Greek Elections: A Europe-wide Non-Event

A couple of random thoughts on the non-event that was the Greek elections last Sunday:


(source via TBIJ)

For all the brouhahaha about Syriza, it turned out that the more things change the more they stay the same. Even in Greece. Sure, the rag-tag coalition of left-wing parties was branded as radical, but it was anything but. As the question du jour was the bailout (which, again, is anything but), the foreign media divided the parties as either pro- or anti-bailout, which most of them translated as “in favour” or “against” the euro and the EU in general. But take a look at this BBC Q&A on Greek elections (scroll all the way to the bottom) to see where the various parties really stand (or, possibly, stood).

Indeed, most of the Europe, nay, the world! held its breath. Some in horror, others (pengovsky included) in anticipation. Had Syriza won, we would have – after five years – seen an end to the “there’s no other way” logic of handling the crisis. Sure, it is quite possible that Syriza would have failed. Indeed, one would not trade places with any European politician in power for all the farms in Cuba. But instead of a coalition whose plan was possibly doomed to failure, Greece is now stuck with a government whose plan does not work as it is. That much we know.

Bailouts EU style don’t work. Or rather, they do, if you’re a German (or any other non-Greek) bank, trying to stay afloat. Out of huge billions of euros sent to Greece in tranches, each of them being subject to “just one more” austerity meausre, most of that goes to service the increasingly bad debts of a country which no one will loan money to, while only a couple of years everyone was positively throwing money at a country known for cooking books.

But those huge billions are not nearly enough, because a) no one knows how deep the hole really is and b) the austerity measures take away what little chance Greece once had to kick-start its economy. Increasing the financial burden imposed on the state and its citizens while cutting public spending and consumption is a text-book vicious circle. It can only end in disaster, much more epic than the one we are in already. Because every new cutting measure is “just one more”. Every billion granted “is just one more”. And every pledge to appease the mythic “forces of market” is “just one more”. Indeed, what fans this fire of euro-crisis is the chronic inability of the few players that have the means to change the direction we’re headed in, to come up with a series of moves bold enough to change the course. Rather than sail into the uncharted waters, European leaders choose to remain in waters infested with economic and financial minefields, even knowing where the mines are, but refusing to change course, because “sooner or later, we’ll be out of this mess”. Well, the sad truth is that by continuing as we do now, the only way out of this minefield is – sinking of the ship.

I’m sure Syriza didn’t have a magic wand to make everything just go away. But they were the guys who looked around and said “why don’t we go that way?”. For that they were branded anti-European, radical leftists, relics of a spend-it-there’s-always-more mentality. Even though everyone else was spending money fast and furious for the last thirty years, even though the (proper) Greek Communist party branded Syriza as agents of capitalism and even though Alexis Tsipras said time and again that he wants Greece to keep the euro, while everyone else is planning to force the country out of the common currency, which would probably mean its exit out of the EU as well.

For about a month, there was a glimmer of hope that a sovereign nation, even though it is on the brink of becoming a European (let’s not use the word German) protectorate, could rise against its self-imposed (financial) masters and try to do it as it sees fit. That hope is gone now, as they voted in a coalition which is nothing more than a PR service for the Bundekanzleramt and is faithfully executing a set of tasks set for them by Berlin Brussels. Which, come to think of it, it not all that different from when Greece was adopting the euro. And if they cheated then, who says they’re not cheating now?

With Greece back in the austerity camp (until it is finally cured by bleeding to death), we’re exactly where we were a month ago and the only hope for this slow-moving train wreck that this the eurozone crisis (via Nouriel Roubini) is the newly minted French president Hollande with his pro-growth stand. But seriously, when was the last time Europe could count on the French to do something about anything?

 

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pengovsky

Agent provocateur and an occasional scribe.

