Monday 23 February 2015

The Euro strangle hold continues for Greece

I very much doubt, whatever they thought previously, that the new Finance Minister and Prime Minister of Greece knew what they were getting into.

After a week of 'negotiations' with their European paymasters, they are now scrabbling around trying to find a way of remaining in the Euro and indeed, remaining in the bailout programme that they were elected to leave.

This is not a happy situation for Syriza and you would have to have a heart of stone not to laugh at the uselessness of the polemic negotiation style which ended up cutting no ice with the Germans.

So now, very desperately, they are reduced to trying to find ways of re-naming the 'Troika' to try and pretend it is something else - typical left-wring approach, same as we have here in the UK with numerous elements of political correctness, where language alteration is used as cover for power and control.

The sad element is that really, the Greeks have more power than they realise. The future of a happy Greek people lies outside of the Euro. Even Germany has really acknowledged this by making it clear Greece can leave. Not an easy decision for the Euro's foundation stone member, but for last week to have happened and to have had such an effect on Syriza, the conversations were clearly very blunt.

The worst outcome will be for a muddle-through solution that allows Greece to remain in the Euro whilst it continues to be consumed by its outlandish and growing debts. These communists, never quite a strong as they like to pretend they are. Real leaders in Greece would walk away from the German terms.


Lord Blagger said...

Just default. Carry on using the Euro. The Greeks can decide privately to use the Euro and ignore what their government does

Budgie said...

"The future of a happy Greek people lies outside of the Euro." Are you sure about this CU? The Greeks have got used to living above their means, as we have of course, though for the Greeks in the euro this is harder to disguise than it is for us.

However if they left, repudiated their debts and set up a new drachma, then suddenly they would have to live within their means because no one would lend them any more money for some years. Overall this is worse than the current arrangements.

The Greeks don't trust their own governments and that is why 75% of Greeks still want to stay in the euro. The Greek governments have not been honest about the burden and have not fairly spread it (endemic corruption etc) unlike, say, Eire which has at least made the attempt.

I am quite sure that the German government and the EU would prefer to see the eurozone remain intact. The Greeks want to stay in. That's what will happen.

hovis said...

Timescales 1. We can only tell who won in around a year's time.

Timescales 2. Greek banks would likely have colapsed within 1-2 weeks with the ECB going into a political grey area if it withdrew ELA - effectively beyond its mandate but likeley given it's schizophrenic nature with the rotating members of the board.

Whether this is playing for time and position,("look we did all we could we need the Drachma back" + time to print and prepare - a 3 week window since election would not have been long enough) or it may be capitulation. If the latter I believe it will be driven by a false ideal of what the EU should be,( not is.)

Anonymous said...

@12.45 - endemic corruption etc) unlike, say, Eire


CityUnslicker said...

Budgie - That Greece's politicians lie to them about the nature of the reality in which they exist is for them to address one day.
They only want to stay in the Euro on terms hat are not really acceptable to the Germans.
If only there was a way to devalue within the Eurozone, eh?

Budgie said...

Anon 2:16pm, That's why I was careful to write that Eire has at least made the attempt, in comparison.

Budgie said...

CU, The Greeks already know well the devastation the Troika package has wreaked, yet they still want to stay in the euro. The reason is the alternative is worse but, more importantly, no one wants it, apart from the culturally blinded (and habitually over spending) British.

CityUnslicker said...

Its fear of nurse for something worse Budgie.

Moe weirdly in the time of the freest flow of information in all history it seems that if anything populaces are more subject to misinformation than ever. Greeks really do believe they are both victims of Germany and that the same time the German Euro is their savior.

In Russia all the problems are caused by Western Agents and Vladimir is the good government and all that stands between them and chaos.

Its an counter-intuitive state of paradigm.

Budgie said...

"... populaces are more subject to misinformation than ever." Very true. And true for us as well of course.

Personally I loathe the eurozone experiment, and I hope the damn euro collapses tomorrow. But it won't. And we cannot base our policies on wishful thinking.

Essentially Germany is correct, both on the principle and by standing its ground. The Greeks will have to learn to live within their means. As should we.

With a Labour-SNP coalition in the offing that's not going to happen.

Patritius said...

They are probably so paralysed with fear after their experience that they are completely risk averse - unlike the British in 1992.

Sebastian Weetabix said...

If Budgie is right, then we should all borrow as much as we can and acquire assets pdq. Get those presses rolling!

Steven_L said...

we should all borrow as much as we can and acquire assets

That's what usually starts to happen at this stage of the cycle, it's a self-fulfilling kind of thing. All the Eds can do is push on a string if you don't play along.