Greece – A Teenage Tantrum

by | May 11, 2015

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Greek Tragedy Meets The Young Ones, says Michael Wilson

“It’s not fair. Those old guys at the IMF and the Brussels Club are ganging up on us. And that Merkel woman is telling us that they’ll send us to our room and we’ll be grounded if we don’t find the money to pay back that €747 million we owe them this month. And they’ve stopped our pocket money and put away that €7.2 billion loan tranche that they were going to give us. And they’ve told us we’ve got to tighten our belts and start studying economics. So how’s that going to help us repay anybody?”

“Well, I told them straight, I did. Germany, I said, you owe us €279 billion for that time you occupied our country in the 1940s. No, we haven’t got round to mentioning it since 1960, when you paid us off ‘finally’ with a puny 115 million Deutschmarks of reparations, but now we calculate that it’s gone up a bit.”

“That occupation loan you made us pay must amount to at least €10.3 billion these days, just on its own. And the rest of the €279 billion is for trouble and inconvenience. And interest. You pay us all that, and then we’ll see about that €240 billion of bailouts that you say you’re putting in to save us from bankruptcy. Should cover it nicely.”

Little Local Misunderstanding

“So you say we’ve been collecting European handouts under false pretences for 25 years, because we under-estimated our budget deficits a little bit, and now we can’t say where all our tax revenues went because all the money got stolen by a bunch of thieving politicians? Listen pal, that’s our business and nobody else’s. And nobody’s gonna tell us we’ve got to put up with all this austerity malarkey, just because a bunch of boring suits says we’ve got to.”

“And another thing. Me and Yanis (finance minister Varoufakis) and the boys have promised our people that we’ll raise their pensions and stop the job cuts, and they’re gonna be awfully annoyed if you try and get in their way. Why, they might even start taking the law into their own hands. That’s a lot of German-owned property we’ve got here in Greece, and some of it looks very nice. So just think about it, right?”

The Terrible Truth

Parody? Only just. Everything above has been threatened, and then some. (Prime Minister Alexis Tsipras also went to Moscow to whinge to his heavy mate Vladimir, not that it did him any good.) But as the International Monetary Fund and the World Bank convened in mid-April for their spring roadshow in Washington, Greece upped the pressure that it had recently been putting on the Brussels negotiators with a barely-concealed threat that something unspeakable might happen unless the IMF agreed to bring forward a part of the third tranche of bailout cash so that it could make enough payments to keep the second tranche within the agreed limits.

It was, in effect, playing a game of Back to the Future. “We can change history if only you’ll let us transport some of the next phase’s cash back to the present day, so that we can fix the second phase so that the third phase won’t get killed at birth by a default on phase two. And if you don’t agree, then phase three and the whole thing will disappear into a logical time-warp and you won’t get paid at all.”

In fact, borrowing against your future assets is not such an outrageous thing to do. Countries do it every time they issue a sovereign bond. But better heads than mine are already saying that, to meet the present stipulations, Greece will need to achieve a 4.5% budget surplus next year, and that just isn’t going to happen.

Or, in other words, a Greek default is inevitable eventually. And default’s a complete no-no for a euro club member. What Brussels needs to do now is to work out how, and whether, it can keep Greece within the euro even after a default. It’s going to be a long hot summer.

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