Saturday, 9 May 2015

"If You're Going To Shoot Me, Shoot Me! Just Get On With It!"

ATHENS -- Fatigue, exhaustion and frustration seem to have descended on Greece like a cloud, dampening the natural exuberance and underlying optimism of many people. They are simply worn out by speculation on the outcome of endless negotiations that achieve nothing, the daily struggle with total uncertainty about their economic future, and the barrage of contradictory proclamations from an inexperienced government. “We are on the verge of an agreement with the creditors! There is no agreement! We might agree to privatise some state assets. We will NEVER sell or lease a single state asset!” And so it goes. Meanwhile hapless citizens are caught in the middle of a frightening maze.

“If you’re going to shoot me, shoot me! Just get on with it,” cried one anguished citizen. “I’m tired of this mess. We’ve been dealing with it since 2008 and there is no end in sight. I just want it over with, one way or the other.” One housewife said she hardly leaves the house these days. “I sit home on my sofa all day watching TV hoping to see some developments. Nothing.  All I’m doing  is wearing out sofa fabric.”

How many Greeks feel at the moment
More galling perhaps is the loss of self-esteem. “We used to be proud to be Greek. We were considered the home of democracy, the worthy heirs of the likes of Plato, Aristotle, and the great playwrights. Now Greece is considered just another unruly little country stuck onto the bottom of the Balkans. It’s embarrassing to admit that you’re Greek these days,” says one Brussels-based Greek.

In the current, rapidly deteriorating economic situation cash is king. No one knows if the banks and all their ATM machines are suddenly going to close. Tourists are advised to bring lots of cash. Many businesses are forced to pay cash for raw materials because suppliers limit credit to only the largest of companies. The central government has stripped municipalities of their spare cash in a desperate attempt to meet pension payments and pay creditors.

The Syriza government swept into power in January with the promise that it would stand up for the ‘little man’, roll back the hated austerity program, and force the country’s creditors to renegotiate a much more favourable package of repayments. This simply hasn’t happened. A lethal combination of inexperience, arrogance and party disunity led the new government to badly overplay its already weak hand.

For four months the Greek people have been living on promises of a better tomorrow. But that tomorrow keeps receding further and further into the distance. Faced with an intractable Eurozone making demands that a fractured, internally chaotic Syriza simply cannot deliver the government faces some unpalatable choices that could rip the party into its constituent parts.

            Some more bizarre members of the ruling party want to dump the whole negotiating process. They openly call for leaving the Eurozone in favour of the old currency, the drachma. They ignore the horrific costs of such a move for the average citizen they claim to represent. Among other things, this move would certainly reduce food supplies in the country. Greece imports about 75% of everything it eats and drinks. How are the stores going to pay for these goods with a sharply devalued drachma? How is the present generation of Greeks going to react to shortages it has never seen?

One ruling party MP, Costas Lapavitsas, blithely, almost cheerfully, admits – from the safety of his academic sinecure in London – that going back to the drachma would, of course, entail a return to rationing of most of life’s basic items – a condition Greece escaped decades ago. I'm not sure how most Greeks would react to standing in line with their ration cards waiting for their daily bread. He also says that Greece should re-align its foreign relations away from Europe, and by implication the United States, and cosy up to such economic power-houses as Venezuela, Iran and China. Never mind that Iran is working hard to re-join the Western world and that Venezuela is flat broke despite its vast oil reserves. Tough to see Greece doing much of deal with China after repeatedly refusing to let a Chinese company buy the portion of the Port of Piraeus it doesn’t already own. Maybe he meant Greece to copy that other Asian powerhouse -- North Korea.

While most of the world has moved on from this Stalinist economic view, it does represent a strong faction within the government, and demonstrates clearly why any agreement with the Eurozone could split the party wide open. This partly explains the hesitant, confusing approach of the Greek government toward any deal with its creditors to keep Greece in the Euro. The Syriza government itself may not have a clear, unified approach. Who speaks for the government?  Ministers are constantly contradicting each other. The government is caught in a bind. Sign a deal, break up the party. Reject a deal, lose Greece. That’s a tough choice for a party filled with people trying to run a country on the basis of revolutionary rhetoric more suited to university agitation than actually running a real country.

Does Tsipras even want a deal with the creditors?
Unable, or unwilling, to make that choice the party may resort to a referendum to solve the dilemma. Let the people choose whether to stay in the Euro or return to the drachma. Fine in theory. Difficult in reality. How exactly will the question be worded? Will the banks have to be closed during the period of the referendum to stop massive withdrawals? Will capital controls have to be imposed? Will people clean out the supermarket shelves and start hoarding just in case the country goes back to the drachma? The only thing that is clear at this point is that the resilience and endurance of the Greek people are stretched to their limits.


betty lagogianes said...

Mr. Edgerly,
A friend who is Argentinian recently said to me that Greece should follow Argentina's example from their own crisis in the past, and default. That this is appropriate because it acknowledges what's really going on and will allow gradual authentic resolution of issues - what do you think?

David Edgerly said...

One way or another Greece will most likely wind up defaulting -- or 'rescheduling' - on at least some of its debt. But if this is managed carefully Greece may be able to stay in the Euro. Unlike Argentina Greece can not rely on exports like oil and soy beans to help keep the economy afloat. I would hope the country could avoid the disastrous move back to the drachma.

London Orient said...

Great majority of Greece's debt is to non-market players i.e. ECB, IMF etc. with extremely low cost. In reality, Greece's interest burden is much less than Portugal, Italy and Irelend. So, comparison to Argentina is completely off the point. Greece, desperately needs to reorganise its economy away from redistribution of state/EU sources to proper private sector led growth. You cannot continue to have a railway company, where the payroll cost is higher than its total revenue.