Why Syriza failed; Why Europe may fail with it

Hullabaloo / Down With Tyranny, By Gaius Publius, May 15

I haven’t written much about Greece lately, but there’s quite a story going on. It’s not that difficult to follow, but you have to be careful whom you read. Conventional wisdom (backed by corporate, pro-austerity media outlets here and abroad) says it’s a morality tale — bad Greeks who went into too much debt and now they can’t pay up. Good German bankers want their money and are reluctant to forgive bad deeds because it might encourage other debt-owing entities to seek debt relief as well. They’re calling that “moral hazard,” fear that a bailout might encourage more bad behavior. There must be consequences, or so they think.

The bottom line of those who tell this tale — Greece provides a place for lovers of austerity (like cuts to social programs) to point and sneer. Their refrain, which I’m sure you’ve heard, is “We don’t want to end up like Greece, do we?”

The reality of the Greek situation is different — not hard to understand, just different.

Briefly, the Greek back story is a tale of looting, but by elites. Greek elites looted the economy through their control of government and their tax avoidance; American banks like Chase looted Greece by selling them unaffordable swap deals (the link is to Matt Taibbi’s great reporting) which masked Greek economic problems, for a while; and at the same time, European bankers poured a ton of hot money into the Greek economy (and that of Spain, Italy, Portugal and other “peripheral” countries) looking for fast profit in a bubble.

Then the bubble burst in Europe — in Greece, Spain, Portugal, Italy, everywhere the hot money flowed. And now the European bankers, especially the Germans, want to be made whole. Despite the fact that the country is in depression and on the verge of radical political transformation, Greece, in their minds, must pay its debts. Period.

Naked Capitalism: Why Syriza Failed, April 29
Naked Capitalism: “Why Syriza Will Blink”, May 15

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