It’s almost like a classic Greek tragedy: we know it ends up wrong. But the choir sings and sings and we must through a few more long acts before the tragic finale.
It is almost impossible to see how it can end well. There is once again bought time before the inevitable bankruptcy – but unfortunately there is nothing to suggest that Greek tragedy protagonists can (or will) change the outcome. Tragedy hero is Greek Prime Minister Papandreou, who had no governmental power and hence responsibility, as it ran completely wrong.
But as things have evolved, the central government power in Greece became more and more powerless. The Greek crisis is structural. Therefore it cannot be solved with lots of many new credits, and ever so many new decisions about savings in public expenditure. It is not possible to create a normally functioning European nation-state in Greece. Nobody really knows how many public servants who are in the country – and tax evasion and capital flight makes it pretty impossible to get a grip on government finances.
Yet Greece was allowed to join the Euro-operation for a dozen years ago – purely by political reasons. The EU partners trusted that it would help Greece in the process of political and economic reforms to benefit from the discipline that had been agreed. But the agreements were not met – which was frankly tampered with the numbers – and everyone closed their eyes in the rest of the EU, while banks and insurance companies bought up Greek government bonds at lower prices.
This is a heavy problem: The already hard-pressed banking sector may risk big losses on government loans to Greece – And what if the market goes into overdrive by fear of Portugal and Spain to follow – Conversely, high court argued that when there has been very high interest rates to make credit available to Greece is it associated with high risk – and if they ultimately do not want to take this risk, it is the entire financial system, which is completely out of control.
The big global financial crisis was started by the lighter crazed American loans to non-creditworthy homeowners – the so-called NINJA loans (No Income, No Job or Assets … just loans on your smooth face (if you were the owner of a miserable hovel). The loans were packaged together in unmanageable credit packages that were taken over by banks and insurance companies all over the world, and when the rotten hovels were forsaken, and the loans were lost, the systems began to shake.
A crisis will arise, if you have borrowed money unrestricted to a state whose creditworthiness is not really bigger than the wretched hovels American, who felled major banks around the world. The conflict, which has been especially between Germany and France on whether private lenders should contribute to the attempts to giving the Greeks more chances, is provisionally ended up with a compromise. It is difficult to see how it can relieve them from the bear part of the burden of a “restructuring” of the Greek debt – an euphemism to let Greece go bankrupt – but the exercise is obviously to win time. There is a little Micawber’sk about it – if you can remember “David Copperfield”: Something will show up – as the eternal optimist Mr. Micawber always said. And yes – miracles is perhaps not quite over. Perhaps it succeeds exactly to put this into practice. Maybe they manage to get wealthy having the Greeks to pay taxes. Maybe the markets will be persuaded that there is light at the end of the tunnel. Maybe, maybe, maybe.
One thing is certain: The EU cannot afford the single currency to fall apart because of Greece. And the EU cannot allow the Greeks to their fate – even though many voters in those countries which has groan over the bill from the Greek crisis like this – because we cannot see the Greek democracy will collapse, with the risk of a new Colonel-control with prison camps, etc., on the Greek islands … It would shake the whole basic idea of European integration. Now there is time gained – yet again. But at some point one must start with the difficult and painful process, called “restructuring” of Greece’s debt.
It’s no use looking back in retrospect – life is lived forwards, not backwards – but the Greeks had perhaps been better off by keeping their original currency rather than the euro. Greece and the people have always had a special cultural approach to life’s inner values that overshadows all others in the European perception of life. A gifted people and a very beautiful country, that has more to offer than the jingling coins. Greece should, in my opinion have had an agreement with the EU as Britain and Denmark have concluded – outside the Eurozone, but full-fledged members of the EU.
Kurt Lykke Lindved