Monday, 23 February 2015

Is Greece ready for the New Drachma

On Friday 20th February Tsipras, Varoufakis and the Greek people found themselves between a rock and a hard-place. The rock was supplied by Wolfgang Schäuble who has been quite gloating in his intentions to break the Greek delegation and continue with EU's strategy for the Eurozone. The hard place was supplied by the Greeks themselves as the announcement on Greek media that around €20 billion had hemorrhaged from Greek bank deposits since December and the scene was set for a full-on run on the banks. Of course, telling people that their deposits may not be safe can have but one result; their deposits will not be safe. An insolvent banking system would be politically disastrous for the most popular government since ousting the junta in 1974. Finally Tsipras ad Varoufakis had no choice but to capitulate and return home with their tails between their legs.

           

Tsipras has vowed that if he doesn't get a fair deal he will leave slamming the door so hard that the whole house will fall in. Has that time come. The win that has be lauded, in lieu of anything else to say is that the Eurogroup has agreed to see a list of proposals for exactly how they intend to bring the economy into check, this is seen as a positive but we must also consider that while the knot has been loosened, it is also possible to wriggle the noose tighter still. There is no way that the Eurogroup (Schäuble) will be satisfied with the proposals this whole exercise is a last ditch demoralisation tactic, maybe even to force Tsipra’s to play his hand. The backlash has begun with the most audible coming from within Syriza’s own ranks, Manolis Glezos has accused Tsipras of trying to get away with calling meat fish with reference to the lexical realignment of the Eurogroup agreement.

Are the Greeks finally ready to bite the bullet and embrace the Drachma again.

There have been no reliable domestic polls on a Grexit and return to the Drachma and none could possibly done as merely putting the question to the people would cause the mother of all runs and a collapse of the economy before anything could be done. I have been trying to gauge public opinion here on the subject and the first impression took me by surprise, people are reluctant to talk about it. This is strange for a people who have always had a preoccupation with politics, taken relish in criticising the government and more recently the governments of its European partners but now starting the conversation provokes nervous fiddling with smart-phones, shoulder-shrugging or irritated changes of subject. So tired by hope against hope, so weary of broken plans, many have shut down completely. Their last burst of excitement spent, they are resigned to a new status quo and are trying to get on with breathing again. The world outside the political rallies and euro zone negotiations is calm detachment. According to Robertson and Bowlby’s attachment theory Greece has come to the third stage of ambivalent attachment, a survival stage that avoids any further emotional investment and the pain that accompanies disappointment.

Is Greece ready to embrace a new drachma. According to Bowlby, Robertson and even Naomi Klein’s Shock Doctrine, Greece is neither ready nor resistance to anything any more and those who feel powerless will just get on with breathing regardless of the flavour of air they are given. 

The one thing I have realised is that for the first time the Greeks have leaders to rally behind and that could just make the difference. 


UPDATE: WHAT WILL GREECE DO AFTER THE GREXIT


Thursday, 19 February 2015

Europe needs counselling


Forget game theory, what is going on in Brussels is an acrimonious divorce with Germany playing the stoical male role while Greece is the emotional wife trying to get the best for her kids. The passion has gone and it is a relationship that has been reduced to mere financial dependence, a situation that will be familiar with many frustrated spouses. The eurozone is a dysfunctional family that is in desperate need of reconciliation counselling if it is not to pull itself apart causing generations of bitterness and trauma.


If this divorce goes through, the Fatherland will keep the house and cars.


She just won't listen!
We, especially in northern Europe are are conditioned to rely on the head to make important decisions, logic is good. The financial institutions are playing this role, crunching numbers and coming up with plausible reasons why Greece is being histrionic and unreasonable to expect concessions that might allow the family to flourish as a stable and contented union. Wifey just doesn’t understand the pressure that he is having at work and needs to get on with keeping a thrifty home. But Dad’s work has become an obsession with him and while it was originally intended to be a good source of income to feed and clothe his family, it is now beginning to take the place of the family. He has become so defined by this role that it has blurred all perception of purpose. The Euro is a medium of exchange, a facilitator existing only to service the family unit and yet as it fails to satisfy this purpose it is the family who are made to adapt, it has become the only thing of importance.

