Schäuble needs a history lesson
Poor, benighted Greece. Yes, it lived beyond its means, encouraged by greedy bankers all too willing to see it mortgage its future. And, yes, the Greek way of doing things seems decidedly un-Germanic.
What an unedifying carry-on that scrambled, weekend marathon was, called to decide Greece’s fate and preserve the integrity of the euro. A two days’ notice summons went out to the nine heads of government not in the euro who were told to attend that Sunday. Then they were told to stand down. They didn’t need a grand council of all twenty-eight EU members after all. Talk about an omnishambles and the Grand Old Duke of York.
It was always meant to be that, once enrolled, you were as locked in as all fifty states of the American union are to the dollar. But it turns out that that this is not the case. Former Foreign Secretary William Hague once made the mistake of saying that belonging to the euro was like being in a burning building in which all the exit doors are locked. Really! Wolfgang Schäuble, the hard-line German finance minister, had actually drawn up a plan to show Greece the exit door if it did not comply with EU terms.
There are many truths to this latter day Greek tragedy. Ironic it is that it should happen to Greece of all countries, which wrote the scripts of the very first tragedies concerning the foibles of human nature. Just as it was beginning to make progress under austerity – though there remained much to do, as the latest Brussels proposals made clear – a crazy, economically illiterate cabal of schoolboy lefties gained power. (They once believed that Communism was the answer.) Their silly promises of an end to austerity were seized on by a weary electorate. But how could they work that particular piece of economic sophistry? It was like asking someone to turn base metal into gold.
We are today in a situation in which a mere eleven million Greeks labour under a mountain of debt equal to what our sixty-four million people spend on the NHS in a year and a half. It was, and is, insupportable.
Once again the banks have a case to answer. It is a truism that a lender has as much of a responsibility as the borrower. What is abundantly clear is that the lenders did not exercise due diligence. They knew the Greek character and that once they enjoyed the security of the euro with its low borrowing costs would, likely as not, go on a spending spree and end up living high on the hog, enjoying a standard of living way beyond what their productivity justified.
But while the good times rolled the banks looked the other way and that fatally flawed conception – a currency (monetary) union without a fiscal and banking one was able to bumble along… just. But it was never going to avoid the attention of the speculators on the world’s money markets when the good times ended, as they always do. And boy, did they end! When the banks were exposed as having lent to millions of mainly Americans (but, yes, us too) on mortgages that they knew were likely to go belly-up, they then artfully – and I believe criminally – wrapped up those toxic, sub-prime debts in packages mixed in with sound debts and unloaded them to unsuspecting other banks all around the world. The consequence was that every bank viewed every other bank with suspicion and would not lend to them (an absolutely necessary requirement under the capitalist system) for fear that the other bank had saddled itself with lashings of toxic debt and may actually be insolvent.
When the giant Lehman Brothers bank went down and the Federal Reserve refused to save it, shock waves went round the world. It was a seismic event in that cloistered world of banking which everywhere shut down on lending. It sent the system into a tail spin. Thus we became familiar with a new term: the credit crunch.
Returning to Greece, the bailiffs of the big boys, (the Troika’s IMF, ECB (European Central Bank) and the European Commission) have effectively moved in. Proud, humiliated Greece is being told it must provide collateral for the monies advanced. It must sell off all it can of its public sector along with whatever else can raise hard cash. The next thing we’ll be hearing is that they’ve slapped a ‘For Sale’ notice on the Parthenon. What has been needed throughout, but which has been totally lacking, is a generosity of spirit. If the 520 million people of Europe cannot handle 11 million, admittedly errant, citizens, then something is seriously wrong.
The fact is it is perfectly possible to be a member of the European family (i.e. the EU) – after all, there are nine of us who are not using the euro – without being beholden and tied to that flawed currency. It is equally possible that if one day that currency proves itself by correcting its inbuilt defects and then goes on to become the world’s reserve currency, replacing the dollar, we may ourselves rethink our position and apply to join. But that day is a long way off.
Meantime what of Greece and its mountain of unrepayable debt? 92% of the monies advanced to Greece do not go to helping that country get back on its feet, but to servicing its debts. As a deadline for repayment looms, Greece is handed monies which it must immediately pay back. Thus, while for book-keeping purposes, the situation seems under control it is anything but. It is an altogether hopeless situation. In essence it’s no different from that of a person taking up ever more credit cards to pay off a loan from his bank.
Europe, and in particular Germany, should remember that when the Americans put together that incredibly generous Marshall Aid programme to rescue them from an even more dire situation than present day Greece’s at the end of World War II, there was a total forgiveness of debt. Without that there would have been no recovery of Europe for decades. It remains my hope where little Greece is concerned that our great continent will show a generosity of spirit similar to what the Americans showed with their Marshall Aid programme and declare a forgiveness of debt. Without it Greece has no hope.
A tragic consequence of the present situation which few have thought about is that we are in danger of losing, through neglect and vandalism, much of that peerless heritage we so like to visit and wonder at. The treasures of European antiquity, of which the Greeks are custodians, are already suffering terribly from thefts and shocking neglect. What with the destruction going on in Aleppo, the oldest inhabited city on earth, at Palmyra, Babylon and indeed throughout the Middle East – the very cradle of civilisation – the world will wake up one day and realise that it wasn’t just present day humans who paid the price, but the surviving evidence of what its distant ancestors achieved down the ages.