Greek Referendum: Win Win for Europe

Greek Referendum: A Win Win for Europe.

So the Greek vote has lobbed a grenade into the Eurozone. Nobody should be surprised. After five years of austerity resulting in massive unemployment, extreme levels of poverty, a startling rise in suicide and 30% wipe out of Greek’s GDP; Greek voters yesterday stood against  the economic ‘terrorists’ and ‘blackmailers’ and openly supported their government giving them a clear mandate to negotiate a better deal.

Despite the celebrations on the streets of Athens tonight, further hardship lies ahead for the Greek people, the vote will not overnight solve the deep and destructive crises that has its roots as far back as the eighties when successive Greek governments overspent and ultimately cooked the books with the help of esteemed financial experts and managed to blag their way into the Euro family.

It seems now that this family has become somewhat dysfunctional. Greece is by all accounts the black sheep , like an errant teenager who has partied too much, the hangover is debilitating. Greek leaders have seen austerity destroy their economic society while most of the bailout was used to pay off debt interest rather than invest in the countries economic and social infrastucture. It is now up to SYRIZA to navigate a way out of the mess in agreement with the institutions.

The Institutions are part of a fairly strong wall of steel behind which the EU are hiding, refusing to deal with realities and hoping that the traditional right – wing economic model which demolished the world economy recently will somehow come good. It will not. It cannot, because Greece has a debt problem that is simply unsustainable and further Austerity is likely to drive the country over the edge with catastrophic consequences.

Despite this, the situation could be a Win Win for Europe. If Greece seals a better deal – relief on austerity and a re-organisation of their debt responsibilities – it will contribute to establishing a sustainable growth situation. Other countries that are struggling might also benefit by arguing for a similar deal in the context of their own specific circumstances. More importantly the lesson of Greece will at some stage force an acceptance within the broader EU family that the systemic faults in how a stateless currency operates needs to be addressed as a matter of urgency.

Europe is a toddler learning to walk and talk and develop its identity. There will be many stumbles, with the Greece situation been arguably the worst so far. Europe has to listen to the Greek vote and heed the cry. Starving a group of people into submission because they dare vote for a party that has the cheek to challenge the prevailing economic paradigm is pointless. And trying to create the circumstances that will lead to the collapse of a democratic government is just plain dangerous. Worst of all, refusing to accept that the Greek economy has no hope of surviving under the current arrangements is basically reckless.

The Greek people stood up against what has been described as blackmail and economic terrorism. They stood alone and have now forced the entire EU family to think again. Irish people have some idea of what it is like to stand alone against a bully and fight for your life. Today Greece gave us all a valuable lesson on what can be achieved when democracy prevails and an entire society refuses to be trambled under the foot of the worst excesses  of neo liberal capitalism. Nobody is quite sure what will happen next and while Greece have not yet won the war, they have certainly won a very important battle.

  • T.E.Lawrence

    “Starving a group of people into submission” Agree, when a person has no food to survive and sees no hope there is only one thing they can do ! Very bad call by EU Leadership. It can now reap the consequences of its failure to comprimise with another human race of people.

  • notimetoshine

    The Greeks should leave the euro. They should never have been in it in the first place. Reforming their economy is going to take years and they need the competitive edge the drachma could give them. Rows over austerity and ideological battles cloud the issue.

    Having said that this is a good thing (or bad depending on your opinion) for the anti federalists and euro sceptics in general. This is just the culmination of the inevitable, you can’t have a proper functioning economic and monetary union without fiscal union as well. It’s a wake up call for the EU and not one I think the eurosceptic political climate can deal with.

  • chrisjones2

    “Greek leaders have seen austerity destroy their economic society ”

    the underlying cause was political fraud, false national accounts, out of control expenditure and rampant corruption. They have done little to fix the last two

    ” invest in the countries economic and social infrastucture.”

    ie they had to pay the debt off. That is what happens when you borrow

    “refusing to deal with realities” ….. that is more the Greek Government’s problem. The Eurozone is the reality

    “further Austerity is likely to drive the country over the edge with catastrophic consequences”

    …for the Greek people which their Government has created and they have voted to sustain

    The rest is all waffle. Like a (bad) 6th Form essay from the 1930s on the evils of capitalism and how socialism will cure all. Only now the blame has been switched from the Capitalists / International Jewry to the Eurozone / ECB

    The sad reality is that Greece just voted to return to an economy of the 1950s. If they want to do as Robin suggests they need out of the Euro now and to have the Drachma back.

