"The intractable problem is that many governments do not trust the Greek government to implement a €12bn (£8.6bn) programme of spending cuts and reforms that will be delivered as part of a bailout. Eurozone governments are seeking proof from Athens it can keep its promises, in exchange for agreeing to start talks on a deal. “The main obstacle to an agreement is trust,” said Pier Carlo Padoan, finance minister of Italy, one of the countries most sympathetic to Greece." [The Guardian]
Europhiles are between a rock of adamant and a very hard place. If Greece agrees to the conditions being imposed to keep it in the Eurozone to secure the third grand bailout, only two outcomes are possible. Either Greece will comply and keep the conditions, or it will not. If it keeps the conditions, it will face decades of deflation--which is to say that the population will eventually rebel and a revolution will drive Greece out of the Euro, into the arms of whoever else. Or, it will fail to keep the conditions, proving that the distrust of Greece is well founded--which is to say that more bailouts will be needed. Fool me once, shame on you. Fool me twice, shame on me. Fool me three times and I am the fool. Europe is well on the way to being branded as the village idiot.
So, is Greece likely to keep its word? Of course not. How could a Prime Minister keep his word when he just misled the entire nation, claiming that they should vote "no" in a referendum on whether the nation should accept Europe's draconian demands, getting a resounding "no" vote, only then to go back to Europe to accept even more stringent and more draconian demands.
And it's not just an isolated act of deceit. Dissembling is a Greek cultural characteristic. Greece's entry into the Euro in the first place was an act of deliberate duplicity, on the part of the Greeks, along with wilful complicity on the part of Europe's politicians. In order to join the Euro, each country applicant had to meet a list of qualitative economic standards--primarily low inflation and low public debt. Then something funny happened.
Between 1999 and 2001, something very mysterious--and indeed convenient--happened. The Greek economy completely transformed itself. Just like that. The budget deficit came down to just 1 percent of GDP. Inflation dropped to just 5 percent. Public debt was still running at around 100 percent of GDP, but at least it wasn't going up as fast as it had been . . . [Matthew Lynn, Bust: Greece, the Euro, and the Sovereign Debt Crisis, (Hoboken, New Jersey: John Wiley and Sons, 2011), p.51.]Greece had lied. It had fudged the figures. Europe's politicians turned a blind eye.
It had cheated and lied its way into the single currency. It had gone on a massive borrowing borrowing spree to cover up the inefficiencies of its economy. When it was offered the chance to reform itself, it had rejected that option and chosen instead a socialist prime minister who had peddled the easy line that the country could simply carry on spending other people's money to get itself out of trouble. [Ibid., p.125]The point here is that for years Greece has deceived itself. It has lied to itself. Its politicians have lied to the electorate. It has lied to the Euro ministers and financial institutions.
In the years after joining the single currency, Greece didn't once bother to stay within the limits laid down by the Treaty. It was not just that they had misreported the deficit data, either. It subsequently transpired that the Greeks had been working with the investment banks to massage down even further deficit figures that were already blatantly dishonest. . . . It was in reality just one more example among many of an economy in which deception had become a standard part of everyday life. [Ibid., p. 119f]And,
One illustration of how dishonesty was part of the fabric of the Greek economy, and one reason why the government budget was chronically in deficit, was that the Greek economy had become a massive exercise in tax evasion. Not paying your taxes had become a way of life for middle-class Greeks. [Ibid., p. 120]The bottom line is this: Greece's politicians will not keep the nation's Treaty commitments. Europhile politicians will turn a blind eye, telling themselves (and their constituents) that all is well. This time it will be different. It will not. If Europe agrees on yet another bailout, the end of the Euro will be inevitable. The only remaining uncertainty will be a debate about how long before the terminal patient expires.
Not trusting the Greek government is indeed an intractable problem. The very fact that such a sentiment could be expressed and seriously regarded tells us all we need to know. If a bailout goes through, the can will have merely been kicked a few more metres down the road. The final collapse and break-up of the Euro is more certain by the month.
Never throw good money after bad, our forbears used to tell us. Doubtless the rejoinder will be, "Ah, yes, but this time it will be different". And that, dear friends, is getting mighty close to insane desperation.
No comments:
Post a Comment