. mauriac

    not sure the panicked people in Greece would agree this gambit was a ,”nice trick”.Referenda(beloved by autocrats)are not the essence of democracy. Default and grexit are not the easy option and would be a kind of super austerity leading to hyperinflation,oil and gas shortages,decimated life savings,mass emigration and a subsistence economy.I agree a long term restructuring would have been sensible but why should Portugal, Ireland,poorer eastern European countries etc. take the hit for a write down? This chaos in Greece sadly ensures FG’s reelection.

  3. Fardays

    I don’t always agree with Julien (and I’m not sure about the second half of this piece); but this rings true to me, certainly the section about the media’s reaction to the referendum. Here we have a so-called ‘extreme left’ party taking the most democratic route, but being lambasted for it by international media. I find this off-putting, or at least the fact that Julien is the only one to mention it (I think, I’d be glad if I was wrong), I find disturbing.

      1. miko

        Shipping already made f*&k all contribution to the Greek economy because it was zero rated. Besides it’s highly mobile and already left Greece.
        Aluminium is extremely common. What matters most is cheap power. Ironically one of the biggest smelters in the world is based in Iceland because they have cheap power from their geothermal sources.

        Greece has nothing of any interest to anyone. The truth is the rest of the EU poured in money not for any strategic or selfish reason, but because they cared about the Greek people a lot more than Alex “Pol Pot” Tsparas who wants to lead Greece to Year Zero of banking.

        1. paul m

          I presume you are being sarcastic when you say “The truth is the rest of the EU poured in money not for any strategic or selfish reason, but because they cared about the Greek people a lot more than Alex “Pol Pot” Tsparas” yes?

          I seem to have vague memories at the time of Greek admission to the EU and the common currency being seen by many as a bad joke considering they could barely meet many of the demands, not least good fiscal practise and anti corruption measures at government level, and there were lots of promises of cleaning up their house. However the big driving force for joining the EU then was if they werent taken in, the country had the potential to being consumed by political/religious radicalisation and a war with Turkey, not a pretty prospect sitting right on the EU’s doorstep. So yeah, the EU was clearly interested in the welfare of the Greek people back then (contagion 1.0) just as it was a few years back when it let it German, French and British banks run riot there and have the lesser EU members pick up the tab (contagion 2.0). The EU only really ‘cares’ about the largest EU member states, even the UK who arent part of the common currency get preferential treatment to many of those who are. All this propping up and lending is to protect the larger countries from exposure to real financial difficulty.

        2. jon

          if you’re going to throw moronic playground insults at alexis tsipras, it would be nice if you began by learning how to spell his actual name properly.

          1. Paolo

            If you’re going to call people out for their spelling then you should learn where the Shift key is.

  4. Odis

    Whilst a lot of what is said in the above article is true. It misses the point. Greece is also trying to dictate conditions to the eurozone. Greece wants the cake and the halfpenny.
    This referendum isn’t about democracy, the eurozone is not run for the Greeks alone.

    Any honest referendum would ask the Greeks whether they want to stay in the eurozone, or leave it.If they vote to stay, then they should have to follow the economic dictates of the eurozone, they know what those are and the miserable consequences, of compliance, have been terrible for their economy.

    If they leave they can re-introduce the drachma and default on their debts.

    Those are the only two choices. They always were.

    1. B Bop

      Odis-nail & head.

      Let us not forget the Greek abhorrence & avoidance of tax.
      And their grass roots level of corruption.
      Despicable predicament for hard working honest Greeks.

    2. MepMep

      Here’s the crux of it. Greece is largely responsible for the sitatuion it’s in – if it wants to stay in the single currency (which would favorable considering exiting to their own would make it worthless) they need to play by the Eurozone rules. Ireland did/is, so are Portugal. Just because Greece’s situation is worse doesn’t mean they should get massive debt write offs to the cost of the other nations.

      1. Mark Dennehy

        You realise, of course, that they’ve cut their spending more deeply than anyone else in the eurozone, and if it wasn’t for the interest repayments they’d be fine and what they’re seeking is to restructure those repayments?