13 thoughts on “Greek Elections: A Europe-wide Non-Event”

  1. That was a long time ago. Besides, that was a revolution stolen by an enlightened absolutist who went on to wage was on most of the continent 😉 Luckily, the ideas of the revolution found home in America. And, again, we find ourselves looking across the Pond for solutions…

  2. As a German taxpayer I am quite unhappy about the fact that the world (yes, the world) should expect Germany to pay, pay, pay. Especially after having read stories told by Greeks from Greece, basically telling the rest of the world you cannot survive in Greece if you are not willing to participate in the shady world of financial … misuse. Even the stupid hope one can approve the situation by sticking to the known (and bad) solutions is going to be costly, who dares to dream up an experiment?
    Anyway, if I have to pay for the Greeks, I want them to start paying their VAT (like: issuing and receiving invoices for every transaction, not just 60% of them), stop paying and receiving fakelaki and do away with luxurious incomes in public services, pensions I can only dream of, at ages I’ll never be entitled to one.
    After the Greeks have completed the experiment called “fiscal honesty”, I am sure the Bundeskanzleramt will let them off the hook. You know, like you would do with children who have reached adulthood.

  3. I was hoping (yes, hoping) for your comment. For someone like me, looking from the outside in, to be smart about stuff. S, thanks! 🙂

    Having said that, there are a couple of myths that I feel should be dispelled forthwith.

    1) As a German taxpayer, you are not (repeat: not) bailing out Greece but rather German and other banks. In fact, your government is giving money to your banks via a Greek bypass because it makes both banks and the government look better.

    2) And even if German (and Slovenian, Dutch, Austrian, etc) taxpayers’ money were used to prop up Greek public finances (which it is not), there’s a quid-pro-quo to it. Germany needs the EU market. The country has by far benefited the most from the euro (which is good) but now refuses to foot the bill caused in part by the fact that in order to create the euro too many corners were cut and everybody was OK with it. As the old Serbian proves says: posle jebanja nema kajanja.

    3) Treating sovereign nations as brats in need of discipline is patronising to say the least. Fact of the matter is that Greece has lost much of its sovereignty and is being pushed around by its creditors. But a EU member treating another EU member as a lesser state is wholly unacceptable. I’m sorry to bring this up, but Germany telling others that they’re somehow inferior has a very bad vibe to it.

    4) Regardless of the above, I understand the sentiment. In the final analysis it is somewhat unfair for the German taxpayers to foot the bill. That, however, could be overcome if Frau Bundeskanzlerin were to let the ECB do what central banks all over the world do. Print money if need be. And the need is here. The single most pressing problem with the “financal markets” (i.e: a herd of investor lemmings who claim to be good at what they do but jump over the cliff when everyone else does it) is the fact that there is always a ceiling to the amount of money in these “anti-crisis” funds. 800 billion. A trillion. Two trillion. It doesn’t matter. The countries in the eurozone (most notably Germany) have declared time and again that there is a finite amount of money they have to deal with the crisis which for the time being does not have a finite rebound point. If, however, the ECB were allowed to print money (rather, to issue eurobonds) the message would have been clear: we will throw money from a helicopter if need be.

    I know of German fear of hyperinflation. We both know how this went down in Yugoslavia. But inflation right now is way below ECB’s own stated goals. Nouriel Roubini wrote a while ago that Germany would do better if it were to endure a bit higher inflation and thus help kick-start the economy than to keep throwing lump sums of money into Greece, Spain, Portugal and (when the day comes) Italy. Apparently, the German establishment is afraid of a repeat of 1923. But (to quote Krugman) they should be more afraid repeating the year 1933.

    In conclusion: yes, Greeks have much to be criticised for. But right now it’s like kicking a dead horse. And they’ve behaved in the same way for… well… forever. The problem here is Frau Merkel. She alone has the means to turn this thing around, but refuses to.

