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Greeks Bearing Debts
Telling Him What They Really Think

European leaders, after months of wrangling and can-kicking, are now really letting Greek PM Alexis Tsipras have it. Bloomberg reports on the heated rhetoric that spilled over during and after Tuesday’s meeting of Euro leaders in Brussels:

“Party time at the expense of others in Greece has come to an end,” Lithuanian President Dalia Grybauskaite said. “Europe and the euro area are surely unprepared to pay for the irresponsible behavior of the new Greek government.”

Afterward in public comments, the leaders competed to find the harshest language to describe Tsipras’s approach and its likely consequences. Dutch Prime Minister Mark Rutte said a “miracle” would be needed to keep Greece in the euro-region, while Malta’s Joseph Muscat said the 40-year-old had created an “enormous trust-gap” with his European counterparts […]

“You can’t have one country enjoying a feast, overspending and having everyone else pay for it, including our citizens with much lower pensions and wages,” said Grybauskaite.

Tsipras’ diplomacy has been a disaster. Greeks have been so full of their own grievances they haven’t noticed that many of the countries participating in the bailouts are poorer than Greece and have troubles of their own.

Overall, however, this kind of bitterness openly on display at a European summit is something new—yet another surprising hidden cost of the euro; the currency that was supposed to bring the EU together is instead splitting it apart. That needs to change, whatever happens to Greece.

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  • dawnsblood

    This is a sad event. I personally think Greece and the Eurozone are better off if they just go with a managed Grexit. Greece can follow the normal IMF advice of repudiating debt and devaluing their new currency. The Eurozone would be rid of a dead weight and it would serve as a warning to anyone else that thinks of the organization as an excuse to live fast and loose thinking they will bail them out.

    A lot of people look at the poor in Greece and think of Germany as a rich neighbor that can afford to help them out (cough up free cash). The problem with this idea is that people overlook the fact that there are a lot of Euro members that are poorer than Greece. Every time Greece gets money these poorer countries have to take on their part of that burden. They have done so now for Greece, Spain, Ireland and Cyprus (I probably missed someone). I do not blame them for for growing weary of it. They have other uses for that money.

    All the Euro members’ governments hold some of Greece’s debt. If a country really thinks Greece is getting a raw deal let them volunteer to forgive the debt they hold. That would be a major help if they want Greece to remain in the Euro.

  • Boritz

    Tsipras’ response:  So what are you saying?

  • wigwag

    “Overall, however, this kind of bitterness openly on display at a European summit is something new—yet another surprising hidden cost of the euro; the currency that was supposed to bring the EU together is instead splitting it apart. That needs to change, whatever happens to Greece.” (Via Meadia)

    Something new? You have to be kidding us. Europe has been holding summits of one type or another for centuries. For the most part, these summits have been contentious, rivalry-riven and hot beds of animosity. Conflicts, often bloody, have been the default position for Europe for as long as there is a written record. What we are witnessing with the current imbroglio is nothing new; its merely Europe reverting to type.

    The mistake of American policy makers since the conclusion of the second world war was the belief that a United Europe was possible and, from an American perspective desirable. The reality is that it was neither possible or desirable.

    While watching the current crisis, its hard to know whether to laugh or to cry; the answer is probably a little of both. Here’s a newsflash for Via Meadia, whatever happens to Greece, Europe will never change.

    Ever.

    • f1b0nacc1

      So you are saying that Europe is like war….for war never changes…

  • adk

    “…the currency that was supposed to bring the EU together is instead splitting it apart. That needs to change, whatever happens to Greece.”
    Got any specific ideas?

  • Anthony

    The Greek vote and The EU miscalculation: https://www.stratfor.com/weekly/greek-vote-and-eu-miscalculation

    • wigwag

      Anthony, the Strafor article is brilliant; Friedman gets it exactly right. If the Greeks exit the Euro and readopt the drachma, it won’t be long before the Chinese, the Russians and American hedge funds will pour investment funds into Greece with reckless abandon. With a high risk tolerance and sufficient patience, my guess is that they will all make a killing. The Greeks will be better off for it and so will Russian, Chinese and American high net worth investors. Europe, especially Germany will be left holding an empty bag.

      What could be better than that?

  • Arkeygeezer

    There is a distinction to be made between the European Union (EU) and the Eurozone or the “euro area”. This is a monetary union of 19 of the 26 EU member states which have adopted the euro as their common currency and sole legal tender. The other 9 members of the EU continue to use their own national currencies.

    The Greek problem is whether or not Greece will remain a member of the Eurozone monetary union, or will be disqualified, and forced to use their own currency as does the UK, Denmark, and 7 smaller countries.

    The governing board of the Eurozone, led by Germany, is determined to protect the Euro from inflation. When a recession hits, they do not want to soften the effects by just printing more money and inflating the currency. They require members of the Eurozone to cut costs to preserve the value of the Euro. Greece does not want to cut costs, but wants to have more Euros to prop up their failing economy.

    If Greece is forced to leave the Eurozone, they can still be a member of the European Union.

  • Andrew Allison

    Rumors of the death of the Euro (and the EU) are greatly exaggerated, and the euro is not splitting the EU apart. The hyperbole around the Greek problem is ill-informed and ridiculous. As Arkeygeezer points out, there is no requirement that members of the EU belong to the Eurogroup. Also worth mentioning is the fact there’s no mechanism to eject a member from either group; Greece will resign if-and-when it reverts to the drachma. Another widely-held misperception is that Greece owes the ECB $300-plus billion. Greece owes the ECB an entirely manageable $18.1 billion. IMF is owed an equally manageable $21.4 billion. The rest of the debt is on the books of individual countries, the biggest piece of it the $68.2 billion owed to, surprise, surprise, Germany. Germany could handle a default financial, it’s the domestic political fallout that concerns Ms Merkel.

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