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Greece Snarls At The Hand That Feeds It

Wednesday, March 11th, 2015

Angela Merkel tamped down a party revolt to extend the Greek bailout terms by four months. And her reward for extending that lifeline? Greek Prime Minister Alexis Tsipras reviving demands that Germany pay World War II reparations to Greece.

Before Syriza came to power, the rest of the EU and the Troika seemed content to play along with the Greece farce (extending further loans in exchange for yet more empty promises of reform) at least a little while longer. However, Syriza’s virulently anti-EU and anti-Germany rhetoric seem to have finally exhausted their patience with the show. It seems even Europeans have limits to the abuse they’re willing to take from perpetual welfare recipients. It’s bad enough to underwrite a freeloader, but evidently having to put up with constant insults from them was too much.

At this point, everyone knows Greece will neither reform nor pay back their debts to the Troika (or anyone else). That’s why Europe has finally started taking a real hard line with them, insisting on inspectors on the ground to see reforms are actually implemented.

Either Tsipras has severely overplayed his hand (quite possible), or he is deliberately preparing to use Germany as the theoretical scapegoat for exiting the Euro.

To say that Tsipras and Syriza has no plan B to escape the crisis is misleading, since their cunning “insult our creditors into giving us more money” doesn’t even count as a plan A.

A bailout from Russia? It’s not like Putin is rolling in dough following a fall in oil prices and his continuing isolation over his invasion of Ukraine. Let Putin subsidize Greece all he wants. (And I doubt a Greek navel base would give him any advantage over what he has in Sevastopol.)

Greece could have avoided all this many years ago if their government had just stopped spending more money than they took in. Given their addiction to a bloated welfare state, this is the one thing they have proven singularly unwilling to do.

I doubt Syriza has thought through just how nasty a divorce from the Eurozone might turn out. Never mind asking they repay their debts, I’m thinking a complete halt to all bank transfers between the Eurozone and Greece, and international foreign exchanges refusing to list a newly floated drachma. People hate having their welfare benefits cut, but they really, really hate being unable to buy food…

Greece has finally reached the stage of socialism where they’re run out of other people’s money, and the results are not going to be pretty.

Experience is a dear teacher, but fools will learn from no other…

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Ten Days to a EuroZone Collapse?

Monday, November 28th, 2011

So says a piece in the Financial Times, here excerpted from behind the paywall.

Things are moving very fast indeed on the Euro front:

  • U.S. banks stop lending to European governments. While this is good news, the possibility that the Fed may rescue Europe is very, very bad news. Our own life raft is barely treading water, and now liberals want us to invite a dying elephant to climb aboard.
  • And not the Fed, then the IMF, which America also funds to a large extent.
  • This article from Der Spiegel is a good roundup on consensus wisdom, which boils down to the rest of Europe wondering why Angela Merkel won’t just give in and pay their bills.
  • There’s word she might even do it, but only if she can get France, Finland, the Netherlands, Luxembourg and Austria to join Germany in issuing “elite” Eurobonds. I mean, what’s another trillion in taxpayer equity flushed down the toilet in comparison to the beautiful dream of European integration?
  • Even Poland wants Germany to take a more active role, something that has not traditionally brought Poland tidings of comfort and joy.
  • Daniel Hannan at NRO provides a nice summary of the state of play:

    From the beginning, the Brussels elites made it clear that, to adapt Abraham Lincoln, their paramount object was to save the Union. Never mind if that meant imposing epochal poverty and emigration on the southern members, and unprecedented tax rises on the northern. Never mind if it meant toppling the elected prime ministers of Italy and Greece and replacing them with Eurocrats (respectively a former European Commissioner and a former vice president of the European Central Bank — two perfect specimens of the people who caused the crisis in the first place). They were prepared to pay any price to keep the euro together — or, more precisely, to expect their peoples to pay, since EU employees are generally exempt from national taxation.

  • How expensive will a Euro bank bailout be? Keep in mind that at one point during the 2008 meltdown, Morgan Stanley owed Uncle Sam $107 billion. With a B. For one bank.
  • In the mid-1990s, Bulgaria got a good look at a currency meltdown first-hand. They only recovered by adopting a currency board for the Lev (which is exactly what Steve H. Hanke and Kurt Schuler had suggested in 1991.)
  • The British Foreign office is already planning for a Euro collapse.
  • A general strike shuts down Portugal.
  • Finally, one Irish commentator puts things in purely mercenary terms:

    The only beneficiaries of the State’s assumption of [Anglo Irish Bank]’s liabilities are taxpayers in the countries whose banks were the reckless lenders to Anglo. Anglo, for all the guff at the time of the bank guarantee, had no systemic importance to the Irish economy. Irish taxpayers had no moral or other liability for its debts.

    The sole reason for saving it was the ECB’s insistence that no euro zone bank should fail. Had Anglo failed, the costs would have been borne primarily by European banks and consequently by European taxpayers.

    So the undertaking by the Irish State to stump up €47 billion to pay those private debts is an act of extreme (if extremely demented) euro-altruism. We are Europe’s ragged-trousered philanthropists, bailing out the euro with money we don’t have and that our European partners are kindly lending us at penal interest rates.

    And this single act of insane generosity wipes out every red cent we’ve got from Europe since 1973.

    [snip]

    And for what? For less than nothing. For a moment of panic, a daft notion, a stupid indulgence in bluster and bravado. Some bleary-eyed fools decided, in the middle of the night, that they could bluff the markets by throwing all the chips we might ever have on to the table. It didn’t take long for the markets to realise that their hand contained nothing better than a pair of deuces.

    But the gamble failed for Europe too. There might be some kind of (very expensive) pride in being able to say that little Ireland took the hit to save the euro zone, like the starry-eyed gal who takes a bullet for the outlaw in a corny western. But we saved nothing. All we managed to do was to buy the euro zone leaders more time in which to delude themselves that there was no real crisis.

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