The WPC site suffered a catastrophic loss in the fall of 2015. Attempts to restore it from backups failed, so I thought all of the old posts were lost forever. Fortunately, I was able to find some of the posts that I really wanted to hold onto via the Wayback Machine. (Why it took me six months to think of checking there…)
This post originally appeared on this site in early 2015.
Greece stands at the precipice waiting to see if they’ll be forced out of the Euro while the troika (EU, ECB, and IMF) engage in open economic warfare against the nation under the continued guise of unilateral profligacy. The Greek’s are the ones being punished, but loans aren’t self-originating. Greece’s lenders have somehow managed neither to share in the blame, nor much of the pain. Rather, the banks were absolved and made whole in the wake of the financial crisis. Half of the equation takes all of the blame, and most of the pain. And the pain is far worse than it might have been if it had been equitably shared as the Greek economy has suffered greatly at the clenching fists of austerity.
Now the troika stands – feet apparently firmly planted in cement – claiming they’ve made significant concessions, and that it’s time for Greece to accept the favorable terms they’ve been offered. As Erwin Grandinger puts it, “What we are witnessing in Greece and beyond, in Europe, is an absurd, but not entirely unexpected spectacle.”
We don’t know what exactly Europe is offering, but if serious concessions were on offer, wouldn’t the high-level details be trumpeted relentlessly? The latest offer from the Greeks was publicized, and their supporters are showing alarm at the concessions therein. Still the troika cry for more. How we are supposed to square the idea that their unknown offer is substantial and serious, but the known Greek offer is neither, is beyond me. And with reports of the Germans acting to disrupt the flow of information, I find myself losing enthusiasm for any offer they’re a part of.
It seems that Greece’s choice is this, either allow the troika to continue taking consecutive pounds of flesh, thereby perpetuating and accelerating country’s downward spiral, or sacrifice a limb and move on. Stuck between Scylla and Charybdis the Greeks now have to make a choice. Tsipras had a mandate to seek relief, but none is on offer, so he’s taking the decision to the Greek people. A referendum is scheduled for July 5th in which they’ll choose whether to accept the troika’s unilateral terms. It’s a bit of a Sophie’s choice to be sure, but it’s one in which, when considering the long-term consequences, a rational choice seems to avail.
Like the rock climber who cut off his own arm to survive, Greece must be prepared to do the same (Yanis Varoufakis has already proclaimed his readiness to do so, a well as his plan to step down if the Greek’s vote to accept the troika’s offer). Unlike the climber, Greece is not alone in the wild. They’ve got a climbing partner who could roll the rock off and help get the country back on its feet. Instead, the troika sits atop the rock admonishing Greece for having put themselves in this position. They’d love to help, really they would, but then Greece wouldn’t learn their lesson and then they’d just do it again with direr consequences next time. (All the while seeming to forget, or unwilling to recall, their role in delivering the rock to where it currently sits.) Worse yet, others might follow suit. So they encourage the Greeks to keep wriggling furiously as surely they can pull themselves up by their bootstraps if only they tighten their belts and push through the pain.
Ian Welsh gets at the heart of the matter:
These people are either very stupid or are doing what they feel they must to keep their jobs and their membership in a very lucrative club. If they were to say, “No, these policies don’t work,” would they keep their jobs?
It’s not that we don’t know austerity doesn’t work, if by “work” you mean “improve the economy more than not being in austerity would,” we do. It’s only ever worked in theory by making very dubious assumptions, and it has never worked in practice.
So, at this point, if you believe austerity works, you’re either an extraordinarily blind ideologue, or you’re crooked, on the payroll, and know what you’re doing.
Even knowing this, there are interesting twists at hand. The troika seems to believe that the Greeks won’t use the knife. Either that, or they’ve decided that the cost of a “Grexit” would be less than whatever fallout they expect would happen if they willingly took a haircut on the Greek loans. But here’s the thing, the climbing partners are hanging from the same rope. If Greece drops out, the rope may snap just above them, leaving the rest of Europe safely above the break, or it may drag the continent (and the global economy?) down with it.
The outcomes of such possibilities are anyone’s guess as it’s a wildly complicated scenario. The global economy is seen to be tentatively headed in a positive direction, but there are multiple warning signals. Could it handle a bit of a bump? Perhaps. But is the juice worth the squeeze? More pointedly, is this path being worn because it is the right thing to do, or because some savage ideology demands it? Jeffrey Sachs seems to think it’s something closer to the latter, writing that, “Europe’s demands – ostensibly aimed at ensuring that Greece can service its foreign debt – are petulant, naive, and fundamentally self-destructive. In rejecting them, the Greeks are not playing games; they are trying to stay alive.” Umair Haque adds that it’s “Tragic and embarrassing to see the EU betraying its very founding purpose by squeezing Greece for pennies for absolutely no reason.”
In addition to financial impacts, there are also political ramifications to consider. The leadership role in Greece has changed hands frequently since the outset of the crisis. Tsipras and Varoufakis currently have the helm, but it wouldn’t likely be long until elections were called if the negotiations go south. (Tsipras is already the fifth person to assume the role of Greek Prime Minister since the outset of the Great Recession.) After years of escalating austerity, Syriza was voted in with a mandate to bring some relief to the beleaguered Greeks. If they aren’t able to make hay, who would get the next shot?
One alarming possibility that waits in the wings is Golden Dawn, a right-wing political party which has gone from obscurity, to the third largest representation in the Greek parliament, over the last five years. All of the party’s MPs were charged with having membership in a criminal organization, so the organization appears to be on thin ice. But if the current negotiations create a vacuum at the top of the Greek leadership, what might fill the void? Having tried one end of the spectrum – to no avail – the possibility of the electorate running to the opposite pole seems ever less remote. If I seem alarmist here, at least I’m in good company as Noam Chomsky is suggesting the same.
I thought this might have all been a bit of high stakes poker; with the Europeans pushing as hard as they could for as long as they could, before relenting just enough to make a semi-reasonable deal seem palatable at the last-minute, but that doesn’t feel like what’s happening now. Instead it seems like an acrimonious, ideologically fueled bent towards punishment. Greek has wronged and must suffer until every Euro is repaid. But Greece is part of Europe. Cutting off one’s nose to spite one’s face is a classic blunder. It might feel good in the moment, but you have to eventually look yourself in the mirror.
A picture of a 77-year-old Greek man who was crying while slumped outside of a bank made the rounds on social media yesterday. He had waited in line at three banks to withdraw funds from his wife’s pension before being turned away each time. Rather than bitterly point fingers, he stated “Europe and Greece have made mistakes. We must find a solution.”
Loosen the vise. Call off the bloodbath. End this austerity NOW!