They’re burning the EU flag on the streets of Athens

 

I must confess to a certain wry amusement on seeing photos of the EU’s wretched “Crown of Thorns” flag on fire in the streets of Athens.  But the underlying problems leading to the flag-burning are no laughing matter, and can only get worse.

This morning (Feb 9th) the financial pages are hailing the ECB’s latest debt deal for Greece, and the €uro rose on “hopes that Greek politicians were ready to yield to the  demands of their Troika paymasters”.  Yet less than a fifth of the bail-out money actually goes to the Greeks — most goes to foreign financial institutions and the ECB.  

If Lord Byron were still alive, he’d surely be in tears.  Towards the end of his tragically short life he went to Greece, to fight for Greek independence against the Ottoman Turks, and he died (of disease, not hostilities) in Greece.  What would he say if he could see the birthplace of democracy reduced to a mere province of Europe, its elected Prime Minister replaced by an unelected Brussels apparatchik, its spending dictated by foreigners, its people subjected to exceptional economic hardship, with no end in sight and decades of depression to look forward to, dictated by, of all people, the German Chancellor.

I feel desperately sorry for the Greek party leaders.  If they accept the Troika’s prescription, ahead of elections, they will be annihilated at the ballot box.  If they don’t, Greece will default, and the consequent hardship will be just as bad.  The economic solution is not politically acceptable, and vice versa.  There is no way out.

What Merkel fails to realise (or rather, must surely see, but refuses to acknowledge) is that the medicine is killing the patient.  It recalls the old operating theatre joke: “The operation was successful, but the patient died”.

Of course the Greeks are partly to blame.  They lied their way into the €uro, knowing full well that they appeared to meet the criteria only by the application of deliberate and cynical accounting tricks.  They hoped for access to vast credit lines at low rates.  We also have to blame Brussels, which arguably understood the mendacious accounts, but nodded Greece through anyway.  The EU wanted expansion at any price (rather as they do today with Croatia), and damn the consequences.  The fact is that Greece has a wholly different economic culture from most of Europe.  They live a Mediterranean life-style.  They enjoy the sunshine, and they don’t pay taxes.  Somehow they got through with a devalued drachma, but they cannot survive the straightjacket of the single currency.

Merkel’s problem is that her medicine (in addition to killing the patient) is merely addressing symptoms and consequences.  We have a failure of diagnosis.  Merkel perhaps knows that the real problem is the €uro itself, but she cannot possibly admit it.  If Greek politicians are in a hard place between politics and economics, Merkel herself is in a hard place between her perceived need to save the €uro, and the reluctance of German voters to send any more bungs to Club Med.

Even the new ECB measures, if they go through, will merely delay the evil day.  Greece cannot survive indefinitely with a massively distorted exchange rate, and unit labour costs 30 or 40% out-of-kilter with northern Europe.  The longer they delay, the bigger the eventual crash.

Greece must leave the €uro, and default and devalue.  They will go through some hard times, but hard times are already baked into the pie.  One shred of hope: they should reflect on the hugely positive impact on the British economy when we left the Exchange Rate Mechanism in 1992.  Leaving the €uro will be the best thing Greece ever did.

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14 Responses to They’re burning the EU flag on the streets of Athens

  1. maureen gannon says:

    Roger There is something I do not understand, we only ever hear of what Merkozy are up to , there seems never to be any argument at the decisions they make by the other heads of governments , they seem to make all the decisions and the others just rubberstamp everything. how has this happened when they expouse the idea that they are all partners?

    • It’s called realpolitik! In the end, it’ll be the Germans (largely) who pay, so Merkel calls the tune. She likes to be “integrated”, so she brings Sarkozy along for the ride. But it’s easier to get a decision between two than between 27, so she keeps it that way.

  2. Jonathan says:

    Seeing as it’s also the Council of Europe flag, maybe they are protesting against the current UK Chairmanship of the Council of Ministers?

    Who knows?!

    • Thanks Jonathan. But I think we all know. They’re protesting against Brussels, against the Troika, against Germany, against Merkozy. They’re protesting, in fact, against the catastrophic failure of the €uro, and the devastating economic consequences it’s causing in their country. We sceptics were foretelling the disaster more than ten years ago. Were we right, or were we right?

      • Maureen Gannon says:

        And so the hamsters wheel keeps turning, elections over and not what suits the one size fits all brigade .Roger a question as I understand it 25 sovereign signed the treaty of austerity [you know the treaty that wasnt a treaty that Dave would not sign] so who gives Merkal the authority to speak out against the newly elected governments, and they cannot do anything but obey. reminds mw of “VE ‘ave vay’s of making you obey..

  3. OGGA1 says:

    Hallo Roger,
    What would Lord Byron say if he could see Great Britain,the birthplace of fairplay,reduced to a mere province of the E.U by it’s elected senior politicians, it’s people subject to economic hardships
    to the tune of £50+ million a day,with no end in sight and decades of depression to look forward
    to, dictated by, of all people the German Chancellor.
    Roger,do feel free to join us in the support of U.K.I.P
    Regards OGGA1.

  4. Peter Hulme Cross says:

    I really do feel for the Greeks. As you say, they are between a rock and a hard place. But there is an extra dimension to their predicament.

    Years ago I used to teach English in Athens. My students were without exception underwhelmed by their great past – they hated learning ancient Greek and everything about ancient Greek history. They wanted to be part of the modern world, have modern values and do modern things. For them, giving up the Drachma, which was associated with the Ancient World and everything they wanted to get away from, and joining the Euro, was like stepping in to the modern world.and leaving all that old history behind. That is why, against logic and economics, they want to remain in the Eurozone.

    While from our perspective we can see it as the best solution, for them leaving the Eurozone and reinstating the Drachma would be like stepping back in time to a history they thought they had left behind.

    • Louisa Flower says:

      That’s interesting Peter and also very sad. I spoke to a Greek person, a university student, on an online game and he said that times were very, very hard at the moment and that he will probably have to work and leave uni just to keep his mum and sister in food etc. When I asked why Greece doesn’t just leave Europe and default on the debt, surprised he asked me, ‘Can we?’ He had seemed quite knowledgeable up until then and I realised that most ordinary Greek people haven’t even been presented with leaving/defaulting as an option.

  5. Pingback: The Fate of Greece: The EU Death Rattle! « American Defense League (ADL)

  6. louise says:

    Let’s throw the eu leaders power freaks into poverty and see how they like it!

  7. Chris Wintle says:

    Roger was being inquisitive as to maybe say other members of the eurozone are probably thinking when Greece defaults and goes back to the drachma are they also harbouring the same notions as there is not enough money to bail out all the eurozone countries

  8. Edward Peek says:

    Good to see the Hitler Union flag being put to good use. The best place for it is trampled in the gutter!

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