        Of course you do, we all do. You obviously have a deeper meaning that we haven’t grasped and can educate us on what it is.

        1. MepMep

          They’d be fine at what must be nearly 200% GDP-to-debt? On what planet? They’re in danger of defaulting on a 1.5 billion payment – the idea that interest is the cause of woes is ridiculous when this is the level that cashflow fails at.

          1. Mark Dennehy

            Default would be bad. Point is though, the average greek right now would probably say “so what, have you seen how bad things are now?”. Except, you know, in greek.
            That’s just a basic human instinct (seriously, it’s called the ultimatum game, it’s been studied extensively). Saying they might not do it because it’s irrational is just saying you don’t know how humans work.

    3. Miskey murf

      Like Ireland the greek people are being forced to pay for other European banks.
      Austerity only suits big business , keep the people down. This is what occurred
      after ww1, and it led to ww2.

  5. Dubloony

    What are they actually voting on?
    There was a proposal last Thursday, now no longer available.
    The Greek politicians are asking people to vote on something that is not there any more.

    Looks to me like the politicians bottled it. No-one smelling of roses in this whole manure pile.

  6. Owen C

    “The fact that the very idea of a referendum was greeted as a bombshell in the media shows how unaccustomed we have become to resort to democratic decision making in Europe.”

    It was greeted as a bombshell by the Greeks as well. If Merceille had done some research into the Greek political structure, he’d find out they are almost never used in modern Greek democracy, and in fact none have been used since the one which set up the current Republic in 1974. Again, as ever, Merceille seems to think his version of democracy is superior to everyone else’s.

      1. Owen C

        if they can successfully pull off a referendum within a week, regardless of the outcome, then the opinion on their competency will have gone up a few notches at EU level

        1. jon

          competency? as opposed to what the eu and the imf have been doing for the last three-quarters of a decade?

    1. daddy longlegs

      It shouldn’t have been a shock to anyone – Papandreou proposed one at pretty much the same juncture in negotiations in 2011.
      It doesn’t take a genius to predict that Tspiras, being a tad more to the left and more radical than him, would do exactly the same thing.
      EU shouldn’t have been shocked, and neither should the Greeks.

      1. Owen C

        Papandreou proposed a referendum in order to push through a bailout. His idea was an honest “we either accept the deal and stay in the Euro, or refuse the deal and leave the Euro”. It had the desired effect with the referendum being cancelled, the deal being agreed to, and Papandreou stepping down. It was a reckless but courageous move.

        Tsipras’ decision is nothing like that previous one. He is proposing a referendum on a non existent proposal that he himself does not back, and believes a No vote will enhance his negotiating position without risking Euro exit. It is reckless and a lie and self serving in nature.

        1. daddy longlegs

          ‘almost never used in Greek democracy’ – very similar one proposed a few years ago, similar brinksmanship. no-one should have been surprised by this

          1. daddy longlegs

            again, you can hardly be surprised if you were paying the slightest bit of attention – same crisis, same responses

  7. Punches Pilot

    And all the time two very simple yet important factors seem forgotten in all of this.

    1) Technocrat accountants cooked Greece’s books many moons ago so that bankers (presumably fully aware that the Greek economy wasn’t worth a sh*t but were only too happy to go along with the pantomime) could print vast fortunes of profits for themselves. None of these spoofers have been arrested or prosecuted for what was essentially fraud.

    2) Greeks took this money to pay wages of the biggest Civil service anywhere in Europe. 1 in 3 was employed by the state. This in a country with no exports to talk of and its biggest asset is tourism. What were all these civil servants doing? This is money for old rope and while Greeks might have lost the game they played with the bankers, at some point you’ve got to take responsibility for your irresponsible actions.

    The simple truth is, so long as bankers run the E.U, the European ideal for the people is dead. Greece had no place in a Euro mechanism with the likes of Germany. There was no reason to treat it the same. Bankers did for profits. Greek politicians did for votes. Its all a nonsense. I hope the game is up. If its not blown open today by a Grexit we’re really only kicking the can further down the road for an even bigger kick in the balls for us simple minions on the ground. This is not just Greece today, this is every ordinary E.U. citizen.

