A Greek tragedy, it could be a re-write of the Shakespearian play Julius Caesar. The Brutus in this modern version is of course the EU. Perhaps a more apt correlation is that of Timon of Athens which is about bankruptcy and the failure of powerful Lords to refuse loans.
Act 1. Scene 1 Servant: ‘His means most short, his creditors most strait:’
It would be great to read a Shakespeare play on the present debacle. How the faceless bureaucrats of the EU forced their diktat on Greece in defiance of the peoples voice. How might Shakespeare have penned the death of democracy and the rise of the machine?
Other great writers come to mind, George Orwell – 1984 and Aldous Huxley – Brave New World. How may they have told the story about a David in his struggle for independent thought against the might of a Goliath?
There is consensus among journalists that the deal to keep Greece in the euro zone was harsh:
- ‘brutal negotiations – punitive deal’ Financial Times
- Euro zone leaders made Greece surrender much of its sovereignty. Reuters + NYT
- ‘ultimatum’ NYT
- ‘painful and humiliating agreement’ Economist
- ‘no reason to consider the summit a success’ Sachische Zeitung
The ensuing debate has battle lines drawn. Daniel Stelter a German writer – Beyond the Obvious suggests that the problem is the euro which is ‘flawed’. (France 24 en) He has support in this analysis from two Nobel Prize winning economists; Paul Krugman – ‘a fateful error’ (p168) and Joseph Stiglitz ‘a political project’ (p276) not one based on sound economic analysis.
Stiglitz p275 identifies one of the problems: “In fact, the ECB continually threatens not to buy the sovereign bonds of the countries of the euro zone, unless they do as it says”.
Jacques Rupnick while supporting the deal qualifies himself by suggesting that closer fiscal integration is necessary. In doing so he is accepting the argument that the euro is the problem. Without the euro being reformed the problems will continue. The notion was that the euro would bring the different economies together; “The last decade has proved that to be illusory”. NYT
Of course the economists’ who-fly-the-flag for austerity support the deal and the Austrian School of Economics. There are several ‘schools’ of economic thought so who says the austerity mob has got it right? Being a follower of a school of thought denies the opportunity to think of alternatives.
The Greeks were given three (3) days to force law changes through their parliament to be introduced by Wednesday 15 July 2015:
- Accept the Eurozone’s 2012 fiscal compact, which includes an independent fiscal council. Thus the Greek government cannot make decisions on its own.
- Must introduce EU banking rules.
- Overhaul their legal system.
- Raise retirement age to 67 by 2022
- Must make the statistical agency independent. It seems the EU doesn’t trust the Greeks to be honest!!!
- Further spending cuts.
- Raise taxes + VAT to 23% EU average = 20%
Failure to comply with the package will result in Greece being denied a sufficient loan to pay back the €3.5 billion it owes to creditors due on 20 July 2015. This is indeed a crackdown. The faceless have brought out the whip and are lashing the Greeks into submission.
One of the main creditors the International Monetary Fund (IMF) has come out against the EU proposals suggesting they are too harsh and won’t actually work! Hm. The EU negotiators were aware of the IMF report but paid it no heed. This suggests to me a strict adherence to their preferred goal – make Greece suffer; perhaps as a warning to others. Telegraph 15/07/2015
The IMF decision may have been strongly influenced by the Americans on the committee. The Yanks wanted a debt relief solution but the EU disagreed. A debt relief package would have seen a huge chunk of the debt chopped-off making it easier for Greece to repay the remainder.
Now we have the big boys at loggerheads. Fight! Fight! Fight! School playground rules, please!
It would seem that the FT called this one right by suggesting it was a ‘punitive deal’. It’s a mess caused by the € euro and the failure to implement it properly in the first instance.
Trying to hold such diverse economies together under present conditions will merely stave off the inevitable collapse. Bull by the horns comes to mind.
Why try hard to keep Greece in?
If Greece is allowed to bail out other weak economies may have to follow: Spain, Italy and Portugal among them. These are being given help under the table at the moment.
Another possible reason is that Greece has more migrants knocking on its door than Italy which has got all the publicity. If Greece opted out it could give all the migrants a free bus pass to Europe and that would cause all kinds of ramifications. A political storm is already blowing!
Do some good….join Robin Hood
Paul Krugman End This Depression Now
Joseph Stiglitz The Price of Inequality