Greek Tragedy: The Political Mess Of Europe13 June, 2011, 19:41. Posted by Zarathustra
Tags: Drachma, Economy, Euro, Europe, European Central Bank, Germany, Greece, Politics
With the silly game by European politicians trying desperately to avoid a default in all but name, austerity will continue to crush living standard of people. Greece civil servants’ salary will be cut, and 150,000 civil servants will be let go by 2015.
No doubt, the already weak private sector is not helping, and the public sector is further tightening the belt for the sake of their creditors a.k.a. banks, people are entitled to be angry. Support for the ruling party PASOK rating dropped to the lowest level in years, a manifestation of the discontent people have. Popularity of the Prime Minister George Papandreou has also dropped to 23%. Within the ruling party, some MPs are calling for the Finance Minister Giorgos Papaconstaninou to go.
Outside of Greece, matters are not looking very good. The spat between the European Central Bank and German government makes everyone wonder what’s going to happen. The ECB opposing the private sector participation in the bailout and the German insisting on one. There is no wonder, because the German banks’ exposure to Greek debts is massive, thus the German government would like to push towards a sort of default which will not be considered as a default.
Lawrence McDonald talked to Irish newspaper The Independent, which nicely summarise the situation for Ireland, and quite possibly for other peripheral countries as well:
Ireland is being treated very badly by our European partners, and concurs that leaving the euro should be considered as a viable option
There may be haircuts around and across the eurozone… If there are haircuts around the EU, it will shock the markets, there will be choppy waters, but it’s not like Ireland will be the only one. I think Portugal and Greece and some others too possibly.
I cannot see the Germans, the Dutch or the Finns simply handing over the cash and keeping on smiling. In return, they would demand that the recipients accept a partial loss of fiscal sovereignty. The recipient countries would call this colonialism and demand that everyone else accepted the same.
So again, back to the unbearable absurdity of Euro, one probably should be surprised that in the next few years, the Euro will become a history, at least for some of the PIIGS countries. Greeks will return to using Drachma.