In response to an FT View on 13th July 2015, entitled 'A deal that is costly both for Greece and for Europe'
"Moreover, a bailout on the terms set out in Brussels risks turning the relationship with Greece into one akin to that between a colonial overlord and its vassal"
That's exactly what it is, and exactly how history will cast it. The fact that successive Greek governments could not run a sweet shop, but have behaved like children handed the keys to one, will also be recorded, but will be seen as a catalyst in the story, not the main plot. This is about something much bigger, and the Troika are not telling the truth about that - for if they did, the edifice would collapse. It will collapse in any case - this deal will just prolong the agony.
The 'deal' and these terms are not designed to help a fiscally irresponsible basket case get back on it's feet, even if that is a good description of Greece and what it needs. They are designed to provide this:
1. A further can-kicking exercise to disguise the reality that the euro is a gloried currency peg, one that was created as a half way house to a Federal Europe; a Europe that sovereign nations did not want and would not sign up to
2. Loans to repay interest on loans, so that the creditors can continue to pretend their balance sheets are not loaded with junk. The Troika would like everyone to believe that 'Mark to Fantasy' is not irresponsible when it's done by them. Here's what it is - it is a politically expedient scam which will be revealed as such when a critical mass of people finally wake up to the realisation that the thing that kept financial markets from collapsing in 2009 was not QE, not ZIRP, but a change in accounting rules - I.E. 'Lets lie about the value of collateral - that way we can pretend we're not insolvent, print lots of money, hope people spend it, and keep our jobs, and this Ponzi scheme going, a while longer'
3. A 'public flogging' to deter any other fiscal miscreants from thinking they can try their luck - thus avoiding the contagion they fear most
To your conclusion:
"Given the catalogue of errors made by all sides, the deal on the table may be the best that can be hoped for. But the agonies involved in reaching it have done deep damage and even now only a brave soul would bet on its success"
You are too kind to them Mr Editor - this isn't a 'catalogue of errors', although a catalogue there is. This is a catalogue of lies and obfuscation. The genie is out of the bottle: 'Whatever it takes' has been revealed as the bravado of an empty suit; whilst 'ever closer union' has been revealed as no more honest than 'four legs good, two legs bad'.
Greece is the canary in the coal-mine, and nothing that has happened over the past few weeks has done anything to change that.
A fellow reader replied:
It seems to me that Europe is delicately balanced, at many levels. At the moment, the only leadership that appears both willing and able to hold some sort of line seems to reside in Germany; that is to say a line against a cynical populism and a much more insidious 'have your cake and eat it' intellectual, moral and ultimately existential complacency (and smugness).
Cheering on the narrative of a plucky Greece against the unreconstructed, deadening and authoritarian German instincts or the (boring) narrative about the Euro's manifest flaws is all a bit too easy, I think.
I agree with most of what you say. I am not intending to cheer on a 'plucky Greece' or attack 'deadening German instincts'. I don't see it that way. I think the problem is bigger and much worse.
The underlying issue I see is a global monetary system that requires an ever mounting pile of debt to stop itself collapsing. The euro is a part of that system, and despite the fact that it was badly designed, and in my view dishonestly 'sold', it is not the main issue that needed to be addressed when the financial crisis hit us, the same issue which is now leading us towards a global financial collapse.
The issue as I see it, is a monetary system that serves the interests of:
a) Banks with a vested interest in maintaining privatised profits and socialised losses
b) Politicians who attempt to maintain power by bribing their electorates with entitlements and greasing their buddies' palms with government contracts...by borrowing money that they have no intention of ever paying back, in the form of bonds which are cast as 'risk free return'. 'Return free risk' would be a better description - a sentiment that will emerge when the dominoes start to fall
c) The 'pet' academics of the people mentioned at a) and b) who mark each other's homework and award each other PhDs for building 'equilibrium' models that do not include money, banking or debt; models which do not describe the real economy of people, resources and relationships, but which do give credibility to crony capitalism and socialism for the rich
This system produces debt. Debt which has been run up by Greece; debt which is feared by Germany, not surprisingly since they are the only major nation with a strong institutional memory of what inflation can do to an economy and to the spirit of its people. I don't blame Germany for that fear, and I don't even blame the idiots in Greece (much) who got drunk when they were allowed into the big rich boys club.
I would direct far more blame toward the 'debt pedlars' in the background: Goldman Sachs for helping them to hide their debts off-balance sheet, and Brussels for turning a blind eye to it.
Incidentally, there is a report now hitting the mainstream that GS may be sued for it's role in the above. Here's one link: