Sunday, June 17, 2012

Will the Greek electorate ignore the German threats?

On the day of the Greek legislative election re-run the German tabloid Bild addressed a threatening letter to the entire Greek electorate, which has been translated into English by the Guardian:

"for over two years now, the situation [has been] like this: Your ATMs continue to give you euros, only because we put them there, the Germans and the other nations that have the euro ... If the elections are won by parties that want to put an end to austerity and reform we will stop paying ... You will choose between painful logic and complete disaster."
The implication being that austerity measures have saved rather than further damaged the Greek economy, that the bailouts were used to provide cash to ordinary Greeks, rather than to pay out on what should have been losing bets made by reckless German and French banks on Greek government bonds, followed by a transparent threat that Germany will force Greece out of the Euro if they dare to vote for the "wrong parties". The conclusion being that voting the "wrong way" will lead to complete disaster.

The German tabloid newspaper Bild clearly consider Greece to be
nothing more than one of Germany's many insignificant client states.
The first point is transparently absurd. Keeping Greece in the Eurozone through the creation of vast unpayable debts in order to bail out the German and French banks that recklessly lent the money to the Greek government in the first place benefits only the European banking sector at the expense of millions of ordinary Greek people who have seen their standards of living annihilated by the austerity fetishists over the last two years.

The threat that Germany (and the other unnamed nations) will boot Greece out of the Euro if they vote the "wrong way" demonstrates quite clearly that the Germans now consider Greece to be their own subservient "client state" and an inconsequential economic backwater that can be bossed around and intimidated at will. The estimated cost to the Eurozone of a disorderly Greek exit from the Eurozone has been estimated at €1 trillion, (more than 3x the size of the entire Greek economy). It seems that the Germans actually have much more to lose from a Greek exit than the Greeks themselves do. The fact that they are so willing to make such threats makes it seem that they are so determined to make the Greeks suffer, they would attack their own economic interests to do so.

The only part of the letter that is not based upon transparent misrepresentations and threats is the conclusion that "you will choose between painful logic and complete disaster" which makes sense, but only because the German tabloid has got it completely backwards.

The painful but logical choice would be for Greece to exit the Euro and defaults on their external debts. It is time for the Greeks to put their own national interests above the interests of their financial sector creditors. The reintroduction of the Drachma would allow Greece to remove the economic straight-jacket they have been wearing since they gave away their monetary autonomy to the European Central Bank. The ensuing economic disaster would hardly be fun for the Greeks, but it would at least redistribute some of the misery to the Germans and the reckless financial institutions they have insisted upon supporting at the expense of millions of ordinary Greek civilians. If the Greeks vote for the anti-austerity parties and the Germans ensure that they are punished for their impertinence by booting them out of the Eurozone, at least the Greek government would regain the economic freedom to weaken their currency, making Greek industry more competitive and creating a tourism boom as European tourists head to Greece instead of significantly more expensive Eurozone destinations.

Allowing themselves to be intimidated into staying in the Eurozone implementing even more barmy neoliberal pseudo-economics dressed up as "austerity" and racking up even larger unpayable debts in order to pay off their financial creditors would quite obviously be a complete disaster for the vast majority of Greeks.


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