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Beware of Greeks Bearing Debts
The Matter with Greece

“Democracy,” as H.L. Mencken said, “is the theory that the common people know what they want, and deserve to get it good and hard.” Well, in Greece, they don’t seem know what they want—and so they might be getting a few more doses of democracy. Open Europe reports:

Greek Finance Minister Yanis Varoufakis told Italian daily Corriere della Sera yesterday that, if Greek proposals on debt restructuring and investment were rejected by other Eurozone countries, “We can return to elections, [or] call a referendum.” The Greek Finance Ministry later criticised the newspaper for suggesting that the referendum would be on euro membership, and stressed that the vote would be on “the content of reform and fiscal policy.”

Fundamentally, Syriza’s internal confusion reflects the conflicting desires of the Greek people. The Greeks want an end to austerity, but to stay in the Eurozone—which is not tenable as the currency union is currently constituted.

The Germans have their own version of this paralysis, whereby they want to keep the eurozone both running along current lines and intact at its current size. Long term, this is no more tenable, but right now, it’s the Greeks who are in the hot seat. They’ll have to jump one way or the other first.

So expect to see calls for further referenda, Parliamentary elections, and/or street protests until the Greek people realize the necessity of making a choice, and make clear what they really want.

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  • Pete

    In your postings, you’d do well to better distinguish between the euro currency and the European Union.

    When you say ‘eu zone,’ it might be taken either way.

    Greece will never want to leave the European Union for if it did, the massive wealth transfers to it would end and Greece would soon be back to Third world status.

    • Curious Mayhem

      Leaving Greece in the EU but out of the eurozone, with a farewell aid package, would have been the most practical and humane thing to do — in 2010 or 2012. Stubborn illusions led the powers that be away from this and into a much more untenable situation.
      Greece will go into default and out of the eurozone. It’s only a matter of time, and not much time at this point.

      • Corlyss

        “Leaving Greece in the EU but out of the eurozone,”

        That makes sense only if the EU gave up the euro and returned to being simply a trade association. The problem with all the proposals is nobody wants to take the medicine implied in whatever solution they prefer. To borrow a phrase from a friend, “They made this s**tcake so they have to live with it.” Damn human nature NEVER wants to suffer the consequences of its own stupid choices. The only ones to my knowledge who’ve accepted their culpability for their mess and seem prepared to deal with the consequences is Ireland. What a commentary on the preening fops on the continent.

        • Curious Mayhem

          No argument from me about that. Ireland is unusual in that it has good demographics, productivity comparable to the strong surplus countries, but heavy debt like the other PIIGS. They’ll need to leave eventually as well, if they want decent growth prospects again — although — with the euro as low as it’s going now, who knows?

          The rest are in fatal trouble on those three counts. A lower euro can help them grow, but even under the rosiest scenarios, their debt burdens are impossible to deal with and always will be.

          I can see some countries being forced to leave, followed by France and Germany mutually agreeing to shrink or dissolve the EMU. Certainly, the situation as it is now won’t last beyond the end of this decade. The end will probably come suddenly, when people are still looking for gradual change. Watch Le Pen in France and the UK referendum on the EU.

          • Corlyss

            You’re more sanguine than I am about a near-term finish of the drama. Never underestimate the ability of pols to delay what seems to us peons to be imminent, unavoidable, and necessary. Like in a car crash, time slows down while people are successively hopeful, cautious, wary, skeptical, disappointed, angry, and militant, by which time pols initiate the whole process over again.

          • Curious Mayhem

            I’m fairly sure of the timing — the French elections and the UK referendum are in 2017, Greece is now a month or two (maybe) away from running out of money and its banking system going into deep freeze — sanguine about nothing else. It’s going to be wall-to-wall ugly.

            A big and obvious danger is a weakened Russia nonetheless being about to play its hand to the hilt while the EMU and possibly the EU dissolve.

    • Andrew Allison

      Pete, I agree that we must be careful to differentiate between the EU and the eurozone, but there is no mention of “eu zone” or of EU in the post, only to the eurozone. That Greece is a eurozone problem seems to be clear.

  • Andrew Allison

    What the Greek people really want is a return to the level of government spending and borrowing which created the problem. That’s simply not going to happen. Ergo, what the Greek people want is irrelevant. Syriza has thus far failed to recognize that what it wants more-or-less the same thing. What’s truly incredible is Varoufakis’s apparent belief that he has any leverage; his initial proposal was laughable. Greece has, at best, just over three months to actually implement reforms sufficient to convince the rest of the Eurozone that the country is serious. However, it’s unlikely that such reforms could passed by the present government. There’s simply no time for further referenda or a parliamentary election. Either would result in the deadline being missed and Greece being forced into default. Since that’s inevitably going to happen eventually, we might as well get it over with.

  • FriendlyGoat

    Mencken can (and did) say whatever he wanted, but that does not mean such sayings are quotable as wisdom.

  • Brett Champion

    The Greek government is essentially stalling for time. They’re trying to appease both their EU creditors and their supporters in Greece until the denouement occurs, which is most most likely going to happen before the end of this year, and, if not, by no later than mid-2016. They’re hoping that Podemos takes over the government in Spain and/or the current government in Italy collapses and is replaced by a more “growth friendly” one. They likely see gaining an ally of the size of Spain or Italy as a key part of being able to at least lessen the constraints put on them by their creditors, and if they manage to get both, they probably think they’ve got it made.

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