  4. 1) Yes, I know about the banks (and insurances), still.
    2) See, our government told us we need to pay extra insurance, a private retirement scheme (or whatever the term is – same thing you do) because we will need the money. Mine is in Euros. Whatever happened and is happening to the Euro zone, it seems to lessen the output I am going to get should I get old. So I need the German banks and insurances to survive.
    And allow me some more simplicity, please … If you have things to offer, you will also gain, this is called capitalism, no? (spoken by someone who’s guilty of having gained a stipend solely due to the fact that she fulfilled the criteria, which other people with finished primary school level didn’t) If Germany is the top export nation, it is not because they come with tanks and force people to buy, is it. And not because the workforce is so cheap here, either (incidentally, I got an offer for a translation from Slovenia yesterday, together with a bunch of other people, and the price offered was so low I’d pay in the end to work for them :-()
    You know, I don’t care if Greeks (or Italians) work as much as I do, I really don’t. We don’t have as much sea and sunshine here in the austere north and it is good to keep busy instead. But they should certainly DO something LEGAL to earn all the money they need. Install Croatian uber-prices for tourists or sell solar energy and let the sheep grass underneath the solar panels (eco lawn-movers, very often seen here) or play with money more successfully than Island – I don’t care. It should just work. And since it doesn’t, they should put up with criticism. Being nice to someone despite it all is no good, either. And as I said: the Greeks themselves concede their system is bad – all the bad things I said above, they are stories told by them (mostly in interviews in Spiegel).
    3) I was quite aware how it would sound when I wrote those things about “the Greeks” – my personal opinion is far less strict (cf. above), but I did want to show I am angry at them, too. They are not only a sovereign state, they are a part of the EU, to a great degree (I guess we can agree on that, no?). As such, everyone should think about the rest of us, too.
    4) Somehow, I don’t believe there’s a solution to this – I think nothing Merkel will do or change will help (I am not a fan of hers, I just happen to think that sentences starting with “If Merkel would only …” are only expressions of … fear maybe? And having found the grešni kozel (Yeah, it sounds like a “kmečka resnica” – that’s the highest level I can contribute on), but in the end, you really need to flog the dead horse into thinking about its death in its next reincarnation.

    And btw, I don’t know how often you have heard or read about Germany having to pay back the Marshall plan now, because that was the money that enabled it to become so strong – here is a quote about it I find very interesting:

    “The first substantial aid went to Greece and Turkey in January 1947, which were seen as the front line of the battle against communist expansion, and were already receiving aid under the Truman Doctrine.” (http://en.wikipedia.org/wiki/Marshall_Plan#Implementation)

    And here is how much money everyone got out of it (UK leading the crowd):
    http://de.wikipedia.org/wiki/Marshallplan#Leistungen_aus_dem_Marshallplan

  5. Reading from Pengovsky about Greece in greece is indeed a blessing. Free wi-fi has become an absolute standard in hotels rather than a luxury. That’s good. and bad at the same time.
    Witnessing things from the very place I was wondering how / could it possibly? / the football victory over Russia affected the election result? 🙂
    Speaking to the locals, who indeed admit overspending and feel the need to repent for the sins, everyone is expecting a change – of any kind, but what has happened is that the power remains in the hands of the same oligarchy that caused all the stir.
    Yesterday I moved from a hotel which has received a bus full of Greek pensioners. They said it was the last batch of retirees to have a free one-week senior relief.

  6. Re: Marshal plan:

    Euro bailouts and Marshall plan are two different things. In fact, it is the latter Greece and other countries need right now, because only investing in infrastructure will increase productivity which in turn will bring about the possibility of them ever paying back what they owe. And in the historical perspective, the Marshall plan was akin to “throwing money from a helicopter” in what at the time seemed nearly infinite amounts.

    This is exactly why I wrote that bailouts EU style don’t work. They’re half-measures rahter than a financial version of “shock-and-awe”.

    BTW: Did you know that the UK repaid the entire WWII lend-lease programme only a couple of years ago?

    But further to your points

    1 & 2) are connected. You are not giving money to Greece. You are simply giving cash to your own banks and pension funds. So your pension fund is already worth less, because you’re funding it with more money to retain the same insurance. This is the basic point of misunderstanding. Other than being slapped with ever more austerity measures which prevent them from earning money, they get bupkis.

