Sassenach wrote:I thought it might be a good time to resurrect this thread. We seem to have right through the recent Greek elections and the fallout from it without anybody at Redscape batting an eyelid. That's quite odd when you stop to think about it, what with the potential consequences being so severe.
I had half thought of mentioning it, but the absence of Nostradamus/Mach doesn't make it quite so fun.
The Greeks are now demanding about 300 billion Euros in war reparations from Germany, threatening to grant legitimate papers to millions of Islamic migrants and send them on into Germany if Merkel doesn't cough up with yet more free money and generally making complete asses of themselves. This is not going to end well. It's the sort of behaviour that can only be explained if it's being done as a prelude to leaving the Euro. Looks like ol' Mach might finally have his prediction start to come true...
The other thing the Greeks are reminding Germany of is the deal in the 1953 whereby huge amounts of German debt was written off by the main creditors as part of the creation of the FDR (then to be West Germany). About 50% of the pre-WWII debts (mainly Versailles reparations unpaid) and post-WWII debts (mainly from the US) were written off, and the remainder were spread over 30 years and the interest and repayments capped and tied to German balance of trade. - http://en.wikipedia.org/wiki/London_Agr ... eece_issue
I'm not sure if this claim is valid (or even if it is it would result in any meaningful amount to offset Greek debts), but the observation that Germany did very well out of that debt write-off and is now taking the high moral ground on others' debts is what Greece is pointing out.
The other side to it is that while Greece crashing out of the Euro would likely only hit Greece itself initially (although Cyprus would also be a problem), it would mean two things:
1) the Greeks would be more likely to default or to devalue the debt, hitting their main creditors - German banks.
2) it sets a precedent that would put Portugal and Spain and possibly others under pressure. And worries over them would then start to also put pressure on banks in Germany and elsewhere.
As well as there being a political will still to maintain the Eurozone and continue to expand it, there are economic reasons why it is not necessarily going to be in German interests for Greece to go.
Syriza have another good point: the policies that were imposed on Greece were designed to help the country get back on its feet. But it is more crippled with debt than it was before, the economy is still in tatters, unemployment is awful and the trajectory looks bad. If the policies of the "troika" mean Greece's economy stagnates, so the government's fiscal position can't improve, then the debt will just pile up. So something does need to change. When the medicine makes the patient worse, you need to really be sure it's working - not demand they keep taking it.
Syriza are not getting all of their demands - at least not now. Not even close, just a can kicked down the road until the next renewal crisis point.
Grexit is perhaps on the cards, but it will probably rumble on for a long time first. The fear of the unknown is too great.