There had been a fortnight of fevered buildup. Yet here we are in the aftermath of the February 28 showdown between the new Syriza government in Greece and the European Union “troika” and… no-one seems entirely sure what happened. Did the asteroid miss Earth? It seems to have. The EU still exists. Syriza is now claiming a victory of sorts. It doesn’t help that the only people who do appear to be sure (the Greeks buckled) are claiming the exact opposite to what the other group (the Greeks won!) are saying. Plus, there are bets either way e.g. Bloomberg News: “Its too early to say who caved in to whom.”
Offhand, I can’t think of another major news event where the outcome seems to have been so confusingly under-reported. You’d think with the stakes alleged to be so high – the survival of Greece’s left wing government vs the future of the European Union – that we wouldn’t be still scratching our heads in confusion.
By and large, the Australian economist John Quiggin thinks the Greeks did pretty well out of last week’s game of chicken and his reports here – and here – include a helpful outline of what led up to the February 28 showdown. As he says, the German-dominated EU bureaucracy remain supremely sure of the reasons for the current crisis. In their view :
The problem is one of profligate spending by successive Greek governments, who evaded the Maastricht rules meant to constrain government debt. Their folly having caught up with them, the Greeks are now seeking to shift the burden to the long-suffering taxpayers of Northern Europe, and, in particular, Germany. The only solution is to get debt and deficits under control through deep cuts in public spending.
There is a grain of truth in this…..But in reality the financial tsunami that engulfed the world in 2008 did not discriminate between the prodigal and the prudent. Countries like Spain, which were running budget surpluses before the crisis were hit just as hard as Greece…
Right. The fact that Spain and Ireland – who had been virtuously balancing their books beforehand – were also left in need of an EU bailout suggests that the root cause was not excessive spending by Greece or by anyone else. Blame can be justly levelled at the huge GFC – related recession which exposed the extortionate trading relations between Germany and the rest of the EU. As others found, the austerity solution that the EU then imposed on Greece (and others) only made a bad situation worse.
The GFC, and the subsequent recession and banking crisis made it impossible for Greece and other national governments to service their debts, given reduced revenue and the need to rescue domestic banks. They were therefore forced to accept bailouts on conditions imposed by a “Troika” comprising the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF). The core condition was the acceptance of a program of “austerity”, that is, deep cuts in public spending. The underlying theory, based on some sketchy research and a lot of wishful thinking was that such cuts would allow room for the private sector to grow, thereby generating tax revenue and assisting in the “financial consolidation” needed to reduce debt and deficits.
Austerity proved a disastrous failure in practice, to the point where the IMF concluded that it did not work as intended and was in fact highly contractionary
In the lead up to the February 28 showdown, the opening gambits had been predictably extreme. Greece was seeking an extension of the bailout, and a complete rewrite of the austerity conditions – while the EU was supposedly seeking total compliance. In reality, Syriza’s real aims were more modest. At crunch, it was seeking a rollover of the existing conditions and without necessarily tying itself to the previous austerity conditions. It got that. It had wanted a six month extension, but it got four months.
For its part, the EU had wanted an absolute Syriza capitulation to the existing bailout programme without any option to change the austerity measures further down the track. That is not what happened. Around the edges, Greece also agreed to a (reduced) programme of privatisation, and it won an increase – size as yet unspecified – in the minimum wage. As Quiggin says, Greece now has four months to come up with an alternative reform programme.
It remains to be seen how the compromise deal will play out. Opinions differ, largely in line with pre-existing views. Supporters of continued austerity see the deal as a climb-down by Syriza, sugar-coated with some softer language. This view is shared by those on the left who favour an immediate exit from the euro and the repudiation of “odious” debt.
Syriza supporters (of whom I am one) see it as a backdown by the Troika, paving the way for at least moderate fiscal expansion and a shift away from austerity. Only time will tell.
Spiritual Needs on a Tight Defence Budget
While the spiritual needs of the Islamic State fighters are being more than amply catered for, can one say the same for the Crusaders… I mean, for the coalition forces heading into Iraq to oppose IS? The NZ Army currently has 13 chaplains among its ranks, and 6 others in the reserves. So will a chaplain be sent as part of our 143 strong Iraq deployment ? When I asked the NZDF this question I got a resounding “maybe” in response from a spokesperson: “The final composition of the Building Partner capacity training mission is yet to be confirmed but provision of welfare support is a standard part of any deployment order.”
If a chaplain isn’t sent, how will the spiritual needs of the deployed troops be met? “Planning for the welfare support of deployed personnel, including spiritual needs, is underway and appropriate levels of support will be provided.” Fortunately, the Army chaplaincy doesn’t seem to depend entirely on divine protection. In the careers options on the NZDF website , it is made clear that chaplains receive full weapons training as part of their skillset.
While the vultures circle around Australian Prime Minister Tony Abbott, the one thing he has in his favour is that if they sack him, then his Treasurer, Joe Hockey, would almost certainly need to be tossed overboard as well. But then who would present the Hockey-drafted Budget due in May? So, there is an argument for keeping Abbott/Hockey in place, and using the Budget fallout as the pretext for the leadership change.
That could be messy, either way. If Hockey’s survival instincts see him deliver a benign Budget, the rationale for removing him and his boss would recede. But if Hockey sticks to his guns, the Liberals would look like wusses for dumping the guy who made the hard calls needed to revive an ailing Aussie economy blah blah…So should Abbott’s enemies strike now and ride out the Budget consequences ?
Not an easy decision. Barely 18 months since taking over the Treasury benches the Liberal Coalition has become a lame duck government. That’s a disaster for them. Abbott can expect to have few friends, once he is banished to the wilderness.
Mr Spock RIP
On the weekend, Leonard Nimoy died, aged 83. Any number of Youtube clips celebrate Nimoy in his role as Spock, the half human, half Vulcan logician on Star Trek who found emotion to be… such a fascinating but rationally objectionable quality of the human race. Beneath that cool logical veneer though, one sensed that seething emotions were deeply buried… and any number of plotlines exist where Spock fell in love, cried, drank brandy and recalled the good old days on his home planet. “On Vulcan, teddy bears are alive. And they have six inch fangs.” Even Captain Kirk once ended up trying to goad Spock into a human response by calling him a “a mutinous, disloyal, computerised half breed! An overgrown jackrabbit! An elf with an over-active thyroid..! ” Here’s a great collection of Spockian pearls of insight:
Yet Mr. Spock wasn’t the only Nimoy creation. Think also of his rendition of “The Ballad of Bilbo Baggins” – which would be a strong contender in any contest to find the worst song ever recorded.