The question is now what will happen if Greece breaks the EU’s stranglehold . The “leftist” Syriza party is no instant fit for Europe’s ultra-conservative financial sector. Former communist party member and leader of Syriza Alexis Tsipras has been using terms like “Merkelism” to describe the brittle, sour support provided to the Greek economy by the EU. Not a setting for small talk and pleasantries.
There’s another side to this situation. Greece has to re-negotiate the lousy deal it got from the EU. €240 billion is the name of the game, and if the deal goes bad, there will be no winners. Another problem is that if Greece walks out, or otherwise derails the austerity package, other European nations may follow.
There’s another issue, with a double edge to it – Syriza hasn’t won a majority, according to current projections. Tspiras’ party has, however, won a landslide turnaround. The sympathy of the country, if not the political machinery, is on his side. The lack of a majority has a soft side – If he does what he said he’d do, he’s a hero. If he doesn’t, he can blame his coalition partners, if any.
The financial media have been nudging around the issues. The Financial Times, in the course of a long article about Tspiras’ background, couldn’t help commenting that a Greek exit from the EU could panic the markets. This was the logic when the austerity measures were introduced. The environment has changed, however. The Euro has taken some savage hits recently, up to 10 percent, and ironically, a bit of good Forex trading could help the Greeks considerably.
Biz News, citing a Bloomberg report refers to Tspiras as an “ultra leftist,” which is more or less a blanket condemnation in financial media. To its credit, however, it also outlines the effects of the six-year recession and 300,000 impoverished households which has plunged Greece into an angry despair which defined the election result.
No mention of the absurdities of the austerity measures, which are impoverishing Greeks to manage account entries in the world’s mega banks, has been made. Heating cost increases are being proposed, for example. This penny pinching approach damaged incomes, destroyed pensions, and simply annihilated living standards, more or less overnight.
That’s the visible news. There’s more to it and it’s global. Greece is looking like the canary in the coal mine — the canary that’s choking. In 2013, the UN stated that the EU’s austerity measures were impacting Greek human rights. The IMF admitted it made a mess of the Greek loans.
The rest of the world, interestingly, seems to be quite incapable of managing public debt. The list of issues and incidents affecting all nations, including the US, with its huge, bizarrely defined, and still unresolved public debt, is endless. Almost every country on Earth is in debt up to its ears.
More to the point, this massive public debt is to banks and other financial institutions — which is why the financial institutions, which break laws with a monotonous regularity, are so politically powerful. The world’s politicians, even real leaders, are stuck with this curse.
If they repudiate the debt, they collapse the economy. If they tolerate the debt, it festers and grows. If they pay the debt, it sucks the life out of revenue which could be used for more interesting and far more useful projects than breeding bankers.
Fortunately, the world’s politicians are infinitely malleable and not particularly intelligent. They don’t want melodramas in the market, quite rightly, and really don’t want to manage the problems, quite wrongly.
Greece will be the testing ground for the EU’s faith in the old regime. The home of democracy may become the home of the first democratization of global finance. If so, it’ll be a historical first.