    In the meantime the EU may help with Emergency food aid and medicines to cushion the people from what is about to hit them from their own Government’s failure. They should also open English and German classes in Athens to help young people emigrate to other parts of the EU that have economies that work!!

  • notimetoshine

    Best thing the Greeks could do now is leave the euro.

  • T.E.Lawrence

    Totally agree econmically there is no alternative for their people. They have the ‘No Vote’ from their people and it is the correct choice to make for these people.

  • Mister_Joe

    Why am I reminded of the man who killed both parents and pleaded for mercy from the Court on the grounds that he was an orphan?

  • Mister_Joe

    The Greeks got themselves into this mess and need to get themselves out of it. Instead of going begging bowl in hand pleading for hard working Germans to continue to pay their bills. For starters they could abandon their insane retirement rules (apparently they pay out more in pensions than the UK which has 10 times the population) and make better efforts in collecting taxes from the estimated 30 – 50% of their people who simply refuse to pay their share.

  • 23×7

    Only partially true. The Greeks, the EU and the corrupt global banking system got themselves into this mess. The Euro as it stands is not fit for purpose.

    Regarding reform of the Greek economy, this will undoubtedly be part of the eventual solution however at the moment it’s difficult to fix the roof in a hurricane.

  • chrisjones2

    Yeah ….but they still owe the money ….there is nowhere to hide

  • SeaanUiNeill

    Chris, “irresponsible borrowing”, yes! But it was the politicians in the 1980s onwards who incurred the debt, not those Greeks suffering from the austerity now. No-ne asked them (yes, some of them voted for the governments who developed the debt, but do you have any influence on what your government does, or even know what’s going on in any detail once the vote is over?) And there is such a thing as “irresponsible lending”, which never seems to incur any problem ever since the post 2007 bail outs. Do you really think that lending a country money simply to service a debt, that then has the new loans tacked on to it is ever going to create a viable economy?

  • Good

  • Mister_Joe

    They had 5 years to do it, just like the Irish. What did they do? Nothing. Why does anyone think they’ll do it now without an almighty push?

  • 23×7

    Wrong again, the previous Greek govt imposed huge public sector job and wages cuts.

    As has been the case since the start of the global financial crisis ordinary workers are being made to pay for the sins and corruption of the financial sector.

  • Mister_Joe

    And yesterday, they voted to support those sins.

  • 23×7

    You read into yesterdays vote what you like. My interpretation is that the Greek people voted to endorse their current leaders strategy to go back to the negotiating table and seek a better deal.

  • 23×7

    They aren’t looking to hide they are looking to renegotiate and restructure.

  • Mister_Joe

    Well, world wide practitioners of 3 card monte are probably rushing to buy plane tickets to get out there while the going is good.

  • 23×7

    That is clearly not going to happen. Greeks leave and the whole Euro project becomes meaningless. The domino moves to Spain and Italy.

  • Mister_Joe

    There will be no better deal, Should a potential
    deal be negotiated it will never pass in the German Bundestag or those other Parliaments whose constitutions require a vote. It would mean the end of the Eurozone, perhaps even the EU, otherwise.

  • whatif1984true

    Eventually the UK will say the same to Stormont. You elected those incompetents. You have been indulged with money and resources, your stand on welfare is a joke.
    It is time to grow up and meet your responsibilities, elect people who will help you.

  • chrisjones2

    ….on a basis that means they will never pay

  • chrisjones2

    Its up to the Greeks to sort our their internal politics. Blaming the people they elected in the 1980s doesn’t wash. Its not the 80s. Its the 90s and Noughties and this decade as well. They entered the Euro in 2002 on the basis of dodgy accounts that hid the debt. They continued with the corruption. They have continued to live beyond their means.

    Noone owes Greece a living. Helping them recover is one thing. What their Government wants is a free ticket for life> That is not going to happen

  • 23×7

    Capitalism eh. Sometimes investments go sour.

  • 23×7

    You are just making things up. Syriza have never said they want a free ticket.

  • 23×7

    Oh there will be a deal. Would you like some of your money back or none of it?

  • SeaanUiNeill

    Why am I reminded of the bright new Liberal Administration of Lord John Russell in 1847 and their reaction against Peel’s “stifling private enterprise” by actually dealing with the Great Famine by distributing food to the needy? Russell genuinely believed that the markets would provide, really, halting Peel’s relief works and maize provision, with disastrous results.

