After 3 years of grueling austerity Greece is about to get what appears to be a stay of execution: national parliaments are about to vote for approval of the newly agreed upon “rescue package”, the German Bundestag being up first this coming Monday. The voices, so goes the newest narrative, that say that Greece is a bottomless pit and hence unworthy of rescuing are multiplying and “even Greece’s friends are losing patience”. I am not sure who is a friend of whom in this story but to set things straight at the top one thing is for sure: after hitting the country with an unprecedented onslaught of reforms and austerity measures abandoning it now, in any kind of form, would be the equivalent of an attempted genocide. It would be similar to offering a rescue vessel to a troubled group of people to carry them across to safe land and dropping them in the middle of the ocean because you did not like their table manners on deck.
Having said that it is clear that the fate of the country is currently in the hands of two types of politicians:
- Greek politicians a significant segment of whom is corrupt and cynical and often incompetent reflecting everything which has been wrong with the Greek society the last years.
- European politicians some of whom view their role as that of rescuing larger stakes than the little guy, the bank or their own country and some who are only interested in their national bottom line.
Greek politicians are a peculiar lot some times reflecting their electorate but often they are one of a kind. Of course on the other hand, other European countries are not exactly immune to political corruption so their politicians may find more common ground with their Greek colleagues than expected. Greek politicians thought and some still do that they can continue procrastinating with the big ticket items of reforms, belt tightening, corruption fighting, burden fairness etc living in a remarkably autistic reality.
At the beginning of the current crisis, circa 2008, almost the totality of Greek debt was in private hands. Now only about one fourth of that debt is still in private hands the rest being held by institutional partners like the ECB, IMF, EU partner countries etc So the 50% haircut on the Greek debt about which we hear of late is applied on that smaller part of the debt. European politicians did what they could to rescue the half baked European Institutions and their own banking systems. When they “rescue” Greece they indirectly rescue their banks. Because the crowd needs someone to hate the most populist of those attributed economic immorality to the Greek folk and in fact the entire European periphery and did their best to obscure the fact that not a penny of the rescue money does anything else but flow into a massive bank bail out in their own backyard. The latter may be necessary but voter discontent should not be manipulated by using the Greeks as a scapegoat. As for the country’s friends losing their patience: it is to be expected. As the masqueraded bank bailout gains traction and the system becomes more stable, these friends, reenforced by the narrative of economic immorality, now demand that the long overdue reforms finally become reality. After all they may have bailed out their banks by rescuing Greece but now they own stakes in Greece and they want to have a chance at a dividend pay out some time in the future.