But the Greek government, particularly Tsipras and the now resigned Varoufakis, have been reaping what they sowed. Of course, they are also sowing what weeds previous governments in Greece were planting, but their handling of the situation has been particularly arrogant and foolish. There is too much national Greek pride, too much touting the Greek democracy -- at the expense of belittling the democracy and will of voters of other euro nations. The Telegraph cartoon about various life-saving attempts in Greece reflects the European mood very well.
Syriza finds out the hard way that working in government is a very different thing from making a big noise in the opposition and gaining votes with populism. Sadly, they seem to have done great hurt to their nation in this process.
Of course, opposition parties are mostly, well, in opposition. In Finland, particularly the Social Democrats -- but also Greens and the Left -- are doing a good job in both having their cake and eating it. They criticize the Finns party for giving new money to Greece -- a panic reaction when SDP lost perhaps half of their working-class voting base to The Finns popular party, and they haven't recovered, and apparently never will. At the same time they criticize the government for a too tough line that makes ordinary Greeks suffer.
Paavo Arhinmäki, head of the Left League, was very good chums with Tsipras -- until now. Now he realized that oh, "I never was a Syriza fan." Hey, you were. You walked like a fan, you talked like a fan. Now you just have noticed that even your voters are finding out it was a bad idea.
The Greeks are sufferingYes, the Greeks are having a very bad time. And there is no end in sight to the suffering as long as they want to hang on to euro. No amount of bail-out loan packages is going to help, because the structures are broken in Greece and the country does not want to fix them -- or even if it did want to, it takes time and they don't have the money to live while doing it. Forgiving all Greek loans while remaining in euro is not going to help, because then Greece will continue to run things the way it has been running so far.
To me, the crisis and its current climax seem quite logical, given the way Greek politicians talk, and the way German (and Finnish, and other EU countries') citizens think. Lots of opinion writers claim that the German politicians (unelected by the Greek) are exercising power that they are not entitled to: they are sending a control commission to mandate policy in Athens. Dictatorship! Junta!
But the dictating of policy only happens because the Greek politicians have driven their country to immense debt. They wouldn't have to take advice and control from outside if they weren't asking for loans.
And it is inconceivable for a German taxpayer to give away his or her hard-earned tax euro which has been extracted from him or her by the German state, when it is completely unclear what he or she would be getting in return.
This is particularly difficult, when one considers that the Greeks claim their economy is grinding to a halt because of excessive taxation - but the taxes in Greece have been much lower than in many of the euro creditor nations. Proportion of tax revenue to GDP has been around 30 % and has now risen to 33 %. This is bad according to the Greeks. In Finland, tax revenue is 44 % of GDP. Does it not hurt the economy here? Surely it does. You can see it in the price level of Finland, as much of the revenue is collected in VAT and employment taxes.
Blaming Germany for past grievances does not help. Jailing bankers does not help.It is completely irrelevant that Germany stole the gold reserves of Greece during Second World War. That is past and gone. The very point of the European Community project is to put that kind of things behind, and "make war not only unthinkable but materially impossible" through economic integration. German tourists are no longer even facing the "occupation - no, holiday!" question-answer at the border.
It is completely irrelevant that some of German debt was written down after the War. Also much of Greek debt has already been forgiven: private debtors wrote down 107 billion euros in the 2012 haircut -- and it only postponed the eventual crisis.
It is completely irrelevant that "75 % of previous bailout money has gone to German and French banks", which is one of the things favourite slogans in the political left (along with the Iceland solution myth) . Hey, those of us who were critical of the first bailout deals told everyone this is going to happen. Risks of these investors were transferred to the EU taxpayers. That was done over 5 years ago, and it is done. The risks are now with the taxpayers, and us taxpayers are not happy to pour more good money after bad.
(The Iceland solution is a myth because Iceland's problems were entirely different from those of Greece: Iceland never had much of public sector deficit; it allowed investment banks to go bust because those banks had not much to do with the Icelandic economy. The problem in Greece is public sector deficit.).
It is also not very relevant for Greeks that Germany and France were also breaking the rules of the monetary union when it was established in early 2000's. Germany and France were able to sort their things out. Well, Germany was, and France is able to get away as with most things in EU; the last time it had a non-deficit budget was in 1974. But the market still trusts France. It is too big to fail. Greece is not.
