A few points:
- This isn’t about soaking bankers. Bankers, with some exceptions, were paid off during the “bailouts.” Right now it is taxpayers who are on the hook. If you wanted this done right (lenders take their losses), it had to be done in 2010.
- The immediate question is if ECB will restore “lender of last resort” services. If it doesn’t (a shocking failure in a central bank), then Greece will be forced to issue its own currency. This may mean, initially, bills denominated as equal to Euros. They won’t sell on the market for equal to Euros, though.
- Many Greeks who voted “no” seem to think that the vote was a way of giving Syriza a better hand in negotiation (this is what Tsipras said, so it isn’t an irrational belief.) We’ll see whether or not the Troika and the EU are willing to re-start negotiations. If they aren’t, I wonder if Greeks will blame them or Tsipras.
- The IMF has called for debt reduction and admitted they got it all wrong. How much that matters, I’m uncertain, but it does give space for a deal. Such a deal would still involve some austerity measures, just not as many or as harsh.
In the short to medium term, this referendum matters more to Greece than Europe. Unless the monetary authorities are completely incompetent, they should be able to contain the shocks. Greece’s economy is small; the amount of debt involved is, actually, small as well.
One should not discount the possibility that the ECB and “Institutions” are incompetent and will screw it up, mind you. Their behaviour thus far hasn’t just been cruel, it has been stunningly stupid from a clean, technocratic POV. Mandos’s article about “How EUians see this” was important, but also necessary to understand that the actual austerity policies followed were delusional if the ECB (or anyone else) thought they would lead to a sustainable debt load for Greece. They could not and did not.
It’s rarely clear in such situations if the people making decisions believe their own propaganda: Did they think it was sustainable and wouldn’t lead to a crisis like this? Did they know it would lead to a crisis and think the Greeks would sit still and take it (not completely unreasonable, actually, given how much pain people have accepted from plutocratic policies in the past).
I don’t know, but I think it’s the winner’s curse: Neoliberalism (and austerity is part of the neoliberal project), has been winning for so long that those who came of age and rose to power during it (essentially all our central bankers, technocrats, and politicians) cannot imagine it would ever lose. The look of incredulity is that of the three hundred pound bully when a 90 pound weakling doesn’t buckle. (Again, this doesn’t mean that the technocrats don’t also think they’re doing the right thing morally.)
If I were them, and by that I mean “not me in their position, but actually them,” I would crush Greece flat and make an example of it. If Greece comes out of this like Iceland, with a healthy economy in three years, then other populist movements (left or right) will receive proof that their policies can work. Democracy, as opposed to technocratic rule, will gain legitimacy, and so on.
This is not a prediction; as Machiavelli observed hundreds of years ago, [people] are generally destroyed because they are unable to be either wholly good or wholly bad. Doing the right thing from day one would have been an excellent policy. Having done the wrong thing, these decision makers’ futures are intertwined with it: They will not keep their positions if Europe turns genuinely populist. Worse, that populism will almost inevitably turn against their masters, the oligarchs.
This is unacceptable. To oligarchs, Europe is one of the few places actually worth living. Yes there are a few American cities, maybe you might want a vacation home in one of the nice Australian or Canadian cities; but that’s about it. Tokyo’s great, but you don’t speak Japanese. Dubai, despite its beauty and being created exactly for oligarchs is too soulless and boring even for oligarchs. Russia or China, well, China’s polluted, and if Putin or the Chinese Communist party says jump you do it, or you get dead or in jail. Oligarchs don’t rule Russia or China, though they hope to in the future.
This is also a significant moment geopolitically. Putin said that he won’t help Greece monetarily as long as it is in the EMU (uses the Euro.) That’s as good as saying he’s open to helping them if they aren’t. Greece is geographically important, can be used as a pipeline route (or terminus), and could offer Russia a warm water port. There are deals to be made. It’s for this reason that the US Treasury secretary keeps telling the Europeans to cut the debt and make a deal; the US doesn’t give a damn about Greek suffering, but it does care if Greece swings towards Russia.
So the game continues, and it is actually important. Greece is a small country, but it’s not a country whose population is smaller than most cities, like Iceland. Its success or failure at standing up to austerity, neoliberalism and technocratic EUian ideology could make a large difference in whether other, even larger countries, decide to do so. And by “other, even larger countries,” we mean essentially the entire south of the EU: Italy, Portugal, and Spain. Ireland might consider it. Finland should consider it and after a few more years of pain in the Euro straitjacket, may well do so.
These countries subsidize the north, and especially Germany, by keeping the Euro cheaper than it would otherwise be (let alone the value of a reborn German Mark). If they go, Germany’s economy is suddenly going to look a lot less efficient and sell a lot less goods (but, wait, isn’t every advantage the Germans have because they are good people?).
Interesting times, my friends. This is power politics, with huge amounts of real power and massive amounts of money in play– not today, but as consequences of what happens today. The fate of Greece matters, not so much in itself (except to Greeks and kind-hearted souls) but for what it will mean for Europe, NATO, Russia, and every country in Europe. It could be one of the dominoes which leads to the end of the neoliberal era.
You’re watching history: While remaining sympathetic to those being ground to pulp by its wheels (or in between your own screams while caught in said wheels), let me suggest that you enjoy the view.
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