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Greek Drama, New Act?

I admit it, I’ve been slow to write about Greece again.  There is news on the Greek crisis every day that is worth writing about, and yet somehow it all seems the same as two years ago.

But then along came Alexis Tsipras, who at 37 is likely to be the next leader in this odyssey of debt.  Outside of Greece he and his “Coalition of the Radical Left” are not well known, which is only reasonable.  They aren’t that well known in Greece, either.  What matters is that he is playing his hand perfectly and may well stand up to the big banks of Europe after June 17th.

Will this former youth organizer for the Communist Party be successful, not just in winning power but leading his nation away from disaster?  It seems unlikely, but if it happens it will be one Hell of a story.

Tsipras has always been a very practical leftist, an organizer who got things done.  He rose to power in the coalition of Communists and more democratically minded Socialists that split off into a harder-line Communist Party and a leftist minded uniquely Greek “Green” party of ecology and social harmony called “Synaspismós” (the coalition) in 2004.  He stayed with the coalition and has never looked back, rising quickly to lead the group as its charismatic leader and taking it to a position of real power.

Sound scary?  Then try this quote from Tsipras: “Yes, we do want Europe’s support and funding, but we don’t want the money of European taxpayers to be wasted. Two bailouts in a row went into the dustbin, into a bottomless barrel. If this continues we would need a third package in six months. Europeans and their leaders must realize this.”

If that sounds reasonable, he continues on: “We want to make use of Europe’s solidarity and funding to create the basis for our long-term reforms. But we need to know that in two-three years we’ll have escaped this downward vortex, we will have growth, and we’ll be able to pay back the money they gave us. There is no way we could pay them off if we continued this program.”

The problem the press has outside of Greece is explaining how bizarre the situation has become and how someone “radical” is exactly what’s needed – assuming they are radical in just the right way.  This is how generational change occurs.

For example, as part of the austerity package pushed through last Fall the Greek Parliament was a property tax.  It seemed like a good idea at the time.  Greeks responded to this new tax in a particularly Greek way, which is by simply not paying it.  So the government got the bright idea of putting the property tax bill on people’s electric bills.  When people stopped paying their electric bills, a court ruled that no, you couldn’t cut off power because people didn’t pay their taxes – and the electric company, ticked at being turned into tax collectors, stopped shutting off power to anyone who didn’t pay their electric bill, either.

So now the government and the power company have no money.

What has been pushed together so far is a series of gimmicks masquerading as “reforms” – little bits here and there to raise enough revenue to keep the Germans quiet and the money coming in.  A wholesale reform that would transform the economy is eluding the government – but not necessarily the next generation of Greeks who want to make this work.

That’s where Tsipras comes in.  Can this young man succeed where older, wiser men have failed?  If you look at his political skill, you have to be impressed.  The Coalition came in a surprise second place on the strength of this call for major reform and a new generation of leadership.  By deftly not playing along with the process, they forced a new election which will give them a chance to emerge on top – and probably form a government.

Much of what’s happening is obscure, and the situation in Greece is far more confusing and dire than we can understand.  It may just be a situation for a young man with new ideas.  Or, these inexperienced lefties might bring down the Euro and threaten the developed world.  You can read whatever narrative you want at this stage.

Because this could be a great story, one way or the other, it’s best to keep an open mind and just watch what happens.  And make popcorn.

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11 thoughts on “Greek Drama, New Act?

  1. Maybe Greeks like us are willing to try just about anything new. When the pols fail completely, why not?

    • That’s about where I am at with him. When you look at the deal already done, it really doesn’t make a lot of sense – it’s clearly designed more to make Germans go away than govern a nation. This guy does seem committed to important things like democracy and equality, and my hunch is that he can’t possibly fail as badly as the previous generation, so why the Hell not?

    • Anna, it’s not a smear – this guy is a dedicated socialist at the very least and has a distinct communist background. But yes, he sure does not talk like one. He’s committed to the Euro and is talking about genuine economic growth – especially in the private sector. What makes him a socialist is that he clearly thinks that more of the money loaned will have to be forgiven and he has little time for banks. But – he does understand the need for a stable banking system.
      As a package, he seems to be more or less in line with our US left, which is generally to the right of the left in Europe. So it’s very confusing at best. It’s probably never good to judge the politics of another nation from afar! 🙂

  2. Politicians always say one thing and then have to do another when they are elected. I will be he is no different.

    • Very likely! Imagine being in the room with the big hitters from banks and Finance Ministers from big bureaucratic governments trying to negotiate to save your nation – can’t be a lot of fun.

  3. You won’t hear it from anyone else except me: The entire Euro Zone needs a massive stimulus bill partly funded from nations that are running current account surpluses. The world economy may slide into depression if Europe doesn’t get it’s act together. If Europe goes into depression, the United States will likely not get out of our depression for another generation.

    The first step is that Chancellor Angela Merkel needs to seek the exit door.

    • Bold. I like that. 🙂
      Here’s a question for you, though: So we have a massive stimulus of some kind. But if it’s funded by debt, aren’t we just creating more trouble? Granted, nations with current account surpluses have more coming in than most, but taxing that away from private citizens will be tricky at best.
      It seems to me that debt forgiveness is definitely going to be a big part of the equation no matter what, and the easiest way to do that is with inflation. Or – is there another way through this?

  4. I agree, debt forgiveness can be part of the equation. Also we agree–inflation is part of it too.

    Germany has room for public fiscal stimulus and they are growing so I don’t think they’ll have a problem. According to this one economist, Germany should consume more from the southern nations to help stimulate their economies.
    http://www.voxeu.org/index.php?q=node/8000
    Some options for Germany would be to raise public wages. That will raise prices thoughout their economy and That would stimulate demand from the south. Germany needs to be buying assets in the southern nations to help jump start things. Real estate, factories, etc. We don’t need any more of their Teutonic stinginess.

    For me the Eurozone debt to GDP ration has fallen to 85.3%. They have proven their creditworthines in my eyes.

    http://www.bbc.co.uk/news/business-17812589

    Time to roll out he big projects again!

    • I’ll agree with you, but tighter political union has to come first for the meat of this. Are they ready for that?
      The reason I stress inflation is that the ECB could do that on their own.

  5. Pingback: Union | Barataria – The work of Erik Hare

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