Monday, May 28, 2012

The Death of Greece’s Introspective Debate

In the span of a few months, Greece’s national conversation has changed completely. Introspection has given way to anger, and whatever reform momentum existed has subsided in favor of a search for scapegoats. The relevant questions are no longer: “how can Greece be productive and competitive” or “how can we address the ailments that most of us recognize exist?” Instead, today’s questions are, “what does the victory of François Hollande mean for Greece,” and “is Angela Merkel bluffing or will she kick Greece out of the Eurozone?” Greece’s new motto is: ask not what you can do for your country; ask what Europe can do for you. 

This is a subtle change: after all, there has always been a keen interest in the international environment and how it affects Greece. But for a few months now, Greece has abandoned the internal debate. We have become obsessed over the “memorandum” and whether we will repeal it, abrogate it, cancel it, amend it, renegotiate it or change it. We are no longer discussing privatizations, salaries, taxes, closed professions, and so on. We have turned our eyes on Europe and make our every move with our eyes fixated on the hands of the other side, trying to gauge the next move. We have turned this into a chess game. Except that it’s a chess game on a sinking ship – we might win the game but what good is that if we drown in the end? 

In the process of going so, we are abdicating our responsibilities. We say, “This is all Europe’s fault, we are but a victim. Help us.” In the beginning of the crisis, we understood that this crisis, while certainly influenced by international events, had certain Greek characteristics. It exposed flaws in the way that Greek society and the Greek economy have been organized. To deal with the crisis, Greece had to cut spending, reform the public and private sector and upgrade the functionality of the state. All this is gone now. In a sense, we have disowned this crisis. There is nothing we can do anymore, we are powerless. 

This lack of ownership risks becoming the greatest casualty of this crisis. Greece has changed from being a fat kid that was going on a diet to a fat kid that wants to sue the candy company. In the end, the fat kid may get a check – but will he get any thinner?


  1. Your boldness to speak frankly to your countrymen is simply breathtaking.
    And so is their refusal to listen.

    1. Don't presume that nobody listens. SYRIZA unofficialy announced their financial program yesterday, and it's basically socialism of the most outdated kind - a sort of Robin Hood meets Lenin.

      Quite a few greeks have understood the perils of statism, although the majority still choose to blame the EU and corrupt PASOK/ND politicians for the present situation, instead of facing up to the fact that the pseudo-socialist system employed in Greece over the past three decades, is a deadend.

      However, with yesterday's announcement in mind, I don't think SYRIZA will win the elections, which, strangely enough, might prove even more problematic. They contol many syndicates and will surely cause mass protests, ,riots and chaos, should anyone but them win.

      Sadly, the coming elections are a lose-lose situation.

    2. I have read the Economic Manifesto and would warn to take it lightly. Obviously, if one reads it with the mindset of someone who understands a little bit how an economy works and what is financially possible or not, one can quickly discard it. Alone the sheer unlimited belief in state ownership/-control would be enough reason for me not to read further. However...

      I think one has to try to read it with the mindset of someone who seeks help or hope from it. Indeed someone like a Robin Hood who will take care of all those who have been taken advantage of or forgotten. There are some powerful populist soundbites for those.

      And let's not forget that there are very many Greeks today who are looking for someone like a Robin Hood.

  2. George PapadopoulosMay 28, 2012 at 9:37 AM

    I am in Greece for 10 days. The sense of sinking is everywhere along with delusions that somethings never really changed (yes, some cafes are still packed mid morning!!!) We are rapidly approaching the confirmation of being declared a "failed state"! I am going from govt office to got office to resolve some complications from my father's passing in 2009...feels like they are sucking my blood still! At this point, I am afraid, going with Tsipras "both sides have nukes" may be a gamble that works; if not, so what? Lose more after losing so much is not that big of a deal.

    1. The EU has a nuke and you have everything to loose. Tsipras has not more than a truncheon which causes temporary pain. That's what too many Greeks don't get and that's why Nikos is so frustrated with people like you and writing such bloggs in a last try to wake you up.

    2. Actually, the only problem Tsipras has is a political one: who will be blamed for the Greek default? Now:

      1) If PASOK + New Democracy win, they go to power and the mainstream politicians will have the Greek default on their watch, much like what happened in Argentina. (Then Kirchner was able to became president, evict the IMF and the creditors and save the country's economy with the benefit of popular support).

      2) If Tsipras wins and gets to power, the EU will have to unilaterally kick out Greece with very strong words. The creditors can't loose face, because of their stakes in Portugal, Spain and Italy. This will probably be even more effective than the first scenario (a foreign enemy is always the best for propaganda purposes). Without the yoke of debt payments and with a competitive devaluation, the economy will recover very fast.

      Either way, the end result will be the same.

  3. Niko,

    I notice you studied at John Hopkins.

    Have you seen HBO's The Wire?

    It has some very pertinent things to say about the possibility of reform.

  4. An interview with Tsipras in the german magazine 'Der Spiegel'.

    It seems like he is also blaming the greeks for voting for the wrong governments in the past, but I don't really know what he tells the greek people.

    1. I though Tsipras handled himself pretty well. The interviewers didn't press him hard, though.

      Now if they'd asked about the Syriza half-commitment in their last economic platform to pursuing WW2 war reparations from germany, *that* would have been interesting.

