The continuing crisis in the Euro Zone, and the resultant uncertainty in the European Union, have taken another twist with the Greek elections, we appear to have Greece indicating it will stay in the Euro Zone despite the heavy cost to the people in Greece; whilst maybe this is a good long term decision, in the short term it is going to painful for the people of Greece in the short-term with more forced austerity and more pain – of the human suffering variety and not the abstract ‘national’ variety. The hardships of the Greek people will continue as the State continues to cut essential service in the vague hope growth. Conventional wisdom would suggest that cutting spending through a recession is not a very bright idea.
I was disturbed at the simplification of the issues involved, one by @LouiseMensch – the MP for Corby – who’s reaction to the election of the Centre/Right Government was:
when push came to shove, the Greek people voted for austerity and sanity. Are you listening Labour? @LouiseMensch (17 June 2012)
The most important point is that Louise, in my opinion, is just looking at the financial side of the problem, like Legarde a case that the only problem is money, when it isn’t its a problem about people suffering not only from the crisis but also the perceptions, the holiday makers are staying away in droves, as far as I can see this economy is not growing, it is in terminal decline. Secondly, and less important if you are starving, Antonis Samaris didn’t win a resounding victory which I am sure he realises as he scuttles around trying to hobble together a coalition – very much like Louise Mensch’s party who could not command a majority in House of Commons and then proceeds to dismantle the Welfare State claiming a popular Mandate (incidentally the Tories are doing everything they said they wouldn’t, but that’s the Tories for you!).
The counter view came from my Sister In Law on Facebook which read:
Sick of listening to the news and hearing Angela Merkel & Germany this and that. What gives her the right to dictate to the Greeks? Watch out Europe. What they failed to do in two world wars they are trying to do through trade and fiscal policies. Don’t let her brain wash you.
The answer as ever is not popular.
The first priority is getting Greece, Spain, Italy, Ireland and the UK on an even keel, we have to start becoming profitable again – which means growth, which means income, less spending on Welfare and more revenues from taxation. Its boring, but to do this we need to borrow. The UK can apparently do this quite cheaply (and we have done to the tune of about £187 Billion a year, with no results because it has not been invested. Europe could issues Euro Bonds, but Germany will not allow it, why, because it would be Germany underwriting the debt.
There is the argument that if Germany is so sure of the solution it should underwrite the debt, but it will not because of its history.
The causation of the rise of the Third Reich was hyper-inflation, and we have seen the swing to the right in this country due to economic depression. The second part of the solution is the bit no-one will like, if you are you going to have fiscal union you also have to political union – personally I am not tribal enough to let this worry me, but a lot of people are, and it is that fact that will ensure it will never happen, or will it?
The idea of the European Union is ‘an ever closer union …’ this is something that the isolated mentality of the UK could ever countenance, in Europe the idea is more palatable because in Germany where my in-laws live they are quite used to popping over the border to fill the car with Petrol, though they get a bit miffed at the Dutch neighbours living in Germany and working in the Netherlands.
The whole point of the Euro was to stop Germany from expanding and dominating Europe, the logic went like this: A unified Germany needs to be contained, create the Euro and that enforces economic co-dependency with its neighbours, as a nod Spain was let in because it emerged as democracy from under Franco, if you let Spain in you have to let Portugal, and of course then Greece …
Its going to be difficult, but we are seeing an emergence of a New World Order.