What are we to make of the tragedy which is unfolding across the beautiful waters of the Aegean? Here in high summer when they should be enjoying the fruits of their glorious holiday season they are locked in a battle for their very survival with the giants of north Europe and their banking systems.
Let’s be clear about one thing: Greece has already paid a terrible price for its profligacy and easy living on the back of a strong currency of which it was never qualified to be part. Their economy has had been bludgeoned by the money men into shrinking by a horrendous 25% and their youth unemployment exceeds 60%.
Right at the beginning, the books appealing for entry into the euro were cooked, helped in no small part by that ‘Great Vampire Squid’, Goldman Sachs. But while the Germans and the rest knew very well how the Greeks went about their business and that they were not a suitable candidate, political Europe had to take precedence over economic Europe and they let them in.
With other weaker economies such those of the Spanish, Portuguese, Irish and Italians allowed to join the party, the Germans ended up with a currency much less strong than their old Deutschmark would have been and that made it much easier for them to flog their BMWs and the like. Borrowing rates for these weaker economies became much lower than ever they would have been had they been using their own currencies so, of course, they were happy to buy north Europe’s products as well as treat themselves to a much higher standard of living than their economic performances warranted.
All was well throughout the goods times that preceded the financial crash of 2008. That ill-conceived monetary union – which lacked the also essential fiscal union – of the euro could bumble along so long as there were no headwinds. But, boy, it wasn’t so much headwinds that arrived but rather a hurricane. The Credit Crunch brought the Western world’s economies to the brink of meltdown.
Today the weakest of the dominoes stands in imminent danger of falling, with the risk that others will follow. And the country that benefited most during the good times, Germany, insists on playing hardball. It needs to show a bit of humility – as well as compassion – and realise that it must take its share of the blame for the plight that Greece finds itself in today.
Despite its own banks, along with French and others, being exposed to a possible Greek default of alarming proportions, it knows that a Greek economy that cannot grow because of acute austerity will never ever be able to pay off its debts. It needs relief and restructuring. Long before this present crisis broke they acknowledged this fact. But what now are the Troika’s proposals? Even deeper austerity. Can we be surprised that a government that was elected on a mandate to end austerity has thrown up its hands and said enough?
If Greece on Sunday, in its touching desire to remain at the heart of the European family – but also out of sheer terror at the thought of the consequences of being cast adrift – votes to accept the Troika’s diktats, it faces never-ending recession. If the Greek people vote no on Sunday, they will stay in the EU and possibly even the single currency, but mayhem could follow with a complete national shutdown. Could Brussels stand by and see this happen?
Actually the majority of economists believe that this seemingly bonkers course would serve it best (Argentina went down a similar road). Economists say there would be six months of hell, or possibly longer, but then a future would open up for Greece. With holiday costs cut to half their present level, we would cast aside that old warning to ‘beware of Greeks bearing gifts’. Greece would become the continent’s playground as never before. Poor, suffering Hellas, the first of all Europe’s civilisations, would start to smile again.