    Couldn’t happen today could it? You do realise that people have actually been dying in Greece due to austerity measures, and the bankers who bloated previous administrations debts are secured in their irresponsible loans while they die.

    I’d value some reputable source for the “free ticket” comment. I think you’re conflating previous Greek administrations with the present administration. It might be worth the efforts to actually look at what Syriza’s actual position is and not simply repeating what the Sun tells us.

  • Before Syriza there were signs of growth in the Greek economy.

  • SeaanUiNeill

    Actually, it might help to have some detail on what these signs of growth were. I seem to remember that economists have been telling us that we’ve all been “coming out of recession” over and over since 2008. I would have trouble believing them if they told me that sky was blue!

  • kensei

    There was a primary surplus achieved at absolutely huge human cost. I’m sure the 60% Youth unemployed were delighted there was some growth in top line GDP.

  • Robin Keogh

    Hi Joe, would you be so good as to link me to the pension spending stats you mention there? Many thanks

  • Mister_Joe

    Robin, I read it in one of my regular sources last week, likely a Yahoo news article or A Canadian Broadcast story on their website or The Economist which I subscribe to.. I’m not sure though and obviously I have no primary knowledge, not having sought the original source which was not identified. Could be BS.

  • Kevin Breslin

    You can’t vote out evil in the world by a referendum. You can’t simply target the big banks and then argue that well I have my salary, my pension, my savings I’d rather they’d be all protected than invent a new financial system where like it was during the Great Depression everything was credit unions, labour exchanges, and bartering. You can’t say I don’t like neo-liberalism and the free market, then enjoy the pleasures of having the freedom to decide where you spend your money rather than a benevolent central government effectively telling you where to spend your money so that everyone gets something. We are Mammon too.

    The debt Greece owes is paid to Eurozone countries, the IMF, the ECB, the UK and USA.

    The only alternative the Eurozone, the UK and the USA have other than mature long term bailouts to Greece is importing their austerity themselves either through debt forgiveness or a multilateral arrangements.

    Debt forgiveness isn’t going to come from banker’s bonuses, or the rich oil companies, or big pharmaceutical … it’ll come from us, Joe Taxpayer. Ergo this is why the stalemate exists.

  • MainlandUlsterman

    No one seems to emerge well from this fiasco. The “bail-outs” of Greece do seem to have been bungled – most of the money went on effectively compensating private lenders and not very much going into long term investment in the Greek economy itself. The ECB effectively took a lot of the private lending into European public hands (I gather – I’m no economist). And I am very wary of centre-right politicians and conservative bankers refusing to cut a deal with Syriza for fear of showing that there is an alternative to austerity. Austerity seems to be widely recognised by macro-economists as bad economics, it just doesn’t produce the growth you need, while having massive negative consequences. Again, I’m no expert, but the anti-austerity line seems not just one of the irresponsible far left. And yet …

    I’m not impressed too much by Greece playing the victim here either. Its government was more than happy to take the funds in the first place and make binding promises in order to get them. If those promises are ignored, it becomes obvious that the real price of lending to Greece is going to be higher (in written off sums) than the deal on paper, so Greece’s cost of borrowing is going to shoot up, is it not? Which would be crippling for the economy too.

    So there is no easy answer of ‘go easy on us and everything will sort itself out’. When banks write off debts, remember it’s not just their money they’re writing off, we all pay a price. Much as I loathe the behaviour of senior bankers in recent years, we kid ourselves if we think there is an easy way to fix a debt crisis like this through the behaviour of banks. It’s about the Greek and European economy as well as banking.

    My feeling is that Greece has to stay in the Euro, or there will be a catastrophe across the southern European countries, with investors taking punts, as they are entitled to, on who exits next. It could get much worse than 10 million people in there sh**, this could be 100 million or more people …

  • Mister_Joe

    I didn’t say there would be no deal. I said no BETTER deal. Europe can’t give more without looking foolish and incompetent and, if they did, Spain would come knocking at the door, maybe even the Irish. The most that Greece can expect is the old deal with a bit of lipstick on it.

  • SeaanUiNeill

    I tend to feel, Kevin, that the serious mistakes made post 2007 are ensuring that not only Greece will be hobbling towards an even greater disaster occasioned by the quasi religious belief of Neo-Cons in the market regulating itself and the orgy of de-regulation which this has engendered, under which we all must suffer behaviour from bankers that would have been considered s criminal only few decades ago. Its a very complex problem and Greece is simply showing that the unqualified demand for repayments and the imposed austerity measures literally kills.

