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Greece Melts

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The dawn was anything but golden for everyone but the Greek Nazis today.  Although they got less than ten percent of the vote, it was enough to get seats in Parliament for the first time. As Wikipedia tells us, the party’s charter declares that “only Aryans in blood and Greeks in descent can be candidate members of Golden Dawn.” Their flag proudly advertises their heritage, though as we understand it, the original Nazis would have held them in utter contempt. (The real Nazis believed modern Greeks weren’t ‘Aryans’ at all, but were degenerate, mixed-race untermenschen sunk in corruption and sloth who needed a strong German hand to keep them on track.)

The Via Meadia twitter feed was in overdrive last night as the election returns came in. Business Insider‘s Joe Wiesenthal had some of the choicest tweets (and insta-posts) on the topic: “Check Out This Video Of Greek Nazis Behaving Exactly Like You’d Expect Nazis To Behave” (we’ve embedded the video above) and “16% Of The New Greek Parliament Is Communists And Nazis” should get awards for headline-writing if for nothing else.

Nouriel Roubini, the celebrated Dr. Doom whose writing before the market crash proved to be quite prescient, was also concerned. “Results of Greek elections increase probability that Greece will leave the Eurozone by next year.” “Greece in political chaos while the recession becomes a depression. It looks like a train wreck leading eventually to default and exit.” “Result of Greek elections much more serious than the French one as the former leads to chaos while Hollande will turn out to be a moderate.” “Greek parties in favor of a Troika program & policies to be able to keep the euro get only 33% of vote. Radical right/left parties get 66%.

Nouriel has a lot of this right. As the night wore on it gradually became clear that the sickly pro-bailout parties Pasok (left) and New Democracy (right) failed to gain a majority between them. Though they fell short of a majority by only two seats, their combined votes add up to only one third of the total and it’s hard to see a pro-bailout government staggering on for very long.

Yet the two thirds of the voters who rejected the pro-bailout parties didn’t produce a mandate for any coherent alternative policy. That’s because there isn’t one. The only thing worse for Greece at this point that sticking with the euro and accepting the pain that austerity brings would be to leave. Given Greece’s huge burden of euro denominated international obligations, its need for external finance and the complicated situation of its banks, leaving the euro now would reduce living standards even faster than the austerity plan.

More, the two thirds of the Greeks who voted against the bailout voted for an incoherent mix of parties who hate one another and have nothing in common. The extreme leftist parties are bitterly divided by longstanding factional, doctrinal and historical disputes. And the neo-Nazis of the Golden Dawn party are unwilling to work with the reds.

The one policy option that Greece has now is to avoid a rupture with Europe but to go back to Brussels and try to get a better deal. This is the policy that Antonis Samaras, the leader of the party with the most seats in the new parliament advocated during the election campaign. Under the Greek constitution, he now has five days to form a government that will command a majority in parliament; if he fails, the anti-bailout “Coalition of the Radical Left” party which came in second gets a chance. And if they fail, the third place, pro-bailout Pasok (moderately leftist) gets a chance.

If as now seems likely, nobody can get a majority, Greece votes again in in a few weeks. The trouble is that by that time, Greece could well be out of money to pay pensions and civil service salaries. Some think this would force Greece out of the eurozone; possibly the government would just pay employees and pensioners in scrip — a promise to pay later that could be used to pay certain bills or traded at a discount for cash.

The centrist Greeks in New Democracy and Pasoc are hoping that Brussels is worried enough about chaos in Greece and its potential to create trouble throughout the eurozone that Europe’s financial leadership will replace the current austerity program with something a little more palatable to Greek voters. With French president-elect Hollande demanding a less austere policy for Europe as a whole, Greece might benefit from a general loosening of the financial hardline. If things move in that direction, it’s possible that a coalition of the two big parties might be able to form a lasting government of some kind, possibly after another round of elections in June.

But the Germans are sick and tired of the Greeks. The Germans believe — correctly — that the Greeks lied their way into the eurozone in the first place, and that both Pasok and New Democracy governments cooked the books and fiddled the statistics ever since. The Germans however are unwilling to face their own complicity in the fraud, or to accept the reality that bad German banking supervision as well as stupid German bank managers share responsibility with dodgy Greek debtors for the huge financial mess.

It is an ugly, dreary scene. The Greeks have to hope that their problems trigger a massive European crisis that leaves Germany no choice but to pour hundreds of billions and even trillions of euros into bailouts and stabilization funds. The Germans have been doing everything they can think of to contain the effects of a Greek crisis to Greece precisely to avoid that kind of Greek blackmail.

Nobody knows how this will work out. The world is watching the financial markets to see just how bad this latest shock will be. In the short term, it is likely to be less severe than some fear. Not only have investors seen this coming for some time; we can be sure that the world’s central banks are standing by to prevent a meltdown and the printing presses will go into overdrive if that is what it takes.

