More on the "Greek" sovereign debt crisis
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Γράφει ο DD πάνω στο άρθρο του Ρουμπινί. Διαβάστε το, έχει σημασία.
It echoes what I have been saying for months, and what the market knows to be true. Apparently the only ones who don’t get it are the politicians. The “rescue package” that is being hammered out is too little, too late, and will only serve to delay the inevitable. Greece is in for a very rocky ride – and so is the rest of the Eurozone. The package ultimately cannot succeed because it is a band-aid on something that requires major surgery. But at this stage, the patient is so sick and so weak that the major emergency surgery now being consulted on by Dr. Papandreou and the rest of the EU/IMF surgical team can only result in one outcome: “The operation was a success…unfortunately, the patient died.”
From my own point of view – and it is not a totally uninformed one (I am a former international banker with 20+ years of experience in world markets, and have a Master’s degree in international affairs from the Johns Hopkins University School of Advanced International Studies, and a bachelor’s degree from Harvard) – there is much about this “crisis” that is suspicious. But now is not the time to rehash those kinds of issues. The point here is that the Greek economy does have serious problems that are fundamental, systemic and widespread, and they will not be fixed by a three-year austerity plan. There needs to be focused, capable and determined leadership in the country who knows what it is doing, is not out to line its own pockets, and is in it for the long haul. It has taken Greece several decades to get to the stage it is at now – it will not emerge from these problems in a short period of time, no matter who says what. Anyone who says otherwise is either lying or does not have a clue. Or both.
Greece NEVER should have gone into the EMU in the first place (and it is getting harder to find people who disagree with that sentiment, both in the country and outside), and unfortunately the single currency has ultimately exacerbated a problem that was already significant to begin with. The country is going to go through significant pain for a significant period of time – the only question to my mind is, will it be pain (and perhaps even slightly more pain for a while than the alternative path) WITH sovereignty, or will it be pain WITHOUT sovereignty. Either way, there will be a lot of pain to go around – but our present leaders seem to have chosen the latter option, forfeiting the country’s sovereignty. By the way, it is not a PARTIAL forfeit of sovereignty as the PM has suggested. That’s like being “a little pregnant”. Either you are or you are not. Either you have sovereignty or you do not. At th e moment Greece accepts this EU/IMF rescue package, it does not. How can one speak of sovereignty in any area of government, when the purse strings and the fiscal and monetary policy are dictated by foreign powers? Does the country want to invest in new infrastructure? Wait, let’s call Brussels and see if that’s okay. Does the country want to buy a new fighter jet or uniforms for its troops defending the borders? Excuse me, Ms. Merkel, may we? I think you get my point.
To my mind, as unpleasant as it may be (and have no doubt, all scenarios will be unpleasant), the only reasonable path for the good of the country is to restructure its foreign public debt (yes, I mean the “D-word”, default), extricate itself from the EMU, and do what every other country in modern history has done when faced with a similar problem – devalue its OWN sovereign currency, loosen its OWN monetary policy domestically (which necessarily carries the risk of long term inflation and therefore requires additional actions), and implement a serious, well-thought and resolute long-term economic restructuring plan. The problem is, from what I have seen, the political leadership of this country (and I am not talking about one party versus another – I’m talking about ALL of them) is completely incapable of carrying out the latter – and in the absence of that, ALL solutions fail. It’s not tha t there are not smart people in this country who know what should be done – Greeks are among the smartest people in the world. It’s that most of them are just too worried about lining their own pockets, and those of their friends and associates. They don’t think anything will really ever change, so they don’t really try, and only think of getting what they can for as long as they can. It’s the mentality of the “turkokratia” – find a way to get around the law, the tax system and the state, and take care of yourself. It’s no wonder we have become a nation of “karagiozides”, only not very funny ones.
Sad to say, Greece’s biggest problem is not a dearth of capital. It’s a dearth of real patriots at the helm. And sad to say that it takes an American “philellenas” to say it.
In any case, please have a look at the article below. Nuriel Roubini is an economist at New York’s NYU and has made some very good calls on the global economic crisis of the last few years. I have a lot of respect for his opinions, even if I do not agree with him 100% of the time. The article also mentions Mark Mobius, head of one of the world’s biggest fixed income (bond) asset management companies, who acknowledges that the only thing that really makes sense for Greece is to default.
It is said that an old Chinese proverb, which was meant to be a veiled curse, went like this: “May you live in interesting times.” We are certainly experiencing those now. Let’s hope we manage to get through them without becoming a nation of a new kind of “rayahs”.