Greek tragedy plays out
This morning, I read a report. Before coffee too.
Published by the IMF, and relating to the ability of Greece to sustain its debt, it’s striking in its honesty. Almost disarmingly so. And it’s frightening in it, too. Terrifyingly so. It’s easy to dismiss it as being something happening far, far away, but of course, we’re talking about the shockingly inevitable decline of one of the greatest nations on earth. I love Greece. My heart weeps.
This is real people we’re talking about, not bland Eurocrats drawing salaries on the alter of political dogma. I have never believed a vote for exit was primarily made on economic grounds – I’m convinced we’d do well enough again on our own (after a period of volatility), but rather democracy, sovereignty and self determination rule the day. This though, neatly undermines those who advocate stay in the name of economic well being.
What does it tell us? Namely, that we can expect a ‘substantial re-profiling of the terms of European loans’. For that, of course, we can all assume we won’t be getting nothing back. Or rather, Germany won’t. Because she was duped into stumping up the readies of course.
Let’s dig into the IMF report a little further, what does ‘re-profiling the debt’ mean? Well, a good stab at it would suggest that Greece won’t be paying back any of the capital anytime soon, in fact.. not paying back any of the interest (and only accruing interest at a maximum of 1.5%) until 2040. And in 2040 of course, it’ll be the problem for my kids, and yours, and it’ll mean no one will retire until they’re 90.
In fact, no one will retire. The rather convenient ‘we are all living longer’ narrative should come in extra handy. And is there strife now, between the IMF and Berlin? “The pledge by European leaders—first provided at the July 2011 Summit—to provide additional support, if needed, until full market access has been restored, provided the authorities adhere to their program, has been critical for staff’s assessment that debt could be maintained on a sustainable path”.
It seems to me that, last year, the narrative was all about the IMF screwing up. Having been handed the mess Webley and told to retire quietly with a stiff whisky, Lagarde is pointing it instead, squarely at Merkel’s head. Or back. You have to wonder about the power plays going on here.
It’s almost theatre, or a soap opera – utterly compelling if you read between the lines. It must have felt pretty good for the IMF to get all that off it’s chest, it reads almost like a confession, equally peppered as it is, with indignation, denial, aspiration and delusion. ” .. debt was sustainable, but not with high probability” is copy to die for (in other words, folks, if we closed our eyes and hoped and prayed really really hard, we could almost convince ourselves we’d be fine).
An indictment on EU hubris, the beginning of the end for the Euro, for Merkel (who has huge economic and political capital invested, not to say German money) and regardless of the future of the Euro, a return to the DM and Drachma? Very, very sad. There is no good option here, only the better of two appalling ones. Either the country fails (impossible, given its location and the regional situation) or German banks take the hit, resulting in even more dismay in Germany at the perception she doesn’t benefit from the EU, rather, she props it up.
I imagine the news won’t be overflowing with this today, but the ramifications are immense. I’m just surprised the news was released before the Brexit vote. The next time someone mentions how the EU stands up for workers rights, can someone point them in the direction of Athens? Time to cry into your Ouzo.