With signs of growing panic in the markets and Greek banking system, dirty tricks via post seem to be the order of the day in Athenian politics. The Establishment Parties and the EU continue to develop scenarios suggesting that the sky will fall in if Greeks vote to leave the eurozone, although opinion polls continue to show that – while support is moving increasing towards the anti-Troika Parties – the electorate has no strong desire (35% at most) to leave the EMU. It seems to The Slog, however, that if the Greeks can hold on and keep their heads, inflexible austerity as a strategy will be a dead duck in the eurozone by the time they come to vote again on June 16th anyway.Large numbers of politically aware Greeks are this afternoon (Wednesday) discussing the as yet unseen contents of a letter allegedly from Prime Minister Papademos to President Karolos Papoulias. Mentioned in the transcript of the Coalition discussions, the note is rumoured to give a true picture of the Greek banking and economic situation. To not many observers’ surprise, the letter reputedly depicts Greece as a country flat on its back roughly five yards from an oncoming truck.
However a growing section of the political class suspects that the letter is a fake.
“I’ve seen it,” says one source on the political Left, “and it isn’t signed by Papademos. Our perspective is that it’s more crude scare-tactics, a new attempt by Venizelos and New Democracy to terrify the voters.”
The ‘scaremongering’ explanation is that expounded by The Slog last Sunday – a piece that got enormous hits here, and went viral in Greece. But Sloggers should note that the piece contained the important phrase, ‘Maybe the first few months will be very tough’. This isn’t going to be a breeze, but nobody – not in Brussels, Berlin, Washington or Beijing – has anything to gain from a post-eurozone Greek collapse. It’s just that Brussels, Mario Draghi and Wolfie Schäuble have a great deal to lose from the exit….hence the media terrorism. As Marketwatch notes this morning:
“Germany will realize the risks involved, eat its words and come up with a mega bailout. Instead of a ‘Grexit’ we’ll see a “Grashall Plan” — as a Marshall Plan for Greece will quickly be dubbed — to reflate its economy and keep the euro staggering on for a couple more years, at least.”
This morning – after a long gap – I had a conversation with the Slog’s Bankfurt Maulwurf on this topic. I’ve spent most of the morning checking out what he said – which was dramatic – and with luck the story may stand up more solidly later today.
But as we saw in March, clever plans can screw up badly. So the Greeks need to accept that, if the second election brings anti-Troikaism to power in Athens, things will be bumpy at first. And there are myriad signs of this already.
Greek 2023 bond yields rose past 30% for the first time this morning. Q1 in 2012 was the first during Greece’s ongoing crisis that saw more enterprises shutting down than opening, according to figures released on Tuesday by the Development Ministry’s General Secretariat for Commerce. Data showed that 8,361 new enterprises went into business in the January-March period, while 10,315 ceased operation.
Central bank chief Provopouluos told President Karolos Papoulias that savers withdrew at least 700 million euros last Monday. He was expecting outflows of a further 800 million euros by the close of business Wednesday.
But the Greek electorate needs to calm down. The tide of austerity is turning into the flow of stimulus in both Brussels and Berlin; and oddly, the Greeks could, if they remain firm, get their best-of-both result of rejecting the Troikanaut approach and staying in the euro. It’s a choice that remains theirs to achieve if they think through just how much Berlin-on-Brussels-by-Frankfurt doesn’t want them to exit….and leave a large hole of unpaid eurodebt behind.
The Slog view remains that the eurozone will melt down anyway in the light of the Spanish (then Italian and French) problems. But already yesterday at a press conference after their first meeting, German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece. Fine, they added ‘as long as voters there committed to the austerity demanded to stay in the euro’ as an oxymoronic attempt to look as if they were on the same page of the hymn book: but this is not a demand Merkel can any longer enforce. Austerity is now seen by many of the German soft and hard Left as a chronic policy failure. The SPD would reverse it if returned to power – and to make their point clear, the Hard German Left torched the car of Greek task force leader Horst Reichenbach outside SW Berlin in Glienicker last Sunday night. An extreme-Left group claimed responsibility in a letter to the Berliner Morgenpost newspaper the following day.
But fakery is everywhere in Athens. To complicate matters further – and in a probable attempt to discredit Independent Greeks – the office of President Papoulias on Tuesday issued a statement saying that he’d given a document on Sunday by the leader of Independent Greeks, Panos Kammenos, containing “various scenarios for the formation of a government”. Kammenos insists that he did no such thing, and had written no such document. (Venizelos is seen in the transcripts of Coalition talks attempting a similar trick at the expense of Alexis Tsipras and Syriza.)
The document was all over the media by late Monday, with Kammenos appearing to back a coalition government in the event of a “national emergency”, but the person Kammenos insisting he knew nothing about the document.
Emerging from the melee for a concluding paragraph, clear minds must face what Berlin has created here. Its blind rigidity about austerity coupled with blind-eye support for banking madness and mendacity has created an EU in which, bizarrely, the markets don’t trust Brussels and EU citizens don’t trust Germany. The Merkel Government then compounded the crime by using a hypocritically moralising tone of voice depicting Germans as thrifty and ClubMed citizens as lazy Untermenschen. Along the way, she and her Dr Strangelove Wolfgang Schäuble (in alliance with the doggerel idiot Herman Van Rompuy) have pulled off a quite amazing feat: the alienation of bond dealers, Mario Draghi, ClubMed Governments, the British and, ultimately, the French electorate.
The launch of a vigorous suit against Goldman Sachs (alongside more honesty from the outset about the need to acknowledge past mistakes, and the promotion broadscale debt forgiveness) could’ve made Brussels and Berlin the permanent heroes of this crisis. That they funked it completely reveals the profundity of their incompetence, and illiberal scheming on the side of big State big business – rather than in support of the European citizen.
The result will be a kaleidoscope of problems with which their successors throughout Europe will have to deal for many years to come – the outcome of which remains both murky and gloomy. I am glad to see a free Greece, but I do not want a Far Left Government in Athens. I will be happy to see baseless austerity ditched, but the details of growth are still absent. I am delighted to see German trumphalism reined in, but the innate imbalance of the eurozone remains a problem not even tackled let alone solved. I would be glad to see the eruozone collapse, but I don’t want either a return for Franco-German emnity or the banking tidal wave that will hit Britain’s shores afterwards. I’m glad to see the nasty imp Sarkozy make an exit, but Hollande’s brand of wishy-washy spendiste socialism isn’t going to take France anywhere except to debtors’ prison.
As new recruits to Brussels were informed over many years, “Your basic job is to keep Germany distracted and within its borders”. Both those aims of the EU having failed, I find it even harder now to see any point at all to the European Union.