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The Greeks Don’t Want Drachmas

Despite the announcement of another massive bailout fund for the troubled Greeks, the eurogloom that has permeated the continent for the past year or so shows no sign of abating. Though there is increasing evidence that Brussels wants Greece out, an eye-opening on-the-ground report from Megan Greene (h/t Marginal Revolution) suggests that leaving the Eurozone is the furthest things from the minds of Greek voters:

Despite the clear sense of despair and anger in Greece, politicians and members of the public continue to think that the alternative—default and EZ exit—would be even worse. A top official from New Democracy, the most popular party according to recent opinion polls and the party likely to lead a coalition government following upcoming elections in April, waxed at length about how much trouble Greece would be in if it exited the EZ. He highlighted that Greece has few export industries it could rely on to grow its way out of the crisis even if it devalued its currency. He conceded there is tourism, but argued that any profits from shipping are kept out of the country and green energy is still but a mere pipe dream as an export industry for Greece. Given that Greece is not self-sustaining in agriculture, he suggested that a devaluation accompanied by hyperinflation would result in a starving population, and that the resulting civil unrest would destabilize the entire Balkan region. These arguments were reiterated by Pasok politicians I met, as well as by representatives from prime minister Papademos’ office.

This sets up a difficult situation for other Euro members to deal with. Greeks are chafing against the demands imposed by the IMF, European Commission, and European Central Bank, and may lack the will or ability to comply. On the other hand, they remain dead-set against a Eurozone exit, as the Germans seem to be hoping for, meaning that Greece may continue to remain a headache to the Eurozone for the foreseeable future, especially if they keep responding to German demands with the usual mix of creative stalling and strategic incompetence.

The Germans, aware of Greek concerns about the difficulties of returning to the drachma, have been talking about assisting Greece with the transition so that the worst-case scenarios don’t come to pass. Via Meadia can’t make up its mind whether it would be cheaper for the Germans to help the Greeks leave or to keep bailing them out, but it looks as if Greek national pride, a formidable force, is coming down on the side of fighting to stay in the club.

Whatever happens, the whole post is well worth reading to get a sense of the state of play on the ground in Greece.

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  • Mrs. Davis

    The other option is for the Germans to leave the EUro.

  • LarryD

    Well of course they don’t want to leave the EZ, that would mean they’d be cut off from the gravy-train. Which is rather the whole point of kicking them out, economically, the Greeks are parasites. They’ve been trained to be so, as far back as the Ottomans, and I see no easy way to break their conditioning.

  • Kenny

    Of course the Greeks don’t want to get booted out of the euro.

    The euro and EU is Greece’s security blanket; it’s what has given them their unearned standard of living.

    As for Germany and the rest of Europe, they’re finding out just how hard it will be to dig a tick out from under their skin once the tick has embedded itself there.

    And in all this, one has to wonder where the Catholic Church is.

    The Vatican preaches a form of pseudo-socialism, so why isn’t the pope out there demanding that Europe take care of the PIIGS, especially since the PIIGS tend to be Catholic whereas the rich of Europe are Protestant.

  • EvilBuzzard

    The Greeks want to retire at 38 and have their birth control paid for when they have sex on the beach. Reality has other plans in mind.

  • ddh

    In the long run, having Greece leave the euro would be cheaper for Germany. The Greeks have a structural budget deficit–that is, they are in the red even if all their debt were cancelled–and the Greek public opposes cuts in government spending and paying more taxes.

    Nevertheless, German leaders don’t want to suffer the short-run pain of forcing Greece out, and they certainly don’t want the blame for scuttling anything related to European unity, no matter how ill-conceived. So, Berlin chooses inertia, prolonging the agony for everyone.

    The real question is how long the capital markets will accept the status quo.

  • retail lawyer

    If they do leave the Euro, they could feed themselves by declaring a nuclear weapon development program and then agreeing to suspend it in return for American food.

  • Jim.

    This is a silly argument. If they don’t export enough goods to cover the costs of their food imports, they’re likely to starve whether they use Euros or not.

    I don’t believe a word of their bellyaching. And if it is even close to the truth, it’s high time they reorganized their economy along some other lines; as it is, it’s a glaring example of exactly how the Blue model is failing.

    What we’re seeing here is the consquence of the de-Europeanization of world power and world trade. Marginal / unprouctive Europeans like the Greeks just can’t support the Eurosocialist lifestyle anymore. The European monopoly on science and industry (and, interestingly, their claim to be the most Christian people on Earth) is over. It’s gone. And there’s absolutely nothing I’ve ever seen out of Brussels that has any prayer of bringing it back.

    Europeans knocked all the fight out of each other in the 40’s, and so they didn’t have enough fight left to resist the challenges of the rest of the world catching up to them. So it goes.

    @Kenny– Greece is (nominally) Orthodox, not Catholic. Which brings up the interesting connection– where is the newly-revived Russian Orthodox Church, in all this? Is Putin a player here, at all?

  • Kris

    The Greeks Don’t Want No Drachmas
    No, no Drachmas
    No, no, no, no Drachmas

    (“They keep givin’, So I keep on takin'”)

    To quote an uncommonly perspicacious commenter: “You must accept us in your club, and you must pay our dues and debts, and we refuse to abide by the club regulations!”

  • Swearjar

    If President Obama opposes Greece’s exit from the eurozone, will he be called “No Drachma Obachma”?

    Sorry folks – it’s been a long day …

  • Jim.

    Seriously, is Russia anywhere in all this? Greece has leaned communist for decades. If the Greeks are really hard up for hard currecy, fuel is probably the first import that will get scarce, and Russia could probably buy a good deal od influence that way. Plus, with their push into Abkhazia a few years back, and their muscling in on Ukraine’s elections, they’re clearly having some success in the Black Sea region. Could the Turkish / Armenian flap give them a pretext to interfere in Turkey? (Or have the Russians been worse to the Armenians than the Turks have? It’s tough to keep track sometimes…)

    If we really want to make a difference in Greece, we should be thinking not in terms of how much money to hand them, but in terms of building up their economy (particularly their export sector) to the point that it could stand on its own. Perhaps some German industries could locate there, backed up by British finance if you’re worried about economic hegemony on the Continent, and it could help Greece stay on its feet.

    Otherwise, keep a lookout in the headlines for an oil deal between Russia and Greece, sooner or later… in exchange for basing rights, perhaps.

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