Greek chaos

I find myself in agreement with some of the Greek left wing parties. I think cutting the minimum wage in Greece by 22% is wrong. It is too far too fast when the Greek economy has stalled for lack of demand. There are other easier cuts in spending that they might make, but only if they also take some positive action to stimulate the economy. That means getting out of the Euro.

I think it wrong that the EU tells Greek politicians what budget they should set. It removes the last vestiges of proper democratic accountability in Greece. The surprise is not that it triggered six resignations by Ministers,  but that it did not trigger the resignations of most of the rest. However, it all makes perfect sense if they are to remain locked into a single currency where other countries have to pay a lot of their bills. They need to resolve the issue of Who governs? They need to persuade all the voters in Euroland of a new political architecture which shifts decision making to the centre if they are to have any chance of getting the politics to reinforce the bureaucratic imperatives of a shared money.

There is a passive sullen response from much of the Greek establishment. They follow EU and IMF orders because they are told they have to. They are totally dependent on the next loan or hand out, so they feel they have to accept what they are told. Unfortunately for them too much of the “assistance” comes in the form of loans, and not enough in the form of grants. This leads to bigger debt problems. The Greek establishment then retaliates in the only way left to it, demanding a larger “hair cut” on the debt.

There is a fundamantal dishonesty in all this. If all concerned want the Euro to stick together they have to pay more for Greece. Surely it is more orderly and seemly to pay more up front, instead of pretending to lend them money and then conniving at default on the debt at a later date?

The Germans know from bitter experience just how dear it is to pay for a single currency in a state which struggles to keep up with the rest of the zone. They found they had to put billions into East Germany when they went for a premature currency union in 1990. They did not do that by “lending” money to East Germany. They just paid up. They do not want to do the same for Greece, because they do not have public consent to do so. Yet all the time Greece stays in this union, there are liabilities building up for German taxpayers. They may end up being paid by default rather than by voluntary grant, but it will come to the same thing.