Posts Tagged ‘Greece’

A warm-up for Italy?

July 13, 2015

So, the Med Men caved. They didn’t have the balls to leave the Euro, which might have been their best option. However I am cautiously optimistic, because a fudge scenario in which Greeks are left in charge of structural reforms and they don’t take place (again) may have been avoided. The Med Men caved to such an extent that it looks like Commission bureaucrats and the IMF will be standing right over them as ‘they’, the Greek politicians, write and implement reform legislation. Like doing your homework with Mummy Merkel leaning down with two hands on the kitchen table. That suggests the reforms and the privatisations could actually get done. The trick is for the EU to ease the pain while the change is happening. A lot of drivel is being written about how the deal is ‘worse than Versailles’ and involves no debt forgiveness. Rubbish. Debt is a combination of principal, the interest you have agreed to pay and the term limit over which you have agreed to pay. There have already been big haircuts on the latter two (in the second, 2012 bailout), and more will come. But Mummy Merkel will have to find ways to finesse a bit of extra current spending to ease the pain of the reforms. This is far from impossible if you believe, as I do, that she is a basically decent person (I’d far rather owe her money than the British government, or indeed the average Greek politician). So let’s see. Assuming of course that those who voted No in the referendum and won don’t — not unreasonably — impose their decision by protest. If the reforms go through and Greece starts to grow that way (rather than as a result of devaluation), it is a warm-up for the Siege of Rome. Doubtless Matteo Renzi, who said he was going to Brussels to tell Frau Merkel how to behave, noted the observation of one person party to the negotiations that Tsipras had been ‘crucified’. Ouch. If, as someone once observed to me, Italians fear pain but not death, that is a horrible prospect.

More:

If you have an FT subscription, read Gideon Rachman’s column. He thinks the Greeks won’t do their homework whatever Mummy Merkel does.

Med Men

July 10, 2015

So less than a week after the Greek people reject a creditor austerity package in a referendum, the Greek prime minister offers a more comprehensive austerity package on their behalf.

And most of the media expect the Syriza coalition in parliament to support the austerity package.

The cost of the referendum, the massive disruption to the Greek banking system and real economy were for precisely nothing.

Go figure!

Still, I doubt that the Greeks, like the Italians, will deliver on the structural reforms that are required (they haven’t so far). They will continue to do the austerity, because budget cuts are easier than fixing institutional problems. But the basic issue of low growth/no growth in unreformed, over-indebted Greece and Italy will remain. Those two countries, and particularly Italy because its economy and debt are so much bigger, are the nub of the Euro-area problem.

 

Goodbye Greece

July 5, 2015

The Greeks have just voted ‘no’ to the terms of a new deal with their creditors. So what happens next?

I think that Germany-led Europe will let them fall out of the Eurozone. The Greeks think they are going to negotiate a better deal, but any improved deal just invites the likes of Italy to think they can get one. So I can’t see any way forward other than letting the Greeks go.

There will be some chaos in the financial markets, and plenty of short-term chaos in the Greek economy. But within a year a Greece run on drachmas will stabilise and start to show some growth at a more realistic exchange rate.

The bigger problem for Germany and the Eurozone core will then come into a view in a couple more years when an Italy that has not delivered structural reforms and is still barely growing sees that Greece is stabilised and starts to flirt more aggressively with leaving the Euro.

That, however, is two years away. In politics, you deal with intractable problems by kicking the can down the road. And that is why I think Greece has to go. So that Germans can try to imagine, for another couple of years, that the Euro project hasn’t been a monumental disaster.

Unfortunately it has.

That said, Spain and Ireland should be in much better shape in a couple of years which at least reduces the list of countries that might be looking for big debt hair-cuts from German and French banks.

I continue to believe that it is in Italy where the Euro mess will reach its apogee.

Joined-up colonialism

December 3, 2014

COUTK 4 COUTK 5

COUTK 3 COUTK 1

COUTK 2 COUTK 6

 

I recently mentioned a compelling new edition of Han Suyin’s beautiful novel And the Rain My Drink, about British conduct in the war against communist insurgency in Malaya after the Second World War.

As luck would have it, writing about British colonial perfidy seems to be the genre du jour, as one of my very favourite journalists, Ed Vulliamy (never met him), files a long investigative report about British conduct in Greece from late 1945 on. It is much the best thing I have read in The Observer for some time, and completely free.

Add a couple more case studies from South Africa, Kenya or Ireland, and we have the beginnings of a joined-up history of British colonialism.

That said, there are marks on both sides of the ledger. As Brave Dave Cameron observed on his visit to India last year: ‘I think there is an enormous amount to be proud of in what the British empire did and was responsible for. But of course there were bad events as well as good events. The bad events we should learn from and the good events we should celebrate.’

He’s right. The Carry On movies were tremendous, a real boon to my childhood. And It Ain’t Half Hot, Mum, not bad either.


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