In 2011, I had he pleasure to meet the now Belgian finance minister, Johan Van Overtveldt. In his 2011 book The end of the Euro, he points out that the single currency was doomed from the outset as an economic union was foisted on a group of nations that had not established a political union on which to base it. Like a marriage of convenience where the couple had not had adequate time to establish a sound understanding and mutual admiration before deciding that his job prospects were sufficient to base a life long bond. So arrogant have the world’s bankers become that they really feel that money makes the world go round. They expected the common currency to be the leverage in European political unification under the logical auspices of the German banking system. This, as Overveldt predicted is blowing up in their faces now and Greece is being offered up as the unstable mother, unfit to care for her children.

The Fatherland is presenting a face of maturity that casts aside the humanistic aspect of government as folly and whimsy. Their focus is on balance sheets and policy that has been (badly) designed to support a currency system that will eventually condition the population of Europe to serve it. This is an autistic mindset that cannot contemplate the uncountable. We are being expected to side with the validity of this argument as it is irrefutable with logic.

The mother of democracy is harping on about how badly she has been treated and that she cannot support her children. She is not getting the right kind of support from her partner. Yes, he gives her money for the home but it’s how he gives it, the demands he makes on her, the disapproving frowns when she tries to make herself nice, the silence at the dinner table when she serves something a little simpler because she has evening classes. She has a point but her argument can get a little confused with ideas that are less easy to quantify as they are off-balance sheet considerations.

We sympathise with Mum but Dad makes more sense because he is logical.


What is needed is a mediator who can reconcile this difference of language. Yanis Varoufakis is arguing socio-political aspect of the relationship, a strategy for growth while the Eurogroup president Jeroen Dijsselbloem insists on strict adherence to the austerity programme, a financial paring intended to support the medium of exchange at all costs.

Relationships of all kinds are dependent on understanding and evolution. I spoke to psychiatrist, Dr. Alexios Lappas, he said that successful relationships are based on similarities and differences, the prior form the core of shared goals while the differences maintain interest. However, as the responsibilities and strains of routine bite, the interest begins to wane and they regress into survival mode. The differences begin to be viewed as betrayal, by the anxious survival mode mind and they look for endorsement from friends (common ground relationships) who will tend to agree with their friend and support an exit from the relationship. It will not be long before irrevocable differences are cited and the family will split into those on dad’s side and those who support mum.



It is too late to impose a retro-fit political framework to underpin the eurozone’s fiscal policies but if the relationship is to develop through the present crisis it will need to be forward facing. The present negotiations in Brussels is an opportunity for growth but in order for that to happen Dad is going to have to loosen his tie and open himself up to some uncomfortable new feelings.  

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Monday, 16 February 2015

Alexis and Yanis are screwed

And it came to pass that in Europe’s darkest hour came forth two horsemen from an ancient land to slay the dragon and free the good and the pious from servitude. These dashing knights held aloft the swords of righteousness and wisdom to hack away at thorn and bracken to bring hope and light. And now deep in the dragon’s lair they fear no evil, for they have been summoned in the hearts of men to right wrongs. We shall all feast on roasted beast, my brothers, before spring blossoms the trees.


Alexis Tsipras and Yanis Varoufakis are these brave knights who bring hope of a renaissance of classic Greek democracy once more unto a world that has lost its way. But irrespective of what happens in Brussels in the coming weeks, they are screwed.


The whole of Europe if not the world is beguiled by these two men who have seemingly sprung from nowhere to take on the might of the Eurozone policy makers (Read: Angela Merkel). Not since Barack Obama’s first campaign in 2008 has a political leader evoked such idolisation, before him it was Tony Blair, delivering a desperate Britain from Thatcherism in 1997. History is littered with similar stories. And, herein lies the problem. Each of these beacons of hope have ultimately disappointed, exposed as flawed men in a near impossible situation (and maybe I’m being kind). 