But the reality is that public opinion across Europe, in France and Germany as much as in Greece, rejects the policy adjustments that could make the euro viable. Yet elites across Europe continue to believe, firmly, that saving the euro is a vital and necessary task.

Irresistible force, meet immovable obstacle.

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  • silverfiddle

    It is a fantasy land. Self-delusional people vote in a hopeless conglomeration that includes imaginary races (Aryans) with impossible dreams (that the debt can be paid off)

    Pay attention America! We’re next…

  • Yannis Frangoulis

    As a Greek, I’m sad for this result, but it is a result that doesn’t surprise anyone who lives in central Athens.

    Golden Dawn have been around since the 1980s, but they took advantage of the tragic financial conditions in the last couple of years to expand their racist activities in many working-class neighborhoods of Athens; they attack Muslim immigrants from Asia and Africa. It must be noted that Golden Dawn sympathizers include not only Greeks but many Eastern European immigrants (from Albania, Poland, Ukraine, etc) although the Golden Dawn leaders always try to hide that fact.

    People have long considered the police officers to be lazy, corrupt, cowardly, and loyal only to PASOK and New Democracy who hired them.

    And of course Golden Dawn leaders appeal to nationalism, which is now very attractive to the average person. Don’t forget that since the economic crisis began, the German newspapers have continuously presented the Greeks as a nation of lazy thieves that deserve no help or compassion.

  • Anthony

    “It is an ugly, dreary scene.” Financial arbitrage and the desire to get more for less has no zero sum result – bankers and sovereign governments informed Greek citizens; we will have no chaos, no regressive pleas for blood and soil (Aryan atavism), and no social cost to pay…. Well here we are.

  • Eurydice

    I think a reason why the fringe parties in Greece seem so attractive to the voters is that they aren’t seen as part of the general corruption in political life. That’s not to say they wouldn’t have been just as corrupt if they’d had the opportunity, but now they can pretend that their clean hands were actually a choice.

  • Luke Lea

    “(The real Nazis believed modern Greeks weren’t ‘Aryans’ at all, but were degenerate, mixed-race untermenschen sunk in corruption and sloth who needed a strong German hand to keep them on track.)”

    Hmm. So who are the real Nazis today?

  • Kenny

    Greece is on an express train to Third World status. Fact.

    Although Greece produces little of what world markets wants, the Greeks still want to live as if they were actual contributors.

    The gap between the ability of the Greeks as a whole to produce and their needs/desires cannot be reconciled.

  • thibaud

    Of course Greece will leave the euro, and of course holders of Greek debt will take a huge haircut on their investment holdings.

    This is the normal and customary way that markets reset after any system-wide financial bubble bursts, be it in the American savings and loan industry in the 1980s-early 1990s, the Latin debt crisis of the same era, the Asian Contagion and Russian debt crisis of 1998-1999, the popping of the US internet bubble a couple of years later, Argentina’s collapse and rise from the ashes after 2001, and now Greece.

    The forces standing in the way of Greek default and devaluation (via dropping out of the euro) have nothing to do with intelligent economic policy and a great deal to do with the elites’ desire to protect a few politically-favored banks in France and other core eurozone countries.

  • john haskell

    If the Maastricht Treaty mandated that all EU members join the Euro (excepting those states that negotiated specific exemptions) how then is it possible to lie your way into the Euro?

  • thibaud

    A likely outcome is that Russians, including Russia’s sovereign wealth funds and state-owned banks and industrial companies, will jump in and buy up big chunks of the Greek economy. They won’t have to change the road signs.

    Or the Greek mentality. Greeks who are now moving back to their country homes and grandparents’ farms in order to eke a living from family plots will likely accommodate themselves quickly to the new order as servants of one kind or another to moneyed Russians.

    The Russians bring desperately-needed liquidity and credit, the Greeks will fall back on the only really strong institution in Greek society – the family – and both sides will find happiness in their eastern model of a huge grey economy combined with a shambolic and underfunded government that doesn’t really govern.

    Who knows, maybe the Russian mafiya and the Asian and African world’s money-launderers will shift their attention from Dubai to Crete.

  • EvilBuzzard

    When the Communists and Nazis form an alliance, they will effectively govern Greece unless the rest of Europe usurps Greek independence. I congratulate the Europeans for learning nothing about how they failed after WWI.

  • MarkJ

    “And the neo-Nazis of the Golden Dawn party are unwilling to work with the reds.”

    I wouldn’t be so sure. During the Weimar years, as a result of their shared contempt for the existing democratic order in general, and the Social Democrats in particular, the NSDAP and KPD were not averse to forming mutually advantageous tactical alliances at the local, regional, and national levels.