    3) Yes, a level of responsibility is expected, I agree. But Germany itself violated the Maastricht criteria on a number of occasions and history shows that everyone including Germany knew full well that Greeks were cooking books to enter the euro. Thus, the burden of responsibility is wholly shared. It is akin of letting a drug-addict become a partner in a pharmaceutical firm and then accusing him for the losses due to stealing of material. If Germany and other pro-austerity countries were such sticklers for rules in 1992 as they are today, our problems most likely would not be half as big.

    4) There always is a solution. But the current course we’re taking obviously doesn’t have one to offer. So, why not change the course? No guarantee that it’ll get any better, but it sure as hell can’t get any worse. Because right now this whole thing will end in dissolution of the euro, break-up of the EU and resurfacing of old feuds.

    Also: Yes, Greeks should learn their lesson. Don’t you think that a destroyed economy, humiliation in the eyes of the world and a failed state are lessons enough? Flogging a dead horse really achieves nothing, because this will only be the first in the herd to die a horrible death. We don’t want that.

  7. Marshall plan: that’s right – I was wondering whether “throwing money from a helicopter” was not a problem even then. For Greece.

    Didn’t know about the UK – all I ever hear about the Marshall plan is how much Germany now owns to the rest of the European world because they got it and used it so well.

    I know I am giving money to my banks – if I could have a state Greek-like pension (before they were cut) I needn’t have done so, no? So yes, I want them to do well, I have no choice (and that’s all I know, really) and ever since one financial crisis started catching the tail of another, I have to worry about almost all the money I have ever put aside, because my government says I should grow up and do it.

    3) It’s true, we could even say Germany really really helped the Greeks get into the EU against all the rules and it turned out to be a bad idea, but … I wonder … don’t we all think Greeks belong to us? I know I do. And also: Germany IS trying to help even now.
    Because the Greeks were allowed to partake in European money pots to such a great degree, it is basically our (= European and/or German) fault they took more than was appropriate? Or should they have developed somehow in the process, too? And since we are at it: would you say Slovenia needed European “education”, too? (I am really asking, no bad intentions behind this question)

    And as to the Greek lessons: yes, there are many individuals down there who are really suffering because of it all and I have much compassion for them. Especially, since many of them had no choice but to survive within the system, as described above. But if I can judge solely from newspaper articles, published online (no TV) and in Spiegel, it is the EU with Merkel on top that is at the receiving end of the humiliation projectiles … Obama needs to win the election so he wastes no time in preaching the bad Europeans to get better soon. Non-democratic regimes, receiving loads of money from the EU (=the biggest donor), suddenly feel the urge to issue patronising statements and what not.

    In short: yes, I believe mistakes should be talked about publicly, because there is more hope at least someone will learn from them (even if it is only because of the shame involved) that if pretending they were just Kavaliersdelikte. Basically, this is the opposite of what wasn’t happening in “socialism” and look where it got us.
    Not that we may not end badly tomorrow, anyway.

    (sorry for not being able to participate in a serious discussion of economy of it all – I do not know enough about it. Though I do feel economy is not giving us enough answers or help to survive anyway.)

  8. A propos Europe financial situation: if you look the history, you find that once or twice every one or (if they are very happy, two) generation something wild happens (a war big or small, a revolution, a cunning government financial plan, a change of valute, you name it) which in effect deprives almost all people of almost all of their property, so they can start fresh just for the next “something wild”, and, funnily, everybody is very surprised when this starts to happen again. So, I hardly see any of the “plans for the future” in shape of this and that retirement plan really useful and working in, say, twenty years. Bismarck model is apparently outlived and seems we simply have to be prepared for the worst. Not with gold, not with money, not with arms, because nothing of that really works for most of the people, just with the conciousness that it can happen.

    Second, frogs gave us a good example in the history with the French revolution. Anecdote says that Mahatma Gandhi was asked about his thoughts regarding the western culture; he smiled happily and said “I think that would be a great idea!” If I paraphrase, I sincerely think that the idea of the French revolution (civil code, separation between the church and the state and depowering of the feudal class) would be a great idea in these days, especially for Slovenia.

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