The Greeks have had quite enough of the failed EU effort to fix the politicians’ sins by punishing the people, which is why they shouted “NO” to further bullying. They don’t want to see still more Greeks living in the street to make the bankers happy. The Greek citizens’ resounding rejection of yet more EU austerity, and especially of Germany’s endless bullying, will change European and even world history in ways we can’t foretell.
And the EU is shocked—shocked!—that the Greeks aren’t really into promoting even more abuse of themselves, as the bankers most sincerely recommend.
It was not remotely possible for Greece to borrow its way out of its present troubles. Greece had already done pretty much everything the EU had demanded, but they wanted more. All the billions the EU injected into the Greek economy didn’t actually go to the Greeks anyway. That was for interest that went to the creditors, and did literally nothing for the Greek people. What the EU really wanted was to force rejection of “socialism” (aka “democracy”), and imposition of the failed neoliberal dogma by way of citizen suffering. The Greeks had had enough of that.
All the billions didn’t actually go to the Greeks.
It was interest only that went to the Greek creditors,
and did literally nothing for Greek citizens.
Up until the most recent election, in which the Syriza party came to power with a mandate to dump austerity and restore democracy, it was never up to Greek citizens to decide their own fate. The endlessly corrupt Greek politicians and their easy acceptance of one foolish unpayable EU loan after another, coupled with the national sports of tax evasion and crony capitalism, put Greece on a downward spiral long ago, in which the citizens were the primary victims.
Greece sank into poorly disguised bankruptcy much like the several Latin American countries that finally made it clear that there would be an end to this neoliberal slavery. But it took the election of Alexis Tsipras in Greece to make the point clear, and the resounding “no” vote on yet another round of suffering and impoverishment by austerity. The bankers apparently think austerity is a matter of paperwork, but it’s a matter of ruined lives.
It took the resounding “NO” vote
to make it clear that Greeks
would not accept any more of the
EU’s endless suffering and poverty.
Now, nobody is saying that all Greece has to do now is reinstate the drachma and go about its business. They’re in for years of hard times, but in the end they just might end up with a stronger democracy and far better economy, either in the EU or out of it. At least, with their own currency they would have the flexibility to fix their own problems.
But the main problem is not financial. The main problem is rule of law. Everyone in the world is tired of corrupt politicians, and if Greece doesn’t clean up its act and put some of its criminal politicians in prison it may become Europe’s sickly cousin. They won’t have a viable economy if nobody pays their taxes and everybody demands favors.
The main Greek problem
is not financial,
but rule of law.
As regular Paul Krugman readers know, the Euro should never have come into existence under current conditions anyway, because the bank does not have the power to protect member states and their citizens. Greece and other EU countries were hobbled in their efforts to get out of financial difficulties because they didn’t have their own currency, yet the European bank was powerless to help because that’s not how it was set up. If the central bank had the powers it needs, Greece would not have been admitted in the first place without significant change in the way they do the business of government, and with the overhang of unstable debt they already had.
It is possible to cure the EU condition in two ways: give the central bank the powers it needs, or let countries use their own currency, as several do. The first way would be better, and it is amazing that almost nobody is even talking about it. The things that plague Greece (and Italy, and Portugal, etc.) will never be completely cured until the EU bank has the powers needed.
Meantime, Greece is in for years of trouble as they work to restore genuine democracy and establish a more solid economic base. They all know this, but apparently believe that it is preferable to the endless misery that was all the EU had to offer.