O democracy you never seize to amaze me. As of this morning Greece banks are closed by order of the Greek Government leaving Greek citizens unable to withdraw savings and access bank accounts.
For months the SYRIZA government with a mandate from the people have been in talks with Troika. The Troika are the IMF (International Monetary Fund) the EU (European Union), and the ECB (European Central Bank) who have loaned Greece hundreds of billions of dollars saving the nation from total economic collapse. These talks have broken down due to the SYRIZA’s rhetoric and demands. Since taking power SYRIZA has repeatedly tried to get austerity measures lifted that Greece previously agreed on in order to receive bailout money. The austerity measures have been forced upon Greece because Greece is not to be trusted with spending its own money let alone someone else’s. Just today Greece asked for 6 billion euros of emergency funding which was promptly rejected by the European Central Bank setting off the above mentioned bank closures.
While austerity certainly wasn’t working for the Greece at least Euro creditors had some assurance that Greece would not default. Of course just some five months ago Greece elected SYRIZA a political party that vowed to end Troika spending restraints. While socialist governments such as SYRIZA certainly improve the life of people by subsidizing health care, subsidizing college, and a progressive tax code they also tend to increase taxes and deficit spending. The funny thing about Greece electing a socialist government is that Greece already has massive debt and owes 300 billion euros to foreigners.
But wait there’s more. Not only did it elect a socialist government in a time when Europe looked upon Greece as the nation that fudged its economy and whom kicked off the Euro debt crisis. Greece also elected a government that believes in renegotiating spending restraints with the Troika. With that said Greece accepted Troika money with the understanding that spending restraints would be put in place and agreed to austerity measures.
So the government that Greece elected to power is being funded and kept aloft by the Troika. And now Greece does like the rules these institutions and government set up when they bailed Greece out. Of course the Troika hold the upper hand and the current government has proved unable to renegotiate spending restraints.
I think Greece will exit the Euro and reintroduce its traditional currency the Drachma. In the past the theory was that if Greece is allowed to leave a domino effect would occur that sees multiple nations trying to leave the Euro, which will weaken the currency. However there is another theory. It is the Chain theory the belief that if the weak link(s) leave the Euro then the Euro will become stronger. The fact that Greece was denied an emergency bailout and that the Troika refuses to lessen austerity measures shows that EU leadership does not care, at least as much as it once did, if Greece leaves the Euro. The Troika have tried to work with Greece in the past by cutting its debt and releasing bailout money early. Such measures have failed in getting Greece out of its crisis. Greece will probably reintroduce the Drachma in order pay debts and its own citizens. Though it may hurt in the short term is time to let an ungrateful Greece go its own way and the let the Euro flourish.
Demos Rhino 