  8. Owen C

    “Second, let’s assume I’m wrong and that Greece does exit the eurozone. Well, that most likely won’t be as catastrophic as we’ve been led to believe. For the first few months, sure, it will be tough and chaotic. But after that, growth could finally kick in and things should get at least better than they are at the moment.”

    This is literally a “cudda shudda” moment. What is he basing this analysis on? His set of maps?

    “Argentina, which did default and de-pegged its currency from the US dollar in 2001-2002, saw years of strong growth in the years that followed. ”

    This last part is a mix of insanity and hilarity. Argentinian inflation has averaged around 10% since 2002, and thats based on government statistics which have been proven to understate, massively, true inflation. The Peso has fallen by 70% in value since 2003. This is your template to success????

    1. Dubloony

      Not forgetting that they gave up on currency for a long while and moved to bartering.
      Swapping skills for food. Also seen during Balkans war. This is not something I’d wish on any society.

      Greeks are already suffering, are we going to see food riots in about 2 weeks when the financial tap is turned off?

      1. bubbleandsqueak

        The fact that Argentina has a much more diversified economy is on a much sounder basis – decent mining and industrial sectors and a very solid agricultural sector. By contrast all the Greece economy has in the way of generating foreign revenue is tourism and the odd bottle of olive oil. Given that a huge percentage of the Greek tourism market is likely made up of EU citizens you have to wonder at the wisdom of acting the maggot towards the EU.

        Anyone trying to use the Argentina as any sort of substitute for Greece is at best ignorant or at worst willfully negligent.

  9. Rob_G

    Does Mercille ever read the comments on here? It seems that his genius is being continually misunderstood by the comments section.

  10. Paolo

    More rubbish from Julien. Greece could leave NATO? Why? Greece cannot get any money from Russia, they have tried already. Greece doesn’t have a great record of paying back loans and Russia is in the middle of its own economic crisis.

    The only accurate statement in there is the one about changing Greece’s economy for capitalist ends. That much is obvious enough.

  11. miko

    What we need is an investigation into a number of low grade lecturers in some of the colleges (I’m looking at you NUIM) who are plainly AAA members who are allowed conduct research far beyond their competence (and outside their departments competence) and then present themselves as impartial academics delivering a rigorous analysis.

  12. Joe O'Reilly

    Here’s some who doesn’t think it would be as easy as Dr Mercille – Yanis Varoufakis:

    Mark Weisbrot has been arguing, for some time now, that Greece must try to emulate Argentina; that is, to default on its debts not as a bargaining strategy that yields a New Deal within the Eurozone but, rather, in the context of exiting the Eurozone altogether and going it alone. Recently, Paul Krugman has endorsed this position (see here and here). I think they are profoundly wrong.

  13. Spaghetti Hoop

    Is it actually legal to throw a referendum like this on to an already panicked and poverty-stricken people? I cant see how rationale can be high on the agenda of the electorate right now – sounds like Syriza have just thrown the balls in the air and dodged decision-making.

    1. Odis

      What’s the question in any event? I heard Tzipras wasn’t going to put the “Do you want In or Out of the Euro?” to the referendum.
      He was going to put something like “Do you think the eurozone should write off our debts?”
      Which strictly speaking isn’t their choice. Presumably, the Greeks would think that their debts should be written off and with some justification, as I suspect the majority of them didn’t “party” during the good years, but that isn’t the option that’s on the table.

    2. jvlme

      Is it legal to ask the citizens of a country to have a say in how their country moves forward? If that’s not democracy in action I don’t know what is. It’s a shame our obsequious Govt didn’t have the mettle to stand up to the Troika when it came to burning bondholders etc. How many Irish people would have voted for that, had they been given the chance?

      1. Odis

        “Is it legal to ask the citizens of a country to have a say in how their country moves forward? – of course its legal and its also very democratic.
        But there’s no point in offering the citizens options that don’t exist.

        Example: If we held a referendum in Ireland, as to whether every citizen should be given a million euros, it would probably pass, with a high percentage. However that’s not an option given the state of the countries finances.

