Home > General Politics, News from Abroad > Why Greece will do just about anything to stay in the Euro (part 2)

Why Greece will do just about anything to stay in the Euro (part 2)

Two weeks ago I was told I was a) economically illiterate; b) talking defeatist ‘cobblers’ for arguing, against the leftie consensus, that the Left should get right behind SYRZIA and other anti-austerity parties as they do what they must do to stay in the euro. 

I argued that the pain would be just too much to bear, and that far from being a decisive act for socialism, leaving the euro could simply tear the country apart, with untold consequences.

Now the National Bank of Greece has set out in numbers what will happen to ordinary Greeks if Greece is forced out:

Per-capita income would drop by at least 55 percent in euro terms as a new currency would depreciate by about 65 percent, according to the report, emailed from the bank today. The recession would deepen by about 22 percent at stable prices, adding to the 14 percent recorded in the 2009 to 2011 period, National said, while unemployment would jump to 34 percent and inflation rise to above 30 percent, pushed up by the higher cost of imported goods.

Greeks know this.  This is why SYRZIA may not win the elections, despite being front runners.  People may feel it’s simply too dangerous.

I repeat

Better for SYRZIA to talk up the ‘nuclear option, in the knowledge that Merkel and co will most likely blink first, but to have some form of compromise lined up if need be. 

Greece will and must do what it can stay in the euro, though capital flight and bank withdrawals might just mean it’s already too late.

And we should support them in that.

  1. May 30, 2012 at 7:35 am

    To play devils advocate, perhaps the strongest case against your position is made by Kindred Winecoff:


    • paulinlancs
      May 30, 2012 at 9:20 am

      Thanks Naadir. Interesting. Actually I don’t think my and Kindred’s analysis are diametrically opposed. It’s simply that he’s seeing it from the Germany point of view, not really caring what happens to Greeks, while I’m trying to see it from the Greek point of view.

      Will Germany let Greece fall if it means a 3% hit on GDP AND a lot of political blame for what happens in Athens and other places later? I’m not so so sure. But it’s an intelligent piece and we really don’t know what ‘the private information’/’they don’t know’ bits are.

      The direct payments idea as another means of stabilising etc is interesting. Again, I’m not so sure it’s actually more unpalatable than the Greece-riots-swing-to-fascism/military rule-risk option.

      SYRZIA are still, it seems to me, playing it cannily. They can’t be seen openly (that prive info thing) to be considering concessions on the loan (the type of which I set out last time) not least because if they lose the election they’ll also have chucked away credbility, but I suspect behind closed doors they’re open to a late deal which allows Germany to save face while giving them a least-worst option on a rescheduled debt which, complete with the ‘structural [tax collecting/hiking] reforms’ they promise, may be enough to go the Greek people with and say validly that they’ve met their austerity-refusal promise (which is of course not the same thing as a total debt default).

  2. Roger
    May 30, 2012 at 4:06 pm

    Peter Boone and Simon Johnson address this from the opposite end of the telescope and argue that Germany’s best interests are to wind up the Euro in as orderly a fashion as possible.


    It was a noble experiment but one that only made sense that utopian perpetual summer that neo-liberals really thought had been brought about by globalisation and the end of history – but now winter is upon us and the absurdity of enmeshing together economies as disparate as Germany and Greece in one currency but not one political and fiscal system has become lethally clear.

    • Roger
      May 30, 2012 at 5:37 pm

      The last paragraph was my opinion – not Boone’s and Johnson’s…..

  3. Ellis
    May 30, 2012 at 6:51 pm

    It really is curious that you take the National Bank’s assessment of the situation as if it were the gospel. I suppose that, for social democrats, it is.

    There are alternatives however, among them the prescriptions that Syrzia is advancing which do not include withdrawing from the euro, though they do make it clear that they will not sacrifice the civil and political rights and living standards of the people in order to curry favour with the politicians dominating the EU.

    • Paul
      May 30, 2012 at 7:01 pm

      “There are alternatives however, among them the prescriptions that Syrzia is advancing which do not include withdrawing from the euro, though they do make it clear that they will not sacrifice the civil and political rights and living standards of the people in order to curry favour with the politicians dominating the EU.”

      Which is precisely what I was suggesting we should support Syrzia in trying to achieve….

      I’m not taking the report as gospel, merely indicating that it corroborates what I suggested the other week would happen in the event of an exit from the euro.

  4. Cameron, D
    June 1, 2012 at 2:55 am

    Extracting a country from the current currency union is bound to be much more difficult than entering into the Euro currency union was. This is especially true as this will have to be done during a manufactured economic crisis, as opposed to the optomistic atmosphere that surrounded the creation of the Euro.

    The question the Greeks face, the same as the Icelandic people faced, is do they want to perpetuate their misery in order to placate the same people with the same neo-liberal ideology who created the Euro with its inherent structural stasis or do they accept pain now and determine their own level of living standards in the future; or do they allow others, for whom the current currency union was always created to advance their own interests, to dicatate their living standards.

    The Greeks and, indeed, in time all of us are going to be faced with reduced living standards. We can allow the priviliged to dictate terms or we can decide to take our destiny into our own hands.

    It seems like the Irish will approve austerity economics; an externally directed economy for the benefit of the well-healed. Iceland took a different route.

    So the big issue is not about which currency to use, or how the poor shall get poorer, but who decides how we distribute what production and services that we can provide for society in the future.

    The current structures, whether in Euroland or Poundland or where ever, have been created to satisfy the few. Maybe working people should create their own currencies.

  5. Jacob Richter
    June 3, 2012 at 4:47 pm

    A “workers government” coming to power in Greece should roll the lessons of Argentina, Iceland, Venezuela, Bolivia, and Ecuador all rolled into one. The first two countries implemented Post-Keynesian monetary and labour measures, plus Argentina defaulted to screw the IMF. Venezuela’s cooperative, social, and co-management measures, and also its drive for energy and general economic sovereignty, is welcome. Bolivia is more focused on agriculture, but Greece is somewhere in between the two Latin American countries with regards to urbanization. Ecuador shows how to deal with neoliberal media barons from the get-go, plus Venezuela shows measures for later on.

    There are radical criticisms to be made of this combination, of course, but this big punch would be a good start.

  1. June 17, 2012 at 12:10 pm
  2. June 17, 2012 at 3:06 pm

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