Deeper Still and Deeper

As the euro crisis moves downward in ever tighter circles I recall a piece I wrote a year and a half ago for the Daily Telegraph readers’ blog site.  Reading reports in the Sunday press I thought I would have another look at it.  It’s astonishing how little has changed; astonishing that grown-up people with grown-up minds could ever have embraced this madness in the first place.  How ill-led we are, how deceived; how unworthy are those in positions of power, who have neither prescience nor judgement. 

Anyway, judge the relevance for yourself.  The original article was headed Moussaka Money, published on 16 February, 2011. 

The Greek crisis is a superb demonstration of the intellectual absurdity and institutional vanity at the core of the whole European maze.  The important thing here is that we are dealing with a political as much as an economic crisis, perhaps more of a political crisis. We are dealing more specifically with blindness, blindness and hubris caused by a combination of self-delusion and self-interest.

The euro itself, the single European currency zone, was always about prestige, a desire for the grand gesture.  Looking at it in hard economic terms who would ever have agreed to allow the Greeks, or the Spanish, or the Irish to join the club? All it would take is for these fragile economies to come under sustained pressure for questions to be asked about the operation of a whole euro zone, combining rich and poor and supposedly treating them as equal partners.  

The Greeks, the poor cousins, were effectively given a Euro credit card, and they used it, without caution or reservation.  The Germans were paying, yes, but they also benefited with a massive trade surplus, another source of imbalance.  Angela is resisting a bail-out; she has to, if only for the sake of form and political credibility.  Sarko does want a bail out, but that comes at a price; there has be convergence across Europe. Athens, as I said previously, is facing a new Macedonian hegemony, a new dependency in all but name. 

The Germans in particular are heading for the perfect storm; they have too much of their economic self-interest invested in the euro-zone to allow it to collapse altogether, but they are horrified of the consequences of countries like Greece riding on the prosperity of the old D-mark, abandoned with considerable reluctance.

We know the Eurocrats are not fond of votes.  After all, they have a tendency to go the wrong way.  But the Germans are least fond of a particular kind of vote than any other European nation, so much so that referendums are actually banned by law because of the use they were put to by the nasty Nazis.  Just as well for the Eurocrats, I suppose, because the Germans would never have abandoned the D-mark if they had been given a choice on the matter eleven years ago.  

At the time the opponents of the euro ran a campaign warning of the dangers of being linked up with the ‘spaghetti money’ of southern Europe.  So, poor old Angela finds herself in an impossible position.  Pressures at home force her to talk tough.  Auntie Angela does not come to the Greeks bearing gifts, no, she waves her Aryan finger and talks austerity.  But this is tomorrow and now we know just how much the Greeks have been spending, as if there was, well, no tomorrow.  

Yes, what a mess this is.  If the Greeks get a handout - as they almost certainly will - the markets will turn on the next most vulnerable, the other partners in the union of the Piigs (Portugal, Ireland, Italy, Greece and Spain).  The contradictions, there from the outset, are being revealed one by one.  

Angela is a high-wire artist, a gambler as much as those who speculate on the currency markets, who speculate against the euro.  She is playing for time, her fingers crossed behind her back, hoping that austerity in Athens is enough.  And if it is not? Well, then we will perhaps be talking about moussaka money.