Thursday, 29 January 2015

Virtuous Germany v/s naughty Greece

We’ll be hearing a lot about the need for countries to pay all their debts and not shirk them, coming from German government officials full of piety about sacred contracts, prudent budgeting and all sorts of similar family values. They’ll insist those naughty Greeks that they mustn’t think of getting out from under their duly acquired obligations, whatever the new Syriza-led government has to say.

They ought to be reminded that a certain European country had its debts forgiven by half in 1953 when creditors recognized that the war-ravaged country was never going to pay in full. That country was Germany, the beneficiary of sensible policy by the victors of World War 2 who did not want to repeat the debacle of the 1919 Versailles settlement. They saw that the decision to impose impossibly harsh conditions led to the instability of Weimar and eventually the rise of Naziism (despite multiple, too-little-too-late rounds of debt forgiveness in 1924, 1929 and even to Hitler in 1934).

Greece is never going to pay off its accumulated debt, which anyone with a grasp of seventh-grade arithmatic can see. Greece’s Depression-level conditions, imposed by the German-led bankers, make it impossible to accumulate enough income even to pay off the interest. Facile talk about structural “reforms” and fiscal prudence are cruel jokes, like telling a child to get an education by chasing after a speeding schoolbus.

Greece will default or being given new loans to roll over the old ones because it cannot pay. Not today, not tomorrow, not ever. The only debate is whether the country is to be crushed under north Europe’s thumb permanently or be allowed to come back to life. The default should have happened years ago, but that would have harmed the German and French banks that were on the hook due to their foolish lending to the Greek kleptocracy, the existence of which the whole country now has to atone for. The EU cleverly paid those banks off with new loans and saddled Greek citizens with repaying them, who are now expected to do so by starving and living on the streets. If they have nothing left to hock, well then, sell off the Parthenon—I’m not making this up.

So why is Germany the only country in modern times to be granted debt relief but refuses to do the same when it is holding the credit chits? Perhaps because it can exercise moral authority over the rest of Europe due to its sterling record as a good neighbor?

Syriza has an almost impossible task, and the EU banker mafia, convinced it holds all the cards, thinks it can dictate terms to whomever the Greeks happen to elect. That may be true for now, but the continent has given us ample lessons in unintended consequences. The financier class seems determined to sow the wind, and the ultra-right is standing by ready to offer its peculiar alternative. Europe should pray for Syriza’s success.

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