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Ah, Greece…

Greek flagWe’re following the news intently, of course.  Pakis follows it in Greek and English, and every few days he talks to his brothers or cousins in Greece.  Everyone has been on tenterhooks for so long they can hardly remember when they used to be able to look ahead and do something like plan a summer vacation.

Members of the family had intense feelings on both sides of the referendum.  Like most in the country, those with something to lose voted “yes”; they want to stay in Europe above all.  Those with nothing much to lose voted “no.”  So if you think about the 60-40 split in the national results, you get a sense of how far so many people’s fortunes have fallen.

As I write this, Greece has submitted its “final” proposal for economic reform and debt restructuring.  According to the Wall Street Journal, it includes tax increases and pension cuts that are closer to the EU demands.  The package will go before the Greek parliament tomorrow; who knows if it can pass?  We know people who have done hard, agricultural work their whole lives and are being hit by austerity measures that seem like punishment for wrongs they never committed.  And we know people who have been milking the system and cheating wherever they could.  It’s hard to think that anyone “deserves” harsher austerity measures, though.

Greece is in a crisis equal to the deepest, darkest moments of the Great Depression, and it’s going to get worse.  Europe, led by Germany, seems intent on continuing to strangle its economy by continuing a grossly unsuccessful austerity policy.   Even the IMF now acknowledges that the debt cannot be repaid.  Greece can accept continued strangulation, perhaps–if a deal is reached on Sunday–or it can try to launch a new currency in the midst of a crisis.  Both options look dismal, but on different trajectories.  The EU offers a continued downward spiral; the drachma will result in a precipitous decline followed by who-knows-what.

Seth Godin’s blog post this morning was about a new book called Debt by David Graeber.  It puts this whole situation in a much broader perspective–and reinforces the sense that this crisis was totally avoidable.  The Europeans (and many Greeks) like to blame Tsipras for refusing to work with them, but there were no solutions generated by the two previous governments, either.  They just capitulated to sham “bailouts” that sent money from German and French governments through the Greek treasury and back to their own banks.  So now they’re “insulated” from a Greek meltdown.

As Paul Krugman points out, bad loans reflect irresponsibility on the part of both lenders and borrowers.  Germany, though, sees fault only on the Greek side.  It has seemingly forgotten the large scale, postwar debt forgiveness of which it was the beneficiary.  Ironically, Europe is making plans for humanitarian aid to Greece.  When starvation sets in, I suppose, they’ll rush in with aid and congratulate themselves.

Our friend Apostolos Dollas has read the Syriza proposal and sees some valuable reforms in it.  If the EU responds dramatically with debt forgiveness and a repayment plan calibrated to Greece’s ability to pay (making the debt sustainable), there could be some hope.  It’s hard to think that outcome is likely right now, but there’s always hope, right?

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