Euro crisis: “Tis agoreuein bouletai?”

At the Guardian’s Comment is Free, Tim Garton Ash is still a believer in the European Project but, probably, not an optimistic one.  As well as mentioning a familiar quote from Luxembourg’s Prime Minister he makes an important point, as Greece faces a democratic choice, again, that applies to the wider euro crisis.  From the Comment is Free article

Greece’s untold, or only half-told, home truth is that its only alternatives now are bad, worse or worst. Worst is clearly an unplanned, chaotic exit from the euro. That may still happen. If it doesn’t, then Greek voters have a month to work out which they think is bad and which worse: a planned, careful departure from the euro or remaining in on the best terms Hollande can help them squeeze out of Germany.

I am not ready to join the chorus of commentators confidently urging Greece to jump one way or the other. I simply don’t know which would be better for Greece. I’m not an economist – and, by the way, the economists don’t know either. I’m also not ready because I’m not Greek. Democracy means people working out what government and policies are best for them. There is no European demos, therefore no proper EU-wide democracy, so the Greeks have to work out what is good for the Greeks. [added emphasis]

Well, economics is more art than science…  [And that’s why, when it becomes serious, you have to lie. – Ed]  Possibly…  There’s also a response there to Wolfgang Schäuble’s riposte to Portillo.

One caveat I would add, though.  Whilst Greece might be considered the birthplace of democracy, they have a somewhat fractured relationship with the modern version of that idea…

And, for believers in the European Project, there’s still “the political trilemma” to address.

But what to do when if even “the Borg” have failed?

, , , , , , , , , , , , , ,

  • Zig70

    Interesting to read the links from a year ago. Nothing much has changed except a few good opportunities to buy shares. That is where the art is (or the software model). I listened to experts on Today FM saying JP Morgan was a good buy just before the news turned sour for them.
    I’m missing the bit after Lenihan guaranteed the deposits for a second year? Was that part of Troika’s deal?
    The politics around the debt crisis is coming more to the fore and Greece may create some big divisons in the ECB/IMF before the elections. What if the parilment is hung again? Rather than a straight yes or no. Surely the most likely outcome. My money is on a pro Euro vote and the boil to fester on for another while until there is a run on the French banks. Nobody know eh. But I notice nobody talks about Ireland anymore outside of this island,

  • Neville Bagnall

    The extended guarantee came before the Troika but contributed to the Troika becoming inevitable.
    http://www.ft.com/cms/s/0/3aac1ede-baa8-11df-b73d-00144feab49a.html#axzz1vCohUb9F

    Ireland is committed to a course and (mostly) hitting its targets. That and its economic insignificance removes it from the discourse.

    Nevertheless, the debt burden remains a long term issue that will have to be addressed at some point, my preference (and I think the only logical option) being when we could balance our budget.

  • The consensus of opinion, even amongst politicians, now is that Greece is unlikely to be able to remain in the Euro. They may even be forced to leave it before their General Election, depending on the speed of capital flight from Greece.

    I can now see a dilemma opening up for the UK Government.

    Hitherto, it has stated that it is in Britain’s interest for the Euro to remain intact. I think that is just about the right position at the moment but I think we are getting near to the point where that ought to change.

    It is interesting to note that David Cameron’s call on the Germans to take effective action is getting louder and louder. Yesterday, he was quite specific. He called on the Germans to issue Eurobonds. The fact that he is saying this in public quite vociferously is an indication to me that the Government has decided that it needs to be rememebred for continuing to nag the Germans.

    Once Greece exits the Euro, the focus will be on the plight of the other club med countries. There are three ways this could pan out

    (1) A fast – spreading contagion that brings a speedy collapse to the exit of Spain, followed by other countries from the Euro – unlikely

    (2) A slow drip drip ebbing of confidence, shrinking economies and no hope for growth in Europe as a whole for years to come – highly likely

    (3) The Germans finally do a u-turn and agree to jointly underwrite the borrowing costs of the other states – confidence and growth returns – unlikely at the moment.

    The UK government can not afford the second scenario. If that is the case, then it becomes in the UK interest that the Euro is killed off as quickly as possible. Once Greece goes, that could be the time that the Government changes its rhetoric.

  • Neville Bagnall

    See also:
    German finance minister calls for directly elected EU president
    http://www.irishtimes.com/newspaper/world/2012/0518/1224316280646.html

    I’d love to see it but I don’t think it’ll happen.

    The European Council is a bit like a corporate version of a late-medieval monarch. Used to having the “Right of Kings” to executive power.

    In the UK, the King was forced to move from appointing his own Prime Minister to do his bidding to accepting the nominee of Parliament (with a few rare exceptions).

    Perhaps its time that the European Parliament proposed the President of the Commission (at least) from among its members (who would resign as an MEP obviously).

  • Neville Bagnall

    Underwriting Greek debt through Eurobonds isn’t really the issue though, is it?

    The issue is Fiscal Transfer.

    If we’re saying that the Greeks will never have an internally balanced budget, how much more should be transferred as annual grants/budgetary aid on top of existing EU funds like the Cohesion Fund?

  • wee buns

    SM

    (4) Greece calls upon the Chinese (sure they’d be delighted to help), prompting Germany to have a speedy change of heart.

  • dwatch

    Quite by accident, and without an ounce of intent or malice by Berlin, Greece has (like Ireland) become a German colony – and it is not a colony which has a future.

    Germans only wanted peace and love – now everybody blames them.

    http://www.independent.co.uk/opinion/commentators/simon-winder-germans-only-wanted-peace-and-love–now-everybody-blames-them-7766899.html

  • dwatch

    Maybe Merkel should have a referendum in Germany to see how many Germans want Greece to stay in the Euro?

    Angela Merkel spoke by telephone with the Greek president on Friday. Merkel ‘suggests Greek referendum on euro membership’
    http://www.bbc.co.uk/news/world-us-canada-18121414

  • Thank you dwatch. That Independent Article was a very good read.

    The article is one of many others which links the politics of Europe to National psychological damage caused by the Second World War. Europeans on the continental mainland were never politically healed after that war, just as Ireland was not politically healed in terms of its relationship with the UK following its independence. Those impairments meant that economic logic was ignored as political decisions were driven by emotion.

    The trouble is, most European political leaders still do not appear to share this insight. It looks as though Rome will have to burn before that happens.