Greece and the Euro sideshow

17 06 2012

The wounded dinosaur.

It’s an image that is a cliché. The injured giant, thrashing wildly in all directions as it sinks inexorably to its death. Because it’s a cliché, we forget that it can be true.

The European Union is now that wounded dinosaur. An oversized, inadaptable beast with savage teeth, a bad temper, useless arms and a miniature brain, thrashing wildly in all directions as it sinks inexorably to its death.

When the Eurozone debt crisis erupted two years ago, it was immediately apparent that the game was up. There was no way that Greece was ever going to be able to repay such a mountain of debt. The banking sector debts of Ireland, Spain and the rest were insurmountable. The single currency itself could no longer be sustained in its existing form. The story of 2008, adapted and retold for 2010.

For two years the political elites of Europe – both federal and national – have gone out of their way to avoid these truths, whilst driving a brutal austerity agenda that is impoverishing millions across the continent. The EU, heralded for so long as the guarantor of democracy and prosperity, feeding its expiring body on the remnants of both.

Now, in 2012, the miniature brain has finally had an idea. Like all the most dangerous ideas, it is both clueless and compelling. It is the idea that this crisis is about the survival of the Euro.

We can see this in Greece. Sunday’s election has been cast across Europe as a referendum on Greece’s membership of the single currency. Despite the fact that all the main parties want to remain inside the single currency, the EU has decided to impose its own terms on Greece’s election.

So now a vote for Syriza, the stridently left-wing party, has been billed as a vote for the drachma. Only a vote for the discredited right-wing New Democracy party can save Greece’s membership of the Euro, they say. Syriza’s demands to radically renegotiate the suffocating bailout package, insist Brussels and Berlin (and London), are the equivalent of rejecting the bailout funds and leaving the Euro. There will be no negotiations.

It’s one of the most blatant attempts to nobble a democratic vote that Europe has seen. It’s part of a deliberate strategy to scare Greeks into voting for New Democracy. It also happens to be complete bollocks.

The Greek crisis is not about the Euro. The matter at the heart of the Eurozone crisis is the fact that the banking and resulting sovereign debts will never be repaid. They are too high. It is too much. The austerity measures designed to bring repayment are killing an entire continent’s economy. A little infrastructure stimulus, as proposed by Francois Hollande, won’t cut it. What was true in 2008 and true in 2010 is still true in 2012 – this debt won’t be repaid.

Where membership of the Euro comes in is two-fold. First, the Euro overvalues the currency of southern European nations, making export-led recovery impossible. Second, and more important, are the constraints that membership places on debtor countries’ economic policy.

Because Berlin and the European Central Bank are so intransigent on austerity, recovery within the Euro is impossible. As long as Greece is a member of the Euro, it has no choice but to follow these diktats that are crushing its economy and its society.

This is why Greece’s membership of the Euro is a sideshow in this election. It is not the case that a Greek exit will crush its economy while membership will bring its salvation. A disorganised exit will crush its economy – but so will the continued observation of the bailout terms. Either way, the result is Greek default, Greek collapse, and a full-blown crisis across Europe.

The key issue is policymaking in Berlin and Brussels. A complete transformation of the EU’s agenda could enable some kind of recovery in Greece – ditching austerity and ‘turning the taps back on’. Because the EU is set against this – and Hollande has largely fallen in line – Greece’s economic survival is at least as impossible within the Euro as outside.

On top of ditching austerity, the EU would also have to address the impossibility of repaying Eurozone banking debts. And none of this addresses the interest rate mismatch created by the single currency.

What should have happened before – and should happen now – is a controlled bankruptcy of insolvent banks, a controlled default of un-repayable debt, and a controlled Eurozone break-up to solve the interest rate dysfunction.

That word. Control. Europe’s politicians have had two years to bring control to this situation. But instead they obsessed over keeping their integrationist ‘project’ alive. So there is no control. There is only chaos. Chaos and bullying and brinkmanship, and the destruction of democracy.

And so the wounded dinosaur goes on thrashing, until the meteor hits.

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23 01 2013
Snobs to the left of us, shysters to the right – here we are stuck in the middle with EU « A Thousand Cuts

[…] on the continent, but our role ought to be to give European workers the courage to refuse the blackmail visited upon the Greeks last year – namely, that any resistance to austerity means leaving the Euro, leaving the EU, and economic […]

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