Friday, July 22, 2011

Relief all round, the EU has found a solution: put Greece even further in debt

The newspapers are full this morning of how the fat was pulled out of the fire at the last minute and the euro has been saved. Greece will get another trillion billion of euros to help get it out of the shit, and this time, at the insistence of Germany's Kanzler Angela Merkel, those nasty moneymen, much distrusted by every right-thinking European, will also shoulder some of the burden. They won't acutally contribute any money, they will merely 'contribute' by not having the money they lent Greece repaid for another 30 years rather than after 10. Eveyone feared the worst and the 'markets rose' all over the world at the news that a soltuion had been found. Already, I'm sure, parades are being organised throughout the lands to celebrate this demonstration of unity. But hold on a minute.
Greece's problems will not be solved. The solution is merely that a country so in debt that it cannot afford even to pay the interest on money it had previously borrowed, is simply being lent even more money. In any other context the appropriate reaction would have
been a huge 'what?' and those coming up with the solution would have been hauled off by the men in white coats. The only excuse for putting forward what in any other circumstances (and a more rational society) would have been regarded as completely bonkers is that there was simply no other option. If Greece had gone down the pan, they say, then Portugal and Ireland would also have done so, and then it would have been the turn of Italy and Spain. This would have caused a severe economic depression in the rest of Europe and then the rest of the world. There would have been a global slump. So that's all right then: the world has been saved. Well, up to a point, Lord Copper. The grand plan rests on the hope that Greece, Europe and the rest of the world will start growing their economies again, things will get back to normal and Greece will slowly come up out of the shit and start behaving like a good European. This seems to me rather like a bankrupt going to the races and betting his last sou on a sure thing: certainly his horse might romp home, but equally certainly it might not. The only abiding image of yesterday's meeting finance directors which is at all truthful is a lot of guys in expensive suits sitting around nervously and crossing their fingers.
What no one has been tactless enough to mention, so I'll mention it, is that we just shouldn't be in this mess in the first place (and I must now say we because even non-euro members are equally threatened). Twelve years ago when all those EU fuckwits were waving flags and setting off fireworks and treating the arrival of the new currency as the Second Coming, they all knew - all of them - that several of the member states signing up to join the euro had cooked the books to be able to do so. Never ming the figures, they said, feel the joy. This, they said, is the European dream.
Meanwhile, a great many economists were warning that the Europe-wide interest rate that would henceforth be applied to all those countries joining the euro was inappropriate given the disparate nature of so many EU economies. Well, here's a thing: why are Greece, Portugal and Ireland now in the shit? Why are Irish pensioners and those on benefits having their pensions and benefits cut? Why are the poor in those countries getting ever closer to penury? Why? Because when the economies of each of those three countries started to go awry, the one financiall measure they should have taken to cool down their economies - cutting interest rates - was no longer available to them. But no one has been honest enough to admit that, yes, they were wrong. In the real world, heads should have rolled. But you can bet they won't roll in Brussels.
My sister, who is a fan of the euro, thinks I'm some kind of Cassandra, only too keen to see the whole euro project collapse. She thinks that I'm talking pie in the sky when I claim that it can only get worse and that eventually those who have nothing to lose could even turn to violence in the streets. That has already happened in Greece, yet it is early days of the austerity measures. It is tactless to say so and given that the notion of 'democracy' began in Athens, quite ironic, but the tradition of democracy is still a little shaky in Greece which less than 45 years ago had a few years of dictatorship, and Salazar's 35-year dictator ship of Portugal only ended 45 years ago. How would Brussels react if in either or both countries a 'strong man' or a group of 'strong men' tried to grab power with the support of poor people who decided they had nothing to lose? Such a grab for power need not even be successful . It could well lead to civil war. And if that happened, how would Brussels react? The point I made to my sister was not that this is bound to happen, but that we would be foolish to think that such days are long gone. She said that 'government wouldn't allow it'. I pointed out that to stay in power, governments need the support of the majority of their people, and once they lose that support, they might well find themselves out of office, to be replaced by less salubrious types resorting to naked nationalism. It's not as though that hasn't happened in the past, and I can't understand why she and others insist it can't and would not happen again. When people are unemployed and have nothing to lose, they reckon they might as well try anything.

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