IS GREECE BEING SET UP by the banks and politicians to delay the inevitable? According to an interview in today’s Der Spiegel, given by Hans-Werner Sinn, the head of Ifo, a top German economic think tank, this is exactly what is happening. Mr Sinn believes that any delay to Greece’s inevitable departure from the single currency only causes greater problems: ‘Because Greece's external debt is rising with every year that passes until it leaves the currency union…’
He goes on to argue that the political leaders in France and Germany want to postpone a decision until after the impending general elections in their countries; thus putting their own interests before those of the Greek people: and as for the banks; it is they who will benefit from the latest round of bailouts, not the Greek people. It would therefore be to their benefit if the troika of IMF, ECB and Germany kept coughing up euros.
This latest round involves €130 billion, and to justify such largesse to the people of Europe, the supporters of the euro have been rushing to the television studios with dire warnings of imminent economic catastrophe by contagion, if this money is not paid to the banks.
But Hans-Werner Sinn is dismissive of such scaremongering: ‘There may be contagion effects. But I think this argument is being instrumentalized by people who are worried about losing money. People keep on saying "the world will end if you Germans stop paying." In truth only the asset portfolios of some investors will suffer’.
If Greece were to leave the eurozone no one is pretending their troubles will be over; but they will be over quicker by returning to a devalued Drachma than trudging along the current mud-covered road they are hell-bent upon travelling. It is suggested by economists like Mr Sinn, that, if the Greeks remained part of the eurozone, it would take a decade or more to free themselves from their debts.
In the late 1980s and early 1990s Argentina faced a similar crises as Greece. But overcame it through being economically independent and making the necessary choices, which, had they been part of a single currency, they would never have had the freedom to make. If Greece were cut herself free from the eurozone, she will have control of her destiny and no longer be faced with the humiliation of having her elected president replaced by a foreign technocrat.
Greece was the first democracy, and the world, with varying degrees of success inherited the title from her. To witness her elected president being dismissed and replaced by the European Union, (which in reality meant Germany and France) I found deeply troubling; especially as the EU was the child of liberalism, that embraced an idealistic need to end all future conflict in Europe, as well as dictatorship (sic).
THERE IS NO easy way through this for Greece, and once Ms Merkle and Mr Sarkozy are, as they hope, once more returned to power, Greece will as subtly as possible, be shown the door. Already Angela Merkle has been accused of wishing to see Greece’s departure - which of course is being denied.
As a British prime minister once said ‘a week is a long time in politics’. Then if this is the case, a year must represent an eternity. It is now being said that Greece’s exodus would be far less costly now than it would have been a year ago when the Europhiles were doom mongering about contagion if Greece left.
Now apparently, the markets in particular have adjusted themselves to the prospect of the euro zone being one member short. As for Italy and Spain; well, it is no longer thought inevitable that either of these countries would follow in Greece’s footsteps, as the Europhiles once suggested they would if Greece was allowed to default.
This is why Herr Merkle is seen as the willing party prepared to push Greece over the precipice. Besides which, Germany has contributed enough of her peoples hard earned taxes to help Greece remain in the euro zone; and Angela Merkle should therefore, not be judged harshly if Greece does leave.
If I were a German citizen whose taxes were being fritted away to keep a foreign economy afloat, an economy which belonged to a nation that despised us, for our historical transgressions; then I would say we still had had a duty to help them. But such help cannot be expended to the detriment of our own economy; which, if it continued, it would certainly be.
GREECE SHOULD NEVER have been allowed to join a single currency, when, economically, she was ill-equipped to do so. I do not blame Greece, but I do blame those early idealists of the European Union (EU) who thought that such discrepancies between each nation’s economies could be sorted out later, believing that the benefits of ever closer union outweighed these problems.
Greece became bloated on cheap borrowing due to the platinum collateral offered by the northern European economies who were in effect her guarantors. It was comparable to myself being given a million pound mortgage while living on a monthly income of just one thousand pounds. For this in effect was what happened. The richer nations of northern Europe stood surety over Greece’s borrowings once she became part of the euro-zone club.
Political idealism taken to such extremes, which in politics, it eventually is, causes untold unhappiness and regret. The need to make Europe a family without nation states drove forward the federal union project - especially following this last war.
Out of pure stubbornness and little else; those pioneers of full political and monetary union within the EU have sought to keep that ambition alive by keeping Greece within the euro-zone. Now, however, after months of prevaricating, they are about to do what they swore would never happen…Greece now has to be invited to leave if the European ideal if it is to survive.
Greece’s behaviour since she became a member of the euro zone; including the frightening growth of her public sector because the country lacked a sufficiently robust private sector, apart from shipping and tourism, to employ her people – so she created a public sector paradise paid for from cheap borrowing which became the main source of employment.
Such was the largess accumulated by Greece’s position within the eurozone, that all sorts of financial benefits were given, including an early retirement age that would have been the envy of those northern EU countries whose energies and taxes were creating Greece’s slumber-land public sector economy.
GREECE WAS NEVER a front runner as many tried to warn the EU at the time. Now finally, after much suffering to the Greek people, those giants of political and monetary union, Herr Merkle and President Sarkozy, are prepared, after billions of euros of expenditure on keeping the euro zone whole, are finally prepared to see Greece depart the euro zone.
As for the Greeks, they must consider themselves lucky after leaving. Yes, I do mean lucky. Let Mr Sinn explain: ‘…Greek products would rapidly become cheaper, demand would be redirected from imports towards domestically produced goods. The Greeks would no longer buy their tomatoes and olive oil from Holland or Italy but from their own farmers. And tourists for whom Greece has been too expensive in recent years would return. In addition, new capital would flow into the country. The rich Greeks who deposited so many billions, possibly hundreds of billions of euros, in Switzerland would see the falling property prices and wages and would have an incentive to start investing in their own country again.
By trying to remain part of the euro zone, Greece will only prolong her suffering. Leaving will be hard of course, but as I have already said, staying would much harder, going on for much longer.
If I were a Greek, I would want out as quickly as possible. If Greece’s political leaders, instead of their EU appointed technocrat placemen, still persisted with membership of the eurozone, then they will invite a cataclysm in the form social unrest that may develop into one of the wilder forms of political extremism.
Believe me. Greece should abandon everything to do with the EU. She will, after a difficult beginning, once more be the master of her own destiny unlike many of those countries she will leave behind.
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