Monday, July 13, 2015

Success - Greece to stay in the Eurozone and the EU

Hands are being wrung; Chancellor Merkel is being cast as a vicious, heartless, and vengeful person; some speak of the French president being brushed aside; and Greeks are dismayed.

During a tense, drama-filled weekend, a deal was hammered out and presented to the debtor nation, which now has to pass legislation this week in order to earn the bailout:

The demands, quickly leaked, piled up: a complete overhaul of Greece's tax and pension system, the ceding of $70 billion of Greek assets to eurozone authorities for privatization, and an agreement to allow Greece to become a ward in all but name of the International Monetary Fund and the European Central Bank.

And all of this to be passed by the Greek parliament by Wednesday, according to Finland's finance minister.

The Greek prime minister, Alexis Tsipras, was given this to-do list in a meeting with Merkel, Hollande and European President Donald Tusk. One European official described the encounter as "extensive mental waterboarding."

If the Greek parliamentarians have any sense at all, they will pass the legislation and start the onerous work of dragging a chaotic, fraudulent economic system into the modern world.

What happened to Greece this weekend is what often happens to debtors who live beyond their means. Dickens had it right: "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

If you borrow too much, if you live as if you have earned the borrowed money by the sweat of your brow rather than by trading value for value, then sooner or later you have to reckon with your lenders. That is what is happening to Greece. It has happened to several others in the EU, and to other nations.
Greek hero

The Greek government did a wonderful job of fighting their creditors until they could fight no longer. Then they settled for what they had to accept, because they have no other sane course right now.

Is the deal offered by the Troika and Germany really that unspeakable? Methinks not. Greece has a pension system that is out of control and only exists because politicians for years have pretended that debt equals earnings. Just like California and Illinois, politicians have not been honest with their people, but have pandered to pressure groups and committed to wealth transfers that could not work.

Greece has a corrupt economic system, one in which tax is a dirty word, and those who escape paying taxes by fast footwork or downright dishonesty, are lauded and not looked down upon. That system is unworkable, and has to change.

Merkel was right: Trust between a borrower and its lenders was broken. It is up to Greece now to restore trust with its lenders. They have to help their citizens scale down their expectations, and to create – as much as they can – an economy where earnings flow into the country, taxes are paid, wealth is built up, and the living standard equals that of money in.

The valiant Greek government did its best. Now it is up to the citizens to recognize what their government has achieved, and to work with them to fix their nation. There is a lot to do.

But Greece will stay in the EU and in the Eurozone. If they choose to.


  1. If the death of democracy in greece in favour of corrupt and unethical European Institutions and the rich is seen as success by you, then clearly you need to check the hole where your soul used to be.

    How about you take some poor persons place in Greece, and after you've suffered in they're place for the crimes of the rich and powerful, then you can talk, till then your just being condesending to the Greeks.

  2. That's how you define "success" Glenn? This won't last long before Greek society is broken and radicalism surfaces. Then, just like the previous subjugation of Greece by the Germans the suppression will be upheld by force. This 70-billion dollar transfer of assets to the IMF is remarkably similar to the tribute the Romans used to exact from countries they subjugated. Merkel's people were more efficient. They just rolled up to the doors of the banks, galleries and museums in panzers and trucks. There are plenty of Greeks alive today who went through those years and watched their family members slaughtered. You think they'll be dreaming of "success" Glenn?

    Merkel crushed the Greeks "pour encouragez les autres" - namely the Spanish, the Irish and the Italian people. She's too myopic to grasp how these things play out in the end. If the EU can only be held together by coercion, subjugation and, in due course, force, it'll collapse soon enough.

    I'll bet Golden Dawn sees Merkel today as their poster-girl. She's done more for them than they could have dreamed possible.

  3. MoS, read this article by the BBC and the statement of the EU referred to in it; the asset sales (privatization proceeds) will take place over time, and be used for different purposes, including the repayment of funds used to shore up the banks through injecting capital into them, and for unnamed investments -

    Right now, I believe the Greek PM did the best that he could given the poor hand he was dealt by the appalling hole in Greek finances.

    If he can lead a restructuring of the poorly performing economy, through some of the reforms he has agreed to, the citizens of Greece might stand a chance of much better life.

    I don't know of any viable alternatives for him, given the view of the German government regarding debt.

    The report does mention that negotiations will be taken over the extension of the repayment schedules of Greek debt, and recognizes that the debt level is unsustainable.

    I tip my hat to the PM for negotiating this acknowledgment, given its rejection prior to the referendum. He has done a remarkable job so far.

  4. I suppose you've read that the IMF has abruptly broken ranks with the Troika and has now attacked Merkel's fiscal subjugation of the Greek people. The IMF's explanation that, against every fibre in Angela's body, the Greeks need a huge debt write-off and now leaves no doubt about just how punitive and brutal Merkel's demands of Greece really are. When the IMF sides with the debtor nation against its principal creditors, something has gone seriously amiss. Now we'll have to wait and see, as Spain holds a general election followed by Ireland, whether Merkel has smashed European unification beyond repair. Poor Europe can't dance to Rich Europe's tune forever. Over the past thirty plus years some countries, like Merkel's Germany, have prospered enormously from European unification while Poor Europe has utterly stagnated. After witnessing Merkel's brutal outburst Poor Europe can no longer be in doubt that it is on the wrong side of the tracks and Rich Europe is totally prepared to turn them into vassal states.


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