She may be more associated with its horrors than any other politician in Europe, but Angela Merkel hates austerity. The word, that is. The crisis gave German the ugly term Austerität. When the German chancellor pronounces it, she wrinkles her nose in distaste, affects incomprehension, seeks distance from it. Sparsamkeit, or thrift, is more her thing. Merkel sees that as an old-fashioned household virtue, which she has elevated into national and European policy. But when it comes to the formula that Europe needs most of all, Merkel’s magic word is “competitiveness”. The belt-tightening, in Greece as almost everywhere else, is but a means to that end…The results in Greece are a society traumatised, elites untouched and taking their money out of the country, no jobs for the young, national output shrunk by a quarter, national debt soaring to levels where it can only be serviced by sacrificing any prospect of recovery. Five years into what in Brussels is dubbed “the programme”, Greece is not competitive. It has the EU’s first government of hard-left rebels and rightwing antisemitic nationalists…
“I never discuss economic policy with Germans,” jokes a senior eurozone official in Brussels, “because for them it’s not about economics, it’s religion.”—The Guardian
By this account, it appears that Germany is the leader in European austerity; they are persuaded by Lutheranism and the prophets of the profits. But, also, the German position is not a bluff and it is popular in Germany. They might be willing to destroy the European Union, rather than give Greece a bailout.
OK, so explain to me what happens if Greece says to the troika and the Euro GFY? Being part of the Eurozone helped it get into trouble in the first place. What happens to the banks holding Greek debt? What happens to the Greek economy? Or will anyone even notice?
ReplyDeleteHunger and revolution, I think. Difficulty for "the European project." But nothing like this has happened in Europe in two generations, so all is uncertain. This is all highly speculative. Economist and historian Brad Delong has some thoughts.
ReplyDeleteMy own less-educated thoughts… The Greek economy has been looted and probably is not self-supporting. Its own rich evade taxes, both legally and illegally. The Greek health care system has already collapsed. If Greece leaves the Eurozone, embargoes and food riots seem possible. I think the ECB might try to govern and might succeed, but the fascist Golden Dawn Party is waiting in the wings (they use the laurel and swastika for their symbol!) and they would probably undertake further acts of terrorism, perhaps even succeed in becoming the government of Greece.
A spreading of revolt against the Euro is also possible. Southern Europe as a whole has been hurt by Euroausterity and further defections in Spain, Italy, and Portugal seem likely.
I'd like to hold out more hope but, honestly, unless the northern Europeans show some give (and so far there has been absolutely none), I think the stage is set for disaster.
Oh, also, cultural losses in Greece if the ECB ends up governing. There will be almost nothing left of the easygoing Greek culture, and that would be a shame, as well as a huge loss to Europe.
ReplyDeleteAnd the YouTube album I had in the background just popped out with the famous 1930sdepression song, "Buddy Can You Spare a Dime."