  5. Nikos, one of the sources of the problems is that the government did not implement ANY of the parts of the memorandum which related to development and privatization. They just did what was easy, raise taxes. So the public were hit hard, very hard. So now people would prefer anything except the present situation. The politicians have done a bad job implementing the memorandum and a bad job explaining it to the public.
    Greece should have had a fire sale in 2010.

    Here is the bit I don't get: Greece leaves the euro, the day before all the banks and multi-nationals move their euros off-shore. The public has already drained their accounts.
    So what is the mechanism for removing euros from circulation.

    Either you remove them from the ECB (which it can't afford) or you don't remove them effectively printing money. There is no viable mechanism for removing Greek euros from circulation.

    And that will push the cost of the grexit up even more!

    1. A forced conversion has to involve what will normally be termed as confiscation.

      One solution is converting only the Greek government obligations and services into drachma and leaving the private economy euro accounts alone or giving the choice to hold either or both drachma and euro.

      This way the banks will get an appropriate haircut for over lending to an insolvent entity (without the ECB cushion and government employees will get an appropriate haircut on salaries and pensions.)

      But as the blog master points out fiddling around with the medium of exchange does not solve the fundamental problem.

      Greece will have to make a herculean effort to produce a primary surplus to the tune of 20B euros every year for at least 20 years in a row.

      Good luck.

  6. What surprises me in this whole debate is how people are talking about it. Nobody seems to have any problem to talk about what the 'Greek people' want or should want. But then they turn around and talk about Angela Merkel as if she has no 'German people' to deal with.

    I think it's fair to say we have reached the point where the opinion polls in Germany c.s. are a better indication of how those countries will react to the Tsipras blackmail strategy than the polls in Greece will be.

    And hearing what I hear around me, people are inclined to not give a damn about the costs; they have lost trust in Greece and don't want to be in a partnership with it any longer.

    To put it short; was there ever a divorce that didn't happen because it was bad economics?


    1. That is a very good point. I know so many people here in Germany who are just fed up. It looks more and more hopeless to keep Germany and Greece in the same monetary union. The cost to the German taxpayer becomes ever more unacceptable and unjustifiable.
      Solidarity with the Greek people would be accepted if it took the form of humanitarian aid to people in need. But handing out billions and billions of so-called credit that will never be paid back, and accepting to guarantee for astronomical sums which in the end will also have to be paid by us (and some other countries) is just financial madness.

  7. Niko,if you have the time,do read the interview Nikos Dimou gave for Spiegel.

    It's a very interesting and pragmatic analysis of the conflicts that Greeks face today,even though I wholeheartedly disagree with the assertion that we like living beyond our means.

  8. Writings like the blog of Nikos Tsafos or the Spiegel interview with Nikos Dimou give an important new dimension to the debate about Greece. Everyone talks about the economic side of the crisis but the core of the problems seems to be somewhere else.

    The cultural gap between Greece and its creditors seems to be that large that it is not even possible to find a common language. Every attempt from Greece is seen as denial of reality and procrastination and every attempt from Merkel or the ECB is seen as part of a humiliating imperialistic raid.

    With hard work and a shared vision it might be possible to form a currency union bringing together economies of different productivity but without a minimum of shared values and the ability to understand each other the Euro can only fail.

    In my opinion Greece' place is inside the European Union but outside the Euro. From a middle to long term view an exit would be the best solution for Greece, for Europe and for the Euro.


  9. The only correct thing that Nikos Dimou said to this Spiegel interview was that “Greeks don't have a good relationship with their government'” albeit his reasoning was too limited and as the rest one-sided. He failed to mention par example that the debt masking that equally the two major parties applied was tricky not only to the European colleagues but to the Greek citizens as well. A bold paradigm of this deliberate deception of the Greek citizen and the calculated enterprise of the corrupted political elite and its disloyal acts is that they tried in any way to convince people that Greece’s entrance into the eurozone was a safe war to affluence a glorious coarse sealed by the Olympic Games that were held in Athens back in 2004. In this false euphoria, that the minister of economics tried with his TV presence to persuade the people that it was totally safe to gamble their money to the stock market – without any prior experience- since the prime minister Mr.Simitis - who managed secretly with Goldman Sachs and the use of derivatives ( to pave the way for the country into the euro masking it’s real debt – declared that we have “a strong economy and a strong Greece”. All this finally led to the well known stock market babble ( maybe the biggest scandal in Greece’s resent history and to the Siemens scandal ( during the Olympics followed by the "Greek Watergate"( In this raw of criminal governance by those two Cartel parties unfortunately in 2009 Papandreou won the elections stating that “there are money” wen he knew well that we were heading to the IMF and ECB for rescue. It is not strange that Akis Tzohatzopoulos the minister of defense which costs Greece around 4% of the GDP is now in jail ( when earlier his political colleagues had voted for his innocence. Then maybe it is not only the austerity measures that led the voters astray from the two main parties, but the real and simple fact the the whole “metapoliteusis” – the restoration of democracy in Greece – was a total failure as the law was used as a tool for extortion, subjection, nobbling and clientelism evidently by those two parties that managed to ruin the country in 30 years escaping any legal or political punsihment. These are now backed by some cultured personas like Dimou that present them as the only saviors and not as the sole responsible of the present mess. Lastly, as there is no trust anymore, it is worth Knowing exactly how the public property – as natural gas or oil, sea shores or beaches – are going to be exploited, by which mechanism, if and to which point has the Greek Parliament any authorization on this? – before start clapping hands in view of the famous privatization that puts in risk the national security.


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