European leaders in Brussels and Frankfurt and Berlin may not be fair, or democratic, and there’s a good case that the economic policy they are advancing is not very sound. But they hold all the power in this situation, and are leaving Greeks to decide between two bad options.
.. For years Greece has muddled along with a depressed economy and an endless series of bailouts and austerity. It’s fine to play the blame game over how public debt got out of control in the country, but by the time 2010 came around what was done was done, and the human consequences of austerity have been grave.
The Greek government apparently agrees that the definition of insanity is doing the same thing over and over again.
.. Expect the E.C.B. and European institutions to deploy enormous financial firepower to prevent a Greek exit from spilling over to Portugal and Italy and Spain. But saying that this won’t be a Lehman Brothers-style economic catastrophe isn’t the same as saying it would be a good thing.
.. In a true federal system, the government cannot let a state fail, nor can it stop a specific state’s citizens from withdrawing their money from the banks. Germany and its partners are acting like de-facto feds with a gripe, more eager to teach the Greeks a lesson than to heal an already fragile union. Would Berlin let Bavaria or Saxony fail and fall prey to chaos? So why put the banks’ interests ahead of the common good and let Greece collapse? What kind of union is that? Clearly not the type of ‘in sickness and in health.’
Who is at fault for the Greek debt crisis: Greece or Germany?
The rule of thumb in economics is that a growing economy reduces debt much faster than any other “solution.”
Businesses Worry About Shouldering Burden of Greek Debt
“The Greek proposal is simply populist austerity,” said Theodore Pelagidis, an economist at the University of Piraeus who has studied the impact of previous Greek programs on the broader economy. “It’s really worrying that a program will be approved with no spending cuts whatsoever.”
.. “With all this bureaucracy and now with all this taxation, who would want to invest here?” Mr. Tziritis said, shaking his head.
If Europe Cannot Bend, It Will Break
When Mr Tsipras claimed that he had a democratic mandate to demand change in Europe, Wolfgang Schäuble, the German finance minister, is said to have responded: “I have also been elected.”
.. Elsewhere, the sight of a radical left party such as Syriza or Eurosceptic conservatives, such as Britain’s Tories, extracting concessions from the rest of Europe could boost similar parties across the continent, making the EU even harder to manage.
As a result key governments in Europe, in particular Germany, are more willing to contemplate Grexit and Brexit than the Greeks and British may have realised.