    But then I’d start from the position that the entire Globalisation project was ill conceived and has become primarily a tool for the concentration of wealth, and the creation of financial power blocks that can ignore or even direct governments. I’d agree that simply wanting things to be supported with more money is no solution whatsoever, but certainly expecting Greece to keep digging a deeper debt hole simply to meet a repayment schedule is no answer either.

    Something much more radical, much more realistic, is required, but I see no-one looking far enough to even begin to discern any serious solution to this problem. Simply doing as the IMF and the ECB demand is no answer.

  • Mister_Joe
  • Ben De Hellenbacque

    Up to a point yes but additional mitigating circumstances are that the parents were remiss in their custodianship. An example of the damage of inconsistent parenting and poor attachment style.

  • Robin Keogh

    Thanks Joe, they dont actually spend more in terms of dollars, a higher proportion of their public spend goes to pensions.

  • Kevin Breslin

    Let’s be realistic. The Eurozone, the ECB, the Germans they are not going to create some sort of ad hoc Breton-Woods III unilaterally with Greece and expect the rest of the world to play ball with it, because they can’t.

    Globalisation was never really conceived to be a universal market system but it’s fantasy to expect Russian oil and coal workers or even in the more extreme case of the providers third world simply to be slaves to Western Europeans who raise placards in the global top 10% complaining about the top 1% so they are not wanting to be poor like the other 89%, expecting some other countries to take upon some one else’s problem. The West got power through industry and politics, you look at how Greek agriculture benefits from CAP which is lowering food prices within Greece in comparison to the likes of Ukraine who’d have to pay a tariff to subsidise the CAP costs. Greece is a victim of a system that has enriched them at the decrement of its former Communist country neighbours. It’s basic Marxism actually, those that have the industry have the power because that industry gives people power. Europe bounced back from the depression through developing the silicon industry when no one would have dreamed of buying sand for anything but construction and glassware.

    Greek industry didn’t give it the political power to negotiate in the bad times. Europe is caught between the needs of its industry competing with the rest of the world and the economic health of its constituent parts. It can’t ignore one at the expense of the other.

    Leaving the EU would only ensure Greece owns its austerity it would not end it, something Syriza’s coalition partners who want Greece to do so would agree with.

    Human beings pretty much are like the original cross continental globalists the migrating birds, eating from wherever they can fly to, bringing what they can back to the nest and hoping that something grows out of their excrement for the next time.
    Money pits one person’s labour against someone else’s, it pits goods whose price pay one worker’s wages with another labourer’s demand to have a good. It creates rich people, but rich people can fall into the gutter through the slightest shift in the markets and internal company politics.

  • Kevin Breslin

    The domino for a Euro collapse doesn’t stop in the Eurozone or even the EU. It would be the biggest GLOBAL shock to the international financial markets since at least the Nixon shock, a breakdown in the European Monetary Union would devalue the pound, the Russian rubble and the Norweigan krone and the Swiss franc quite severely in the fallout and ultimately the dollar too.

    The only major country with no exposure to a Euro collapse is China.

  • james

    To paraphrase another Socialist: “Will anyone here really object if, with the begging bowl in one hand and an as yet unsigned application to join a new Russian Federation in the other, we receive yet another bailout to shore us up for another 6 months, and to Hell with the bill sure we aren’t going to pay it back anyway?”. Pouring other people’s money into a bottomless pit is the only solution we can come up with?

  • murdockp

    You are falling into the trap of thinking what happened in the years 1974 – 2008 where ‘normal’ economic conditions. They were not, the Greek economy was on steroids of cash injections much like Ireland, but without the efficient industry and inward investment that saved Ireland.
    We as a people should be very grateful we speak English as a first language and that many americans see us as the 51st state.
    The greeks have no such advantage.

  • Kevin Breslin

    You borrow from other countries, you sacrifice a bit of your autonomy. Europe isn’t federalised so no one nation could really tell Germany or Greece what to do.

    What is radical and realistic is a non convoluted form of chaos where you can undermine any man’s property rights with very little obligation to redistribute. That process is called war.

    These internal plethoras can go on until compromise or war. Neither side really has a compromise.

  • SeaanUiNeill

    I entirely agree, Kevin, but would add that what is occurring economically is in its very unnegotiability a form of warfare.

  • Mister_Joe

    I take it you think Canada is not a major country.

  • Kevin Breslin

    I think Canada is more exposed to the Eurozone collapse than the USA is.