The Greek electorate voted to endure the harsh austerity measures imposed on them by their more prosperous currency partners, and those of us who celebrated Fathers’ Day with one eye on the news wires breathed a collective sigh of relief. The Greek dog didn’t bite—at least it didn’t bite global securities markets as deeply as it might have.
A coalition government composed of the first- and third-place finishers—the same two Greek political parties that misgoverned the beleaguered country into today’s mess—somehow seemed a better alternative to most stakeholders than backing the second-place finisher, the renegade Syriza party. Syriza promised to renege on the bailout/austerity plans already agreed to by previous governments, which essentially dared the rest of Europe to watch as Greece stopped paying its bills or began to pay those bills in a currency manufactured in Athens, rather than in Frankfurt.
There were those who argued that a big bang “Grexit” was exactly the shock the system needed to begin to right itself.[1] Presumably, those voices didn’t belong to folks whose euro-denominated invoices were likely to be repaid in severely devalued drachmas. Greek voters apparently agreed and voted for the devils they know, and the rest of us returned to our bar-b-ques. But should we have?
While I agree that a Greek vote to cut itself off from European and International Monetary Fund (IMF) funding would have been foolhardy, I also recognize that continuing to do the same thing and expecting different results is the definition of insanity. A part of the discussion has turned from austerity toward growth—constructively so—because sustainable fiscal conditions will demand both fiscal discipline and increased resources to meet existing obligations. But, I can’t imagine conditions under which growth accelerates fast enough to prevent another Greek default and deepening problems in the larger peripheral economies. Something has to give.
The something that can do the most good and the least damage is, I’ll say it again, more Europe, not less. Sovereignty is precious, especially if you hold a position of governmental power, but treaties, wars and royal marriages have shifted European boundaries before, and economic necessity could cause similar shifts to occur again. The question now is: What human and financial cost before we get there?
***
WEBC.062112.02
[1] The Economist, “Germany and the future of the euro (1); Is Grexit good for the euro?,” June 16, 2012 http://www.economist.com/blogs/charlemagne/2012/06/germany-and-future-euro-1
For the first time in 2,000 years Europe has experienced an extended period without warfare. I am convinced that the people of Europe are very aware that economic union lies at the root of this peace and will do whatever it takes to keep that union.
Really?? Did you not notice the war in the Balkans??
The Eurozone’s problem does not lie in its fear or love of unity. Europe was better off prior to its self imposed unity. Europe has gained the ability to share and impose its mistakes to each member state through its equal currency and equally spreading the results of a common error. The common error is in continuing to allow Europe’s home manufacturing to be done by foriegn based companies, China for instance. That act removes the Jobs. salaries, cash flow, taxes, and all of the peripheral money generated from those manufacturing activities. China is, at last count, holding more than $2 trillion Euros in payment for their tremendous service to the Eurozone’s economic problems. Europe cannot return to fiscal sanity without returning its manufacturing base to Europe.
Marvin E. Fox
A major war anywhere – note I said MAJOR – is very unlikely. You cannot aim a gun, drive a tank, fly a plane, etc. while staring at a phone or sending a tweet.
In a nutshell, the greeks are lazy. Until they realize that years and years of socialism put them in the mess they are now living in. I served a tour of duty in Crete and witnessed it first hand.
Public works projects lie unfinished with weeds growing out of the piles of building materials.
No one will steal the building materials because it requires labor to cement them together.
Both for following be braking EU rules but need to done.
If Greece is bankrupt it can only default or pay things off is script only good for Greek goods. Its’ Government cannot starve many Greeks or not fund education. The real estate bubble should have been stopped in Greece before it bust as in other nations, but that is nature uncontrolled banks who can buy politicians.
Since the underling problem is imports exceed exports. In the short run Greece needs to have export subsidies and tax none-exporting investments to pay for it and force investment into export industries. This problem is greater for Greece than the US because as a small undiverfied nation more og the GDP is in trade than in the USA. But we have the same problem with a longer time for it to become acute.