Monday, July 06, 2015

Greeks vote a resounding NO

This is a story about democracy breaking through. We've had dramatic political events in the U.S. recently -- it's not likely that many of us have been paying much attention to what has been going on in Greece and the European Monetary Union. But Sunday's 61 percent vote against further economic measures that would immiserate ordinary Greeks in order to placate northern European bankers should invigorate everyone who prefers democracy to plutocracy.

Sure, Greek governments in the '00s ran up some huge debts, debts the country was never likely to repay. Note the lenders were probably smart enough to know that, but they trusted the European Union project to save their speculating asses.

Comes the 2008 recession and by 2010, Greece can't pay up. So in that year, the European Central Bank, European Commission and the International Monetary Fund (the Troika) sent enough cash to Greece to enable the private creditors (mostly French and German banks) to escape their losses. In return Greece has had to cut government services, raised taxes and slashed pensions. This sent the Greek economy into a tailspin -- twenty-five percent unemployment and collapsing small businesses sent some people to picking through garbage for food. Meanwhile, all this pain is doing no more than pay interest to the Troika. Greece is never going to pay off the principle on the original loans. Repayment was probably always impossible; with a trashed economy, default is a certainty.

Meanwhile, the Greek people decided they couldn't forever let technocrats and Northern European elites decide what their lives would be like -- or if they'd even survive. In January of this year, exhausted Greek voters turned to the party of the Coalition of the Left, Syriza. Syriza promised to negotiate a better deal with the Troika. Over several months, led by German Chancellor Angela Merkel, the Troika said the bankerly equivalent of "screw you and we will take your mother as well as your money." Greek Prime Minister Alexis Tsipras finally said we'll just put that "offer" of yours up to a vote of the people. That is what happened Sunday. Greeks thumbed their noses in return.

Economist Paul Krugman says this is a good thing and he knows a lot more about it than I do.

... we have just witnessed Greece stand up to a truly vile campaign of bullying and intimidation, an attempt to scare the Greek public, not just into accepting creditor demands, but into getting rid of their government. It was a shameful moment in modern European history, and would have set a truly ugly precedent if it had succeeded.

But it didn’t. You don’t have to love Syriza, or believe that they know what they’re doing — it’s not clear that they do, although the troika has been even worse — to believe that European institutions have just been saved from their own worst instincts. ... democracy matters more than any currency arrangement.

Just maybe, Greece will now have to leave the Euro, the common currency used by most of the states of the continent. This may be economically painful, but it is not clear that fate will be worse than being dictated to by (mostly) German plutocrats. And people insisting on self-determination against bankers is almost always inspiring.


Rain Trueax said...

I had read a lot about it being good if they voted no. We shall see. To me the big lesson from this for our country and regarding either partisan side. Do what you can pay for and be honest about the true consequences. It seems some believe they can vote in say lush pensions for their workers and that's all it takes-- voting. It's rather like saying someone doesn't believe in global warming and that means something as to whether it's true or not. There are a lot of good things I could have in my personal life, but I need to count the true cost of any of them and figure out how to pay for them.

To me the lesson from this for us is two pronged but the same basic thing-- for any action, look at the true cost and figure out if it's worth it. For a Democrat, it's like my belief we should provide college tuition for any student who got good grades in high school. Then how do we pay for that? It's a good thing, but it has to be paid for-- and might even mean government getting into the economics of those universities and telling them they can't be so administration top heavy. It gets closer and closer to government running things. But, you cannot borrow money forever. For the right wing, it's like when they talk loosely about ending ACA, well what is the human consequence to that? What are people to do who cannot afford medical care? Is it okay to let them die based on money? If they have a plan, then tell us what it'll do. Too often nobody gets into the reaction to the action.

I think the Greek people were right to vote no because the banks and corporations should not run the world as they want to do. But in the end, Greece will have to either say they won't pay for what they borrowed or figure out how to pay the debt. Nobody will invade them, but they can be cut off economically-- making their situation more dire. Would the Greek government really take the money in banks to pay the debt? Would European governments back penalties against Greece? Germany would but how much say should they have? How will the US see it? It should be interesting but I am glad I don't live there right now as it also could be very difficult for awhile. Borrowing, interest and taxes are a big deal right now for figuring out almost anything that can be done. This is one area where I am conservative (the way the word used to mean). I don't believe in pie in the sky and I do believe there are consequences that have to be factored into any decision.

Hattie said...

My simple and perhaps simple-minded take on this is that a bunch of crooks stole all the Greek money and left them flat. They were right to vote no. And they should be pursuing the thieves and getting their money back.