  14. 15 cents

    Mercile is spot on. as usual, no one gets it, all the commenters here are so deeply rooted in capitalism that they instantly dismiss anything outside their own understanding, showing zero capacity to consider other possibilities. instead they just pomp and chuff ‘nonsense, nonsense, he knows nothing’ in a wave of collective ignorance and shouting down of an insight that’s not in line with their own.

    1. Paolo

      Thanks for that brilliant analysis. Unfortunately, You and Julien will not be forced to join the queues for food if Greece defaults, inflation spirals and they can no longer afford to pay for all the food that they import. When the hospitals close down due to lack of medicines and equipment, it will not be you and Julien left to suffer.

      Yes, the IMF and EU want Greece to be more in line with other capitalist economies.
      Yes, it would be better if more EU economies were socialist (but Greece is not a socialist economy).
      No, it is not possible to achieve these goals by not paying debts and leaving the EZ virtually overnight.

      1. Mark Dennehy

        Hang on there Paolo, Michael Noonan won’t be joining the poor on the food queues in Greece either, but he’s happily out there speaking on behalf of Ireland about what the Greeks should do.
        You can’t say one viewpoint has to shut up in case it fails because they’ve no skin in the game, not when the other viewpoint has been consistently wrong in its projections for what would happen if Greece only followed its advice:

        So, after following the EMF program and being economically mangled, has anyone from the EMF voluntarily joined the average greeks in their financial woes?

  15. Mark Dennehy

    So. Pretty much every economist talking about this has a different idea on what will work and what won’t and none of them can prove their hypothesis because that’s not how economics works, so all we know is that the average punter will have to foot the bill no matter what.
    And now some lunatic has said that the average punter – the person who’ll be paying the bill – gets a vote on which way to jump.

    Y’know, it probably will all end in tears and running and screaming and so forth, but I’m finding it really really really really really really hard not to think that I’d have liked it if someone had given me a vote on what we were going to do back in 2008 instead of issuing a bank guarantee at what the banking inquiry is now saying was some millionaire’s behest.

    1. Paolo

      They don’t know what they are voting for.

      Option A: Yes, I would like to accept the offer that expired last Tuesday and CANNOT be accepted now.
      Option B: No, I would like to go with whatever plan Tsipras has in his head but has not shared with voters.

      It is a political stunt

      1. Mark Dennehy

        Ah, so actually voting on policy is a political stunt when all you have are bad options.

        I see.

        Then when we have a referendum on, say, any EU treaty ever, it’s a political stunt.
        Or when we have a referendum on anything else, because literally every decision in the world of politics is trading off one bad set of consequences against another bad set of consequences.

        Why even bother so? Why vote at all? Just nominate one guy, say he’s the king and let’s all go home and let him run things. Or girl. Why not give it to Merkel? I mean, she’s effectively bought the place and gets to see our budget before our TDs do, might as well just finish the job…

  16. Kilcock Swayze

    Why does Greece leave the Eurozone if Greece defaults? How does Greece leave the Eurozone if Greece defaults?

    1. Paolo

      Because it will not have any money (in Euros) to pay for the running of the country and so will have to print its own money (in Drachmas).

          1. Rob_G

            You’re right – apologies, should have clarified: Greece are running a primary surplus, but still need to borrow to cover their outgoings (plus debt servicing)

            => so, they still need to borrow money from somewhere, but people are unwilling to lend to them. So, not enough cash to run the country

          2. Mark Dennehy

            But the Greek government’s entire point is that the only reason they’re running a net deficet is debt servicing, and a restructuring of that debt would allow them to recover. And yet the ECB says no…

          3. Rob_G

            That would be fine if there creditors willing to keep lending to Greece in order to allow them to restructure the debt – the only people willing to lend to Greece are the EZ countries, and they are only willing to lend more money subject to strict conditions (which the Greek govt do not agree with, but at the end of the day it’s the only game in town as far as Greece is concerned)

          4. Mark Dennehy

            …unless they jump ship, because if you’re screwed no matter what you do, well, humans tend to like to share misery around.

