Jean Claude Juncker has been quoted as saying, “We all know what to do, we just don’t know how to get reelected if we do it.” Yesterday’s Eurogroup meeting was exceptional in just one way. It threw the disarray out into the open, albeit with a ridiculous squabble over whether the Greek debt/GDP ratio could be reduced by 2020 as originally ordained or should be given another two years to become what they define as “sustainable.”
No one appears to have argued, at least not publicly, that all this is nothing but ludicrous nonsense. That any such target is completely arbitrary and anyway bound to fail, since the only thing these wise people forming the Eurogroup and troika fail to address is Greek GDP.
Apparently all were very delighted with the Greek government for having passed the measures and budget imposing further debilitating austerity, with automatic adjustments every month when these impossible and arbitrary targets are not met. Very good! They said. Bravo! They said. Greece is on the right path! They said.
Did not even one of these… dumbos even realise that this very policy is precisely what will lead to Greek GDP disappearing completely? And where would that put their fine equations and the ridiculous squabble over the 120% debt/GDP target being reached in 2020 or 2022? I have already used the Alice In Wonderland image to describe the goings on and decision making processes of the EU and Eurozone, but this surpasses all madnesses, even those of the mad hatter in this philosophical tract!
The German Economy is slowing down dangerously. And why is that? Oh, they say vaguely. It is because of the recession in Europe. An impersonal cause. Something perhaps like Hurricane Sandy that just happened. An act of God. Here we go back to The Frau as God theory. Because it is precisely because of the German inspired punishing austerity policy being imposed on Europe with troikas and Quislings, that not only the European Economy is in recession but the global economy too has come under threat.
Back to Alice In Wonderland logic. Almost three years into the worst and most vicious austerity/IMF plan ever imposed, Greece still has a primary deficit and an impossible actual deficit (including interest and debt repayments), its debt burden has soared and is set to soar even further. Well, when 100 billion is written off in exchange for a further loan of 130 billion, that is, I would say, inevitable.
So the Greek programme is “off track” we are told. Precisely what track it was supposed to be on with a policy that completely strangles the economy is a metaphysical question. The more the economy is strangled the more remote any target of debt repayment becomes. Yet the Eurozone insists. Austerity, austerity, austerity! And claps with joy when the Greek Quisling proudly announces he has passed laws that will bring about the complete and utter catastrophe of his country’s economy.
Now, the IMF, not renowned for its sane economic policies either, says, look guys, this debt business has got entirely out of hand. You have to cut it down significantly by giving yourselves the cut you so relished giving the private sector. But no! They shriek. No! We can’t do that! We won’t do that! Against the rules! Shrieks Draghi, while insisting on redeeming all Greek bonds the ECB holds at face value, even though the bank acquired them at around 30% of their value. If the Greeks can’t pay, never mind, we shall lend them the money to pay us….! (More debt reduction logic form the ECB!)
And NO! Shrieks The Frau. I have elections next year. I can’t tell the volk that I have just flushed all their hard earned money down the drain! Nor can I tell them that I never flushed their hard earned money down the drain, but have merely been making a killing through the high interest rates.
So what to do? Here is the modern day Gordian Knot. Greece is totally and utterly insolvent. However, the Official sector insists it must be paid back at full face value. No cuts, no discounts. Oh and Greece will continue to apply inhuman austerity, lest it manages to grow somehow and make some money to pay us back eventually. No, that is out of the question.
So, no haircut of Official sector debt and no growth to be tolerated. Deficits and debt will only spiral, so the only thing Greece can do is default on its debt and exit the Euro. But No! The cry goes up. Greece may not be allowed to default and it is not allowed to exit the Euro either! This will cause one hell of a domino reaction, tantamount to a nuclear chain reaction for the fictional financial capitalist economy, so No! They cannot do that either.
So what can they do? Shift the goal posts from 2020 to 2022? And what is supposed to happen by then? Other than complete melt down. Well actually, as far as The Frau is concerned, it is only for a year longer that she wants to string Greece along in this state of limbo, till she wins the next election. Then she can turn around and give Samaras a taste of his own medicine telling him, as he told her, “Well, you know dear, I really did not mean any of that rubbish I kept telling you to keep you in line, and you can just go hang now!” As Samaras told the Greek electorate.
So this is an impossible situation. A situation everybody knows how to solve, as Juncker himself admits, but no one wants to out of sheer myopic, egotistical and idiotic short term self interest. But the knot needs to be untied. What to do?
Alexander the Great under a similar situation knew exactly what to do. He took out his sword and chopped the knot in two in one decisive stroke. Samaras (and his acolytes) is no Alexander the Great. He is a pitiful Quisling, also interested more in his own short term self interest than in anything else.
But the Gordian Knot will be chopped into two. And soon. Not by Samaras of course, but by events overtaking both him and his idol The Frau. It would be so much nicer if they could negotiate all this rationally. But rationality is something the Eurozone has always been sorely lacking in, it would appear.
Which is one reason the IMF may well be using all this just to get the hell out of Europe and devil take the hindmost.
In the Biblical sense of the first shall come last and the last first. Both of these countries begin with G.