Europe’s Financial Elites to Greece: Drop Dead
Video via The Guardian, showing campaign rally by Syriza leader Alexis Tsipras.
The New York Times has a lengthy, heart rending account of the suffering Greeks are going through as their economy collapses, money disappears, businesses close, and their ability merely to survive faces increasing risks. More here from The Guardian on the collapse of the health care system.
If there had been an equivalent natural catastrophe — a massive tsunami or earthquake — the response to the human suffering on this scale would, one hopes, be entirely different. Whatever else you do, you save the people first.
But this human catastrophe — with echoes in Spain, Portugal, Ireland — was entirely man made by Europe’s financial elites. Even worse, those who caused it were not held accountable, those responsible for preventing or ameliorating its effects are making it worse, and some of the elites are insisting the victims deserve their lot. We hear the same arguments here.
Europe’s political and financial elites have spent the last month trying to influence Sunday’s elections in Greece. But in the last week the message has radically changed: Before, the message pretended Greece could survive; but now Europe has written off Greece and condemned it to suffer and fend for itself. One wonders what the elites think this message conveys to the next inevitable victims of Europe’s failed experiment.
The public version of the month-long unified message, coming from everyone in German Chancellor Merkel’s government to the troika heads of the IMF, the European Union and the European Central Bank (ECB) has been a cross between a big lie and a big distraction: if Greece wants to stay in the Euro, it must elect parties committed to implement the austerity agreements that Greece’s leaders accepted. Keeping the deal, they insisted, is the condition for continued emergency lending to keep the government at least marginally afloat, which mostly means paying its bond holders, whether or not public services continue.
Of course, that is not the choice Greek voters want. They want to stay in the Euro, to be part of the larger European project, but they want whatever conditions Europe imposes to define a credible path that ends the depression and relieves Greek suffering. And why would any peoples want less? But Europe’s leaders have never defined, much less offered such a path.
The logic and moral appeal of the Greek desire is self evident, and it is a measure of the Euro elite’s distorted priorities that instead of acknowledging the real crisis of human suffering, not just in Greece, but in Spain, Portugal, and Ireland, the elites have systematically condemned any Greek leaders who advance this argument. Hence, Alexis Tsipras, who logically says Greece should stay in the Euro and make efforts to pay it’s debts, but should not be forced to strangle it’s own economy and impoverish its people, is called “radical” or “extreme.”
The financial elites of Europe apparently do not understand this logic or simply don’t care. But their incompetence only starts there. Last week, ECB head Mario Draghi dithered while Spain’s conservative government and the leaders of the EU fashioned a bank bailout that collapsed in hours of market opening and threatened Spain’s ability to borrow. Apparently none of them could foresee that if you structure the Spanish banks bailout in a way that increases the debt load of the Spanish government, the market would translate this as increasing the government’s risks and raise borrowing rates accordingly. No one has resigned from this strategic blunder.
Only two weeks ago, Mr. Draghi lectured Europe’s political leaders, telling them the ECB should not rescue the financial system without major progress on financial and fiscal unification agreed by the political side of member nations. Okay, but in the last few days, even though there has been no real progress from the political leadership, the ECB and the EU have leaked word that they are working on a grand scheme to rescue the entire financial system — something Draghi said he wouldn’t do the week before.
The timing of this very public announcement appears driven by both panic over the the failure of the Spanish bailout and it’s feared effect on markets, along with a desire to mislead Greek voters. The latter tells you a lot. There is nothing in the proposed grand scheme — better deposit insurance, centralized banking oversight, and so on — that will help save the Greek economy or boost the economies of other struggling Euro nations. The scheme may temporarily slow down the Euro/bank runs — necessary in any event — that are draining Euros out of several economies, but it’s unlikely to stop the bleeding and not designed to boost the economies.
The people know the system is collapsing — they’re getting their money out anyway they can — and they now suspect it’s too late to save the system; the financial and political leadership are not capable of or willing to do enough to stop it, even if that were defined and possible.
Still, you have to marvel at the cynicism of announcing vague plans to save the system a day or two before the Greek elections. Nothing here will save Greece; they’ve been written off, and the misery will continue in unpredictable ways no matter how they vote. Who’s next?