Europe prays for Fortuna but may end up with Nemesis
Greece signed away more of its sovereignty this morning in the hope that it can recover from its debt problems. But with even the Troika warning it may not work, the ordinary Greek is being sacrificed on the altar of Europa
And here we go again. Has the rock stopped rolling down the hill? Has the eurozone finally pushed it back up the hill for it to stay there?
Erm, no. Nope, not in the slightest.
I know you want optimism; I know you want someone to tell you that that’s it; that Europe is saved. But all we are seeing is the mother of kicks down the road.
What actually has been resolved after the 14 hour meeting?
Greece has essentially defaulted under the guise of a secondary bailout.
Private debt holders will have to take what is in essence a 75 percent hit on their holdings through the increased haircut – that is a default in any normal world but of course we are talking about the eurozone here.
In addition, those debt holders that want their money back will be forced to accept the haircut under legislation being introduced in Greece. Now, you could argue that the voluntary haircut made it a non-default. But to force debt holders to take the cut? Default pure and simple.
Perhaps credit default swaps will be triggered and the whole corrupt system will collapse? A nice dream but even with the retrenchment from the eurozone by most banks, unfortunately it would probably take the world with it.
In addition, the Troika – the European Commission, the European Central Bank and the International Monetary Fund – will now have a permanent presence in the Greek government ruling on economic policy and the creation of an ‘escrow’ account which will hold three-months of debt repayment at any time, untouchable by the government.
But it gets worse.
Even the Troika suspect this won’t actually work.
That’s right, it may not work. To use the Troika’s own words, the bailout and austerity plan is “highly accident prone”.
The whole programme is based on an extremely shaky combination of public acceptance of pay and pension cuts and growth. Without these the whole edifice will collapse. You have to ask, how many more fires in Athens do the eurocratic idiots need to realise that the average Greek is pretty unwilling to accept the deal?
Again to quote the Troika: “With debt ratios so high in the next decade, smaller shocks would produce unsustainable dynamics.”
What would that mean? Well that would mean debt ratio going up to 178 percent by 2015 before falling back to 160 percent by 2020 – only slightly away from the 120 percent target debt ratio isn’t it?
And that would mean even more money being found, €245bn to be precise. Almost double that is being promised now.
How much more money has to be doled out before the penny drops?
I know some will be thinking: those lazy Greeks, serves them right. But you ignore that they work longer hours than most in the eurozone and the cheap loans they were given helped the likes of Germany to sell them ships, cars and tanks.
This deal goes to the fundamental heart of democracy. Can you imagine how a Greek, thrown onto the unemployment pile, feels about the fact that it doesn’t even matter who he votes in? These are people that were under dictatorship in living memory, where tax avoidance was actually a political statement more than a grab for their own money. They are now under the control of people they didn’t vote for, being forced to see substantial drops in their living standards without a say beyond the thrown brick and petrol lit.
Greece will continue to burn and its people will continue to hurt and they are being offered as a sacrifice to the idealism of the Sixties in the hope that Fortuna and not Nemesis answers the offering.
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