    Heck, I wouldn’t be surprised if the Golden Dawn leadership is already thinking about it can quietly start making deals with Syriza and even the KKE….

  • Bill Peschel

    John, my understanding is that the books are inspected before Greece could be admitted. And with numbers on a page, it’s very easy to erase a few here and write a few new ones there.

    It’s not like looking at someone’s bank account.

    (See, U.S. unemployment figures for another example)

  • elkh1

    Don’t worry about the Greeks, Nazis or not.

    Perspectives: What have the Greeks done since they lost to the Romans?

    The Huns underminded the Romans. Then they forced the Romans back to their little enclave. They were vicious, and effective killers. But the Greeks… sigh!

  • Hucklebuck

    “The only thing worse for Greece at this point that sticking with the euro and accepting the pain that austerity brings would be to leave.”

    Sensible people have got to stop repeating this nonsense as though there were some basis for it. “Leaving” the euro is the only responsible action the Greeks could take. Which is why I don’t expect them to do so.

  • Rich K

    Ive read 600 years of european history which is enough to know that these tribes will always try to play nice but in the end decend into chaos.Its the euro way after all,history defends it.

  • BDB

    German Nazis wouldn’t consider the Greeks Aryan? Well, why don’t we ask Elizabeth Warren for a comment .. she’s an expert on race laws and blood counting.

  • S P Dudley

    If the Greeks end up not being able to pay their armed forces the Turks could very well solve the problem for them.

  • Bill M

    If Greece won’t face their trouble, Europe (Germany) should cut their losses and move on. If they loan any more money, they are throwing good after bad.

  • Pete E

    “The only thing worse for Greece at this point that sticking with the euro and accepting the pain that austerity brings would be to leave. Given Greece’s huge burden of euro denominated international obligations, its need for external finance and the complicated situation of its banks, leaving the euro now would reduce living standards…”

    Who says the debt is denominated in euros? If Greece converts all its euros to Drachmas, surely it can declare all its debt to be in Drachmas only to be repaid in Drachmas.

  • Jim.

    The irresistable force of austerity is meeting the immovable obstacle of Greek Entitlement…

    And finding that the obstacle’s foundation has been eroded away completely by unsustanable borrowing.

    Bye-bye, Greek Welfare State.

    We need to look to our own debts now, and pay them off before this happens to us.

  • TMLutas

    Instead of exiting the euro and printing drachma, exhanging them for euros to pay off their euro bonds, why don’t the greeks simply print euros? They have a printing plant for the things. They have always printed a certain number of euros. Why not simply print more?

    Sure it’s dishonest, but no more dishonest than every greek government that has been in the euro so far. And that’s the really funny bit. Certain kinds of dishonesty (lying about economic performance and budget statistics) are viewed differently than other kinds of dishonesty (printing euros). Of course the Germans would leave the euro at that point but all the bonds would still be payable in euros.

  • cubanbob

    I suppose it would be gutsy on the part of the Greeks, but they could drop the Euro, denominate the current debt back to drachma and with a sufficient renegotiation by defaulting on a portion of the debt leave the rust sustainable. Then to avoid reacquiring the old bad habits make the euro legal tender again in Greece, just like Panama has the balboa but uses the US dollar. The good thing about this is that Greece will then earn euro from tourism, remittances and exports but will have no control over the money supply and the government won’t be able to borrow again for years. It would painfull to say the least but that would probably be the least worst option for Greece. The worst the EU would do is kick Greece out but leave intact the internal freezone aspects along with the customs union aspect of the eurozone albeit losing their agriculture subsidy.

  • Jacksonian Libertarian

    The problem with expecting Germany to bailout the PIIGS is that it won’t work, and everyone knows it. Once the PIIGS are into Germany’s wallet they will never let go, there will be a thousand excuses for why they keep failing to pay and eventually Germany’s wallet will be empty. It would be better for every nation involved for the Euro and the EU to be dissolved sooner rather than later, but the European Political Elite who think they are smarter than everyone, are going to keep trying to make it work. They will fail.

  • PTL

    Time for Greece to try a military junta again.
    There is little difference between the National
    Socialists(Nazis) and the Communists.

  • Corlyss

    “(The real Nazis believed modern Greeks weren’t ‘Aryans’ at all, but were degenerate, mixed-race untermenschen sunk in corruption and sloth who needed a strong German hand to keep them on track.)”

    Now that’s funny. Isn’t that what the Germans think of Greeks today, not 60 years ago? Oh sure, for different reasons, but still contemporary, not ancient history.

  • Corlyss

    “Nouriel Roubini, the celebrated Dr. Doom whose writing before the market crash proved to be quite prescient, ”

    The guy gets one bullseye in a million predictions, and he’ll never have to be right again!

  • M. Simon
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