Shockingly, Another “Do or Die” week for Greece

2012 February 5

Today the Greek Prime Minister is meeting with leaders from the three parties that make up his coalition to discuss the details of the proposals on the table to save Greece from messy default and likely exit from the Eurozone. It seems that every week is the “most important” for the future of Greece, and that may be because no ultimate decision has been made in all of these “most important” weeks.  The clock is ticking though, because Greece has to come up with some way to make good on a bond payment of more than 10 billion Euros (that it doesn’t have) by the second week of March.  If not, it’s off to the races with the (official, rather than nominal) default. This default would not be of the orderly variety and would, most likely, also result in Greece’s expulsion from the Eurozone.  Then the dominoes would begin to fall, with (order subject to change) Italy, Ireland, Spain, Portugal falling next, leading the northern European countries to flounder with bank failure (Germany denied world domination for the third time in a century) and then the slow, piecemeal, almost nonexistent recovery in the United States put in great danger.

 

The sticking point at this point in the most important week for Greece, is that many people are starting to realize (or at least talk about the fact that they’ve realized) that there is only so much austerity, tax hikes, and service cuts, that the public can stand before it makes no sense.  The IMF, in the past week, has said that the deep austerity forced on Greece in exchange for the bailout funds thus far given, is actually harming, that’s right, harming Greece. A conclusion that much of the rest of the world is realizing as other nations contemplate their own faltering economies. But why listen to experts and economists, when public opinion polls show that the Germans think Greece should leave the Eurozone? And why not thank the debt holders for their generosity in agreeing to write down (yes 70% is a lot, but 30% of something is better than 100% of nothing) as suggested by the outgoing head of Deutsche Bank on his way to Athens for negotiations?

 

In the architecture of the most recent “plan” to save Greece from collapsing under the weight of their debt, is a further reduction of the minimum wage (which, at the moment, sits at the equivalent of around $5.15/hr), the elimination of the culturally important Christmas and Easter bonuses, and supplementary pensions which have all been a mainstay of the Greek social compact of the modern era.

 

With yesterday’s ultimatum from Eurogroup head, Jean-Claude Junker, that the Greeks accept the plan as it exists now, or default, positions are being entrenched, ire is being raised, and (for someone who has studied a bit of Greek history, both modern and ancient) it appears we might be headed rather rapidly towards a “Malon Labe!“ moment (this was the iconic response by King Leonidas to the demand that the Greeks at Thermopylae lay down their weapons and surrender to the Persian Empire, it means, “Come and take them”).

 

While ultimate bankruptcy and default will not happen until March, it is widely understood that this weekend is the deadline for some sort of agreement in order to get bailout funds to Greece to make its March bond payment.  So, perhaps, finally, we are at the actual most important week for the future of Greece…until next week, that is…

 

This article first appeared here: http://findingthehellenictrail.blogspot.com/2012/02/shockingly-another-do-or-die-week-for.html

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