What is relevant is that the one who needs money cannot dictate policy to others. This is why the Greek national pride bordering on impudence is so infuriating to others, and Germans in particular.
It should also be noted that the much touted idea that Varoufakis is a master of game theory did not really help Greece. To the contrary. Hearing about masters of game theories is likely to make a frugal taxpayer in other countries wary: are these guys trying some new elaborate theories to fool me?
You cannot democratically vote away your debtI have been flabbergasted by statements that Tsipras, Varoufakis and other Syriza leaders have made about democracy. They seem to have no idea that there are 19 other democracies in the eurozone besides Greece.
A democratic vote cannot repeal the law of gravity. A democratic vote can change laws in your country, but not in another country. A democratic vote cannot make debts disappear (without consequences and side effects).
A Finnish proverb says "debt is a brother when you take it, it is a nephew when you have to pay it back". This means that the money-lender is nice and polite when he comes your way at good times, but when the debtor comes to collect the debt, he may not be as close and friendly, and the debt may be substantially harder to bear when paying it back. Or just paying the interests. And that is what Greece is finding out the hard way.
Debt is also something that you can get easily when you are trusted. When you have lost trust, it is much, much harder. The speed at which trust can be lost is remarkably fast. In 2007, Greek government bonds were as solid as any euro government bonds. In 2009, situation was totally different. And no amount of tantrums is going to make money-lenders donate
Insulting Germans and mocking Finns is not a particularly efficient way in convincing them that they should do more to help the Greek government.
Yes, the Greeks are really, really sufferingIt's not that the Greeks don't suffer. It's not that ordinary Greeks haven't taken a hit. Or that there has been no change at all. But any change has only happened after extreme coercion. Greece actually reached a situation last year where it did not have a primary deficit - its tax revenues were enough to pay its public expenditure, and even a bit of the interests for its debt. but then came Syriza, with promises of end to austerity that makes everyone suffer. That was a moment when the collapse of trust started, and that is why banks remain closed in Greece and life is becoming more and more impossible.
The Greek politicians, most recently Syriza, have completely destroyed any trust that people had in them. Calling Germans Nazi is stupid. Bringing up the war debt question was stupid; that issue was settled at the latest in 1981 when Greece applied to join an economic community with Germany (like France, another aggrieved neighbour, had done earlier). Calling other people names is generally not a good approach to convince them that they should borrow you more money. Expressing lots of national pride is not a good idea when you are totally broke. Demanding solidarity is not how solidarity works.
The Greek referendum stunt on July 5 was a final straw on the camel's back that made sure that any credibility that Syriza might have had as a new political force was eroded for once and all. Greeks: you guys strongly make your voice heard and reject austerity, and a couple of days after that, your government solemnly promises to do even much more austerity than what you rejected? Nobody is going to believe that.
So what's ahead for Greece? I can see no end to the suffering unless Greece defaults and quits the euro. That will be a hit on the creditors, including taxpayers, but defaulting is the standard way to do this thing. It doesn't happen without consequences. Greece will be a pariah on the international credit market also after this, because lack of trust. But at least the government can print money and pay its bills nationally, and banks can open, and the economy overall can get rolling. Now the Greek government is just holding its population as hostage.
This will of course be a huge embarrassment to federasts who have been trying to convince that integration to a political, fiscal and transfer union within Europe is a historic necessity, a one-way streets where no movement can be reversed.
From #grexit to #fixit?The Finnish government is going hugely to debt just like Greece did. The level of debt is not alarming yet, but the speed of accumulating new debt really is. The public finances in Finland are in shambles. And it's not a cyclic recession: all our export markets are in reasonably good shape. The Finnish disease is, like Greek, a structural one.
There is no way ahead until Greece admits the it has to do #grexit . It may well be that Finland is not able to do an internal devaluation so that it could avoid a #fixit . If we don't really change the direction, we'll be talking to our debtors just like Greece is now.
Finally, it feels appropriate to add a newpaper clip from Keski-Suomi, July 13, 1895 who reports the issues of Greece, a member of the Latin Monetary Union. Not much has changed:
- Of the Greek monetary issues. The cabinet of Deligiannis appears to be seriously pursuing an agreement with the debtors of Greece. The Times at least reports that the Greek government, as soon as discussions of financial legal issues have been completed, will be sending special envoys to Paris, London and Berlin to commence negotiations with debtors about "a reasonable and satisfactory agreement".
(Courtesy of Digital National Library in Finland)