Grexit: Greece must decide
It is difficult to understand why there is so much jubilation in Cuba or among Turkey’s romantic socialists over the Greek “oxi” (no) vote and the subsequent developments in Greece. Does Greece have an incredible amount of debt? It does. Should it pay it? It should. Can it compare the situation with the post-war situation and the conditions Germany and the World War II victors “agreed” upon? Sure it can, if it agrees to give the creditors the right to teach democracy, clean and effective governance and perhaps write new labor and civilian service laws and a constitution converting the siesta society into a hard-working, German-style disciplined one. Would Greeks agree to that? They love to say “oxi.”
Greece’s recovery decision must be made in Athens by the Greek government. Offering a rescue plan to a referendum might be a good move, but a referendum on whether to say “yes” or “no” to creditors can only be a bad joke.
Assume a family has outstanding debts to the butcher, grocer, greengrocer, baker and supermarket in their town. If the debts of the family reach a point which clearly demonstrates they could never ever be able to pay it back, would the shop owners continue providing food to the family on account? On the other hand, if they stop “funding” the family by providing it with food on account, the family would not be able to survive and the creditors would have to forget about getting their money back. Thus, a payback scheme must be arranged.
That means the family must agree to a set of tight austerity measures. The father and the mother must consider working, for example. Instead of having a three to four-hour siesta every day and spending the evenings at a Greek tavern until the early hours of the morning, perhaps they should learn to cook at home and spend less time out.
Gathering the family and voting on a debt repayment plan offered by the creditors can be a matter valid only for the family, and definitely irrelevant for the creditors. Is anything in that worth celebrating? Why did Fidel Castro’s comrades or the socialists of Turkey celebrate the Greek “oxi” vote? Because they thought it was something against the “imperial West” and thus must be “correct.” Indeed, immediately the grocer in the neighboring town, Russian President Vladimir Putin, jumped onto the scene, saying he could open fresh credit for the Greek family.
Is it indeed sane to consider submitting to a vote a set of conditions creditors are demanding from a bankrupt country? Is it reasonable for that country to expect the “oxi” vote of the indebted members of the Greek family to believe that their vote was an act of democracy, and indeed an outcry for Greek honor and pride? The situation in Greece is a byproduct of a third grade economy entering a club of first grade economies without changing and adopting the rules of the club, while trying to capture a higher level of artificial luxury and glamor through external funding and easy credits from its new partners. Entering the eurozone was a problem for Greece, and staying in will continue to be a big problem unless Greeks learn to give up old lifestyles. Will they?
Now the Greek government, which came to office promising to find an end to the years of Greek economic disaster, brought the country to the threshold of total collapse and started signaling the prospect of turning to some other sources of finance. Will new creditor Russia’s Putin be less demanding than old creditor Germany’s Angela Merkel? Or, can it be that easy to abandon one club and join another with no cost at all?
Well, once upon a time there was a belief in Turkey – it was during the time of the Cold War and rather dangerous to say – which said: “We may cross over the wall.” What the belief tried to say was Turkey could abandon NATO and join the Warsaw Pact, using the Berlin Wall as symbolism. That statement, together with a subsequent “A new world will shape up and we shall take our distinguished place in that new world” lunatic statement, to a great extent were the last examples of social democratic governance in Turkey. Since then social democrats have sometimes assumed roles in governance, but they proved to be more conservative than the conservatives.
Now, there is much talk of a “Grexit,” that is, Greeks abandoning the euro and introducing the new drachma while staying in the European Union. Many European countries would prefer to see Greece abandon the EU all together but even a Greek exit from the euro would help the currency overcome the crisis and consolidate. And for Greece, perhaps with rapid 60-100 percent devaluation soon after the new drachma is introduced, and with the country flooded with cheap and worthless money, people would feel the crisis is over. At what cost? Greeks will discover that later when they start to see the difficulty of cutting their coat according to their own cloth.