            And again, everybody knows this. Things like the war reparations argument (see the first few comments), the actual greek budget figures, the degree to which they’ve implemented austerity policies, the margin by which the EU projections for the results of those policies have been wrong, the domestic political situation in Greece; this is not the first place they’ve all been pointed out.

            At some stage you just have to ask what the hell everyone is playing at. We can’t afford to let the greeks go to the wall for political and social reasons, so this all appears to be purely a greasy-till sort of economic decision.

            And honestly, I don’t see quite *why* private-sector businesses like banks *should* have that degree of social policymaking power.

        1. Rob_G

          At the moment, Greece are spending more than they are getting in through taxation, so they need to borrow to pay for running the country. However, the only people will lend to Greece at the moment are the Eurozone countries (everyone else would only lend to Greece at huge interest rates), and the EZ countries are no longer willing to lend to Greece.

          So, no more money to run the country.

  17. Zaccone

    On the one hand, the German/ECB obsession with austerity measures has proven to be extremely damaging to the Greek economy. On the other, the Greek government/people’s refusal to fully reform their broken state apparatus sufficiently is a serious long term liability for the country.

    As usual, despite the shouts of the ideologically “driven” about EVIL GERMANS or LAZY GREEKS, the truth lies somewhere in the middle – there’s more than enough blame on both sides to go around here.

    Unfortunately for the Greek people they have far more to lose from a Grexit than the ECB/EU, so their playing hardball here is a risky manoeuvre likely to end badly.

    1. Mark k

      See, I can’t get behind this “both sides are as bad as each other” stuff.

      “On the other, the Greek government/people’s refusal to fully reform their broken state apparatus sufficiently is a serious long term liability for the country.”

      Fully Reform? What does that mean? What’s the timescale on that? What would it involve? Do you have any idea what life is like in Greece at the moment? How damaging socially and politically would it be to institute the kind of EU backed program that aims to “fully reform” Greece? Look at the rapid rise of Syriza in the face of the kind of programs that already been attempted. What do you think the popular reaction in Greece would be to a failure by this leftist government to secure a meaningful deal that bears some resemblance to the mandate they secured a matter of months ago? I’m sure you’ve read of the rise of neo-Nazi parties in Greece as well. Do you think everyone’s just going to accept that the now positively anti-democratic EU demands immediate “full reform”, whatever they take that to mean, and suck it up? If you saw your parents’, your children’s and your own life being torn up for the sake of this “full reform” program, do you think you’d just accept it as inevitable? I know I wouldn’t. God knows what seeds would be sewn.

      Obviously there are institutional, systematic problems in Greece, but any reform process would have to be incremental, talking about “fully reforming” Greece in the midst of this crisis shows how naive the understanding is of Greece among people here. Admittedly RTE, The Irish Times and plenty of others don’t do much to help inform people here about how dire the situation is, but this is clearly a political failure caused primarily by the intransigence of the creditors due to the domestic political concerns of governing parties across Europe. Christine Lagarde had the nerve to talk about “adults in the room” the other day, when none of those with power within the institutions of the EU has the nerve to do what’s best for the sake of Europe and resolve this crisis. These organisations are putting Greece through this for the sake of 0.01% of the EU’s GDP. This makes absolutely no sense if you remove the political context of governments from other debtor nations and the likes of Holland, Germany and Finland not wanting to give in to a left government in Greece.

      It is a disgraceful result for the European Union itself and undermines any confidence I had in the ability of the EU to become more democratic or to act as a force for good in the wider world.

    1. jvlme

      Ah yes, the usual carpet baggers queuing at the door, with Goldman Sachs first in line no doubt

  18. Joe Rooney

    If I were in Greece I’d be voting for the Golden Dawn party. The EU has treated the Greeks like garbage. Syriza is drowning the country in foreign migrants, when they can’t take care of their own people. Greeks need to stand up for Greece.

  19. Shadrach


    1. Sam

      Calm down, switch off caps lock.
      Then I suggest you drop the naive view of the Vatican and also the US, and look at the world as it is, and judge countries and institutions by their actions, rather than their self-serving declarations – then you won’t need anyone else to explain to you why there isn’t a caped crusader jumping in to save Greece.

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