Suddenly Greece’s financial crisis is more than money. The deaths of three people in Athens — in a fire caused by a firebomb thrown at a bank — has taken the story away from the jabber jabber and self-interest of politicians, investors, central bankers and associated market hangers on, to real tragedy.
Going bankrupt or defaulting, poor outcomes as they might be, seem less threatening than the deaths of innocent people in a protest carried out by many of those who have caused Greece’s financial predicament: unions protecting some of the most lucrative (retire at 53) and easiest working conditions in Europe, small business people who hide income and under-declare tax, and anarchists, who now form the violent part of every political or social issue in Greece.
The anarchists were a feature of the violent strikes and demonstrations of late 2008 and they have appeared again.
In some ways those demonstrations were prescient: corruption, inefficiency, poor governance (not to forget government ineptitude) tax evasion, much of it by older, more established Greeks, companies and institutions, have been major factors in the country’s financial implosion in the past few weeks. The anarchists went along for the ride in 2008 and made the demos violent confrontations and for that reason, the underlying reasons for the protests were ignored by the government and adults, to their cost in 2010.
Because it has been those issues that have caused the rest of Europe to lose confidence in Greece, its government and its people to re-organise and restructure their lives and finances.
And even though the cuts in spending and higher taxes, and the terrible, continuing debt burden will make Greece’s future drab, burdensome and rotten for the country’s 11 million people, the strikes and demonstrations so far don’t have the urgency or bitterness of the 2008 protests, which went on for weeks and saw widespread arson, looting and injuries.
For the next three years Greece won’t be in control of its own fortunes; the eurozone countries (led by Germany) and the IMF, will be running things, no matter how much they try to hide it. So stand by for more demos, some probably violent, as the sense of helplessness increases.
But while Greece has to bear much of the blame, don’t forget the rest of Europe and its role.
Incompetence, fear and and over-arching German arrogance and politics have pushed Greece and the eurozone to the edge of collapse. All this talk by London investment banks of PIIGS (Portugal, Italy, Ireland, Greece and Spain), is northern European arrogance, or British indifference. If Spain or Portugal follow Greece, then the UK won’t be far behind, for all the smugness of the current government and the alternatives.
Ireland has done more to take hard decisions and cut deeply than any other country. Where Greece goes, the UK will have to follow, cutting spending, raising taxes and inflicting financial pain on its citizens. So drop Ireland and put the UK in the list of countries waiting to crash.
And we mustn’t forget the roles played by bit players — ratings agencies such as Standard & Poor’s and the Vampire Squid and other banks, which did cosy, rich deals with former Greek governments to hide debt levels and raise cash from thin air by pushing debt out to later years, which is about now. Their deals are scattered through the balance sheets of other eurozone countries.
So now the rest of Europe are really scared. Their inept handling of Greece’s problems up to a month ago, and their turning a blind eye to them since 1999 when the eurozone started, have played a role in the present crisis. The primacy of the euro has held their attention, rather than workability of the eurozone, or the plight of people in Greece, even though the country as a whole caused most of its own problems.
The three deaths have brought politicians and others to attention: now we get rhetoric (and in Germany, we must remember Chancellor Angela Merkel’s conservative coalition is facing a loss in an important regional election on Sunday) rather than quick decisions.
“German Chancellor Angela Merkel said Europe’s fate was at stake and France declared the euro was under speculative attack but said it would fail, while the Greek government vowed not to retreat a single step despite violence on the streets of Athens,” Reuters reported.
The Financial Times reported:
“European Monetary Affairs Commissioner Olli Rehn said it was vital to stop the crisis spreading beyond Greece.
“It’s absolutely essential to contain the bushfire in Greece so that it will not become a forest fire and a threat to financial stability for the European Union and its economy as a whole,” he told a news conference.
“European authorities warned that the irresponsible behaviour of financial markets in the eurozone’s debt crisis was threatening Europe’s democratic institutions and vowed to impose tough regulations to protect the area from attack. José Manuel Barroso, European Commission president, said he would propose placing credit ratings agencies under the direct supervision of a new European securities markets authority.
“We are all familiar with the expression ‘markets are testing this, markets are testing that’,” Barroso said. “Well, they are also testing regulatory authorities and democratic institutions. They must know that all of this is ultimately a test for themselves.”
They all have to share in the blame one way or another, but no one should have died.
So, given all this, why should ordinary Greek people carry the burden of cutbacks?
One area worth looking at might be defence spending, particularly arms purchases. Greece is part of NATO. But I bet that proposition never gets any airplay.
Remember also that this is really about the euro. In the words of Deep Throat in Watergate, “follow the money”.
“Where Greece goes, the UK will have to follow, cutting spending, raising taxes and inflicting financial pain on its citizens. So drop Ireland and put the UK in the list of countries waiting to crash.”
The UK is not part of the EMU. It has a floating, sovereign currency which stabilises its incomings and outgoings, and it can always choose to inflate in the event of a severe debt crisis. Greece can do neither. http://bilbo.economicoutlook.net/blog/?p=9533
Yes, agreed, the 3 deaths are a tragedy.
However the real culprit here are the Banks and the Greek Govt (especially the New Democracy Party, that made these decisions at that time) It is no way the fault of the Greek people, thus they should NOT accept the punishment and they should continue their aggressive protest.
This is a creditors bailout, it’s the banks (or Loan sharks) who loaned the money under some dodgy dealings that are asking for the bailout so they can get paid for their dodgyness, so again why do the people of Greece have to pay?
If a corporation or a home-owner default on their loan the bank repossess the assets; it’s highly unlikely the b(w)anker will repossess a whole country.
Russia and Argentina defaulted a decade ago and the world didn’t end.
Hey Banks, this is capitalism in action, it’s called risk, Go F*ck Yourselves.
Greece should not accept the bailout money NOR should the Greeks accept any austerity measure. Continue the fight!
@PG: “It is no way the fault of the Greek people, thus they should NOT accept the punishment and they should continue their aggressive protest.”
In the democratic system — and Greeks should know this better than any — you get the government you deserve. This fundamental corruption didn’t happen overnight; Greek voters have been letting it happen for decades.
Wouldn’t the Greek government have more $$ in the coffers if the citizens hadn’t willingly buoyed up the highly popular cash-in-hand tax evasion system?