Wake up, wake up and smell the tear gas! The Greeks are having yet another 48-hour general strike — plus an extra day of transport strikes — as they continue towards eventual and certain departure from the euro.
Demonstrators are out in force. Inside the parliament building, premier Antonis Samaras pleads for his latest belt-tightening package to secure the release of bail-out money from the eurozone’s rescue funds. Otherwise, he says, Greece may be forced out of the euro. This is a final warning, he tells his rebellious MPs.
He has had a final warning himself from the eurozone authorities to say that the money now needed to avoid a Greek bankruptcy depends on the package being accepted. Actual implementation this time would also be a nice change.
A strong hint is dropped from the bailiffs waiting outside his door that Greece might even be granted a grace period of two years to attain its already modest target for cutting its astronomic national debt.
With so many ultimatums swirling around, we should remember Ambrose Bierce’s definition of an ultimatum: ‘A last warning before resorting to concessions.’
The eurozone authorities are quite desperate to prevent Greece leaving the single currency. That would immediately put the spotlight on Spain, followed by Italy — and even France, which the IMF warns is in more serious straits under the new government than it, characteristically, cares to admit.
Samaras warns that ‘leaving the euro would be catastrophic . . . a nightmare’. It might be for leaders in the eurozone who have mortgaged their political futures to the single currency.
But not for Greece itself, for which staying in the euro has led to five years of plunging output and soaring unemployment. At heart, the lenders are now more scared than the borrowers.
More from Andrew Alexander... Foreign wars and a chilling legacy of hate 28/05/13 Afghan exit - or is it a very long goodbye? 14/05/13 Why the Eton crew could sink Cameron 07/05/13 Vive la change between us and the French 30/04/13 Are kissing cousins best for Britain? 23/04/13 The expense! Mrs T wouldn't have approved 16/04/13 Of course she split Britain - she HAD to 09/04/13 If this is the last euro crisis, I'm a Dutchman... 26/03/13 Don't break the bonds of Britishness 05/03/13 VIEW FULL ARCHIVEThe answer to the Greek problem remains supremely clear: return to the drachma, devalue sharply and hunt for growth. It is there for the asking. Cheap products and services would be highly exportable.
But salvation for Greece would also involve Athens defaulting on its vast debts yet again. It did this in the spring for non-government investors. This time, the lenders at risk are other eurozone governments.
However, those making silly loans, whether the lender is a person, a bank or a nation, do not deserve to be saved from losses. That way is madness, or removing the ‘moral hazard’ as the rules of banking call it.
You might also argue that those foolish enough to lend to this unreliable borrower have surely had plenty of time to prepare for the worst. The Greek crisis is three years old, its outcome predictable. It is as if people were to complain that they had not had time to be prepared for Christmas.
Which, by the way, would be a good time to deal with the eurozone problem, with all those bank holidays — just an outside bet, but only on when, not whether, the single currency falls apart.
Running scared: Samaras says that leaving the euro would be catastrophic for Greece, but now the lenders are now more fearful than the borrowersAccording to the much-respected Bank of England director Andy Haldane, the Occupy movement performed a valuable service, both morally and intellectually, in its protests about the economic crisis.
These stern words sent a shudder through the City, which thinks the Bank’s top job is to admire the financial services industry.
Up to a point, he is right and Occupy is right, too. There is something wrong with a system that encourages speculation and huge inequalities of wealth which then lead to rescue operations financed by the taxpayer — rescues that remove the moral hazard that normally restrains rash lending.
Occupy represents bewilderment and anger. Lord Keynes once observed that the trouble with inflation from the public point of view was that not one in 1,000 understood it. Therefore, they blamed all sorts of guiltless parties: trades unions, alleged monopolies, farmers, greedy shopkeepers — but rarely the government or central banks, with whom responsibility really lies.
Moral: The Occupy movement performed a valuable service in its protests about the economic crisis, according to Bank of England director Andy HaldaneWe have another example of that misunderstanding today. Occupy does not understand the business world and likes to blame our present problems on ‘capitalism’ or the excessive size of companies. Neither of which helps.
Capitalism is merely a natural extension of the instinct to buy and sell, and the consumer likes the products that are made possible by large, global corporations.
Occupy also fails to understand that it was Washington-sponsored political correctness that forced U.S. banks to make unsafe housing loans, which in turn set off the economic crisis.
More... Workers in Greece begin 48-hour strike ahead of vote on controversial austerity bill Strikers brought Greece to a standstill one day early to protest the government's austerity cuts Euro hits one-month low against pound as Greece votes on latest austerity measures
Haldane’s position on this is not clear. But he is right to say that the two types of bank — the High Street retailers and the City investment arms — must be separated. That reform is expected anyway. The investment banks are where the big money is made and the big rewards doled out. They should not get their funds on the cheap.
Whether Haldane has all the answers is questionable, especially in his call for more moral purpose. But at least he understands public anger.
Perhaps we could have a people’s Governor of the Bank of England now that the post is falling vacant.
I once warned him that he would not get on while he looked so absurdly young, scarcely of voting age but actually 45.
Next time, perhaps?
