I wasn’t quite ready to write this post – but given the deadlocks and failed meetings and Monday deadlines (aren’t we all just so tired of all these deadlines?) – I thought that I’d better get in there one more time, in case Monday is a complete blowout.
First off, Greece is still going. I was there last week, soaking up the late Greek island evenings and eating an embarrassing amount of sun-ripened cherries.
And apart from some lingering concerns about being able to draw money at an ATM (I didn’t try – because the ATM informed me that there was a 5% withdrawal fee for cash before my own bank’s charges), everything seems to be trucking along. And for all those foreigners panicking about domestic bank runs, I didn’t see any.
Of course, I think that’s because:
- Greeks tend to keep their money out of the formal banking system (you’d be amazed at how hard it is to pay for things by card – most business-owners hail from the “cash only” school of business); and
- Most of the money has already left – if any Greek is caught by surprise in this, shame on them. There has been a good six years in which to take measures against the possibility of default.
I did see the preparations happening for the Syntagma Square protests on Sunday evening. Some pictures:
But despite how fun the protests look, and even though the cafeneios are full and the metro system is abuzz, you can definitely see that things are not well:
- The relatively well-to-do are drinking coffees in the cafés, not eating meals.
- The restaurants are full of empty tables on Friday and Saturday nights.
- There are pensioners begging on the streets and on the underground.
- The only flourishing businesses seem to be lottery ticket salesman and betting houses (I counted three of the same chain in the same 800m stretch of road).
- There is a mass profusion of €1 stores and discount supermarkets.
Admittedly, I did see some street parties in central Athens. But I would ask why the parties are on the streets and not in bars; and also why all the twentysomethings are out on the streets on a schoolnight.
As an overall impression, to me it seems that the Greeks just want some kind of a decision to be made already.
Yes, they want to stay in the Euro. And yes, they don’t want austerity. But actually, I suspect that the biggest factor at play is fatigue. The economy is sitting on a knife-edge of being in or out of the Eurozone – and it’s been slowing bleeding on that knife-edge for the last half a decade.
For what it’s worth, I think that this is the most important graph that you need to look at:
Let’s repeat that graph a few times from different sources:
Every time the IMF, the ECB and the European Commission have insisted on a program, and made a prediction of the impact of that program on the Greek economy, they have been wrong.
To be clear, the Greek government has returned to a primary budget surplus. They are spending less than what they collect in taxes. They are doing what the Troika suggested. They are attempting to live the conservative ideal.
But it is not working.
So when the IMF and the European finance ministers get all aggravated about the Syriza negotiating tactics – I want to know where the acknowledgement is that their own programs have failed to deliver on their predicted outcomes.
I just do not understand the unrepentant insistence on more cuts when none of the existing cuts have delivered what they were meant to. Especially when the IMF says things like “We won’t accept the more aggressive tax collection measures in the Syriza proposal – we will only accept more cuts.”
To quote Paul Krugman (reluctantly):
At this point it’s time to stop talking about “Graccident”; if Grexit happens it will be because the creditors, or at least the IMF, wanted it to happen.
You should read his blog post on this: “Breaking Greece“.
Also, check out this piece from the Guardian: Greece is being blackmailed.
To be honest, I’m beginning to agree with the people saying that the short-term pain of a Grexit might be the lesser evil for Greece.
As for the rest of the Eurozone – they’re not nearly as prepared for a Grexit. For their sake, I hope that they’re right about the impact it would have on them.