Alexis Tsipras came from left-wing student activist roots to pull off a democratic coup in the Greek parliament. Despite not managing an overall majority in the house his support has snowballed spreading far beyond national borders to garner support from throughout the austerity-stricken Eurozone. He has vowed not to wear a tie until his mission is complete, a sentiment that his finance minister, Yanis Varoufakis has taken to heart and run with. This is a man who embodies the Greek economic situation; he needs growth, not a haircut, his charismatic presence belies his true stature and he is definitely not dressed for the bank. He has proved to be an inspired choice. An academic Goliath, highly respected by his economist peers, has a penchant for game theory and a dynamic youthful demeanour rarely seen in his position. The two of them have become the Kirk and Spock of modern politics showing up many for the out-of-touch dinosaurs that many believe them to be.

To all intents and purposes though, the Eurozone is Angela’s game, its her ball and she will be captain, she can even decide to adapt the rules should anyone get out of step. Then along come these two upstarts from a cigarette kiosk of a country telling her she’s off-side. The task ahead of them is formidable and the chances of walking away with all they ask is a snowball’s chance in hell.

The real problems begin when they get back home. Let’s say that they get the majority of what they ask for. Which, if you follow Varoufakis is not a haircut but a restructuring of debts, something akin to consolidating all your credit cards into one low interest loan with a manageable payment plan. But what they really want is to be freed from the conditions of the loan, the austerity measures that have forced Greece's economy to shrink a 1/4 in the last few years and the selling off of public assets to foreign investors. This is the real bone of contention. For while Greece has been forced to take loans to pay the loans which pay the interest, the economy has had its laces tied together by a series of cuts that have forced anorexic shrinkage of an already troubled economy. If they get all this then they have to make it work and be seen to work and that means that people are going to have to magically pop back into full employment, debts accrued during the last years will have to go away and taxes will have to return to being an avoidable nuisance. Things will have to go back to the good ole days (during which everyone would tell you they had never been so bad) things will have to be right for everyone and they won’t.

They have promised to reinstate public employees who were sacked over the last government's term. this is part of what put an unsustainable burden on Greece's resources in the first place and had come about due to successive governments trading votes for jobs. Its result was a public sector bloated with the wrong, unqualified people who didn't give a jot about solving your problem because they had tenure. They have also vowed reopen the state TV and Radio channel ERT, a popular move but will need to be well-managed if it isn't to fall back into the habits of its public sector peers. These are expensive promises, though and neither of them are growth catalysts.

So much is being expected of these two men that there is no way that they won’t disappoint. The best that can be expected is for them to return from Brussels with their dignity and integrity intact carrying the means to create an environment where businesses can begin to build on stable ground. There is still a lot of hard work and sacrifice ahead but what many are going to have to digest is that it will not be only Tsipras’ and Varoufakis’ hard work and sacrifice but their own. They can only do so much and there is still so much domestic reform that needs to take place before the benefits of the concessions that can realistically be expected can take hold.

There will be a backlash. Not only from the Greek people, but all the other nations watching closely to Greece for sign of light at the end of the austerity tunnel. When things do not work out as they hoped or as they chose to believe that T & V had told them. They will cast aside Tsipras and Varoufakis in a wave of told-you-so wisdom. Such is the fickle nature of the people. This will allow the next wave of cure-all promises from whoever has the public ear.

The world has taken these two men to their hearts at a very vulnerable phase in its history. Expectation will be unrealistically high. I hope you have factored this into your game plan, Yanis. 


UPDATE: After more final hours and more renegotiations and more broken promises, the general consensus is getting closer to just roll over and let it happen, already. People are tired and I feel that they are ready to vote back the old order if only to let the screwing be done and lubricate appropriately.
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