Today, the financial markets are in turmoil, not just in Europe, but around-the-world.  On Saturday, Greek Prime Minister Alexis Tsipras spoke on national television, declaring that he would hold a referendum on July 5, to enable the Greek People to decide whether to accept or reject the demands of the country’s creditors–the European Commission, the European Central Bank and the International Monetary Fund.  Tsipras also closed Greek banks until Monday, July 6, until the results of the referendum are known.

The political dance, as I see it, has three component parts–and, to an extent, there are some surprises. The most ridiculous idea is that the average Greek-on-the-street can possibly understand the full extent of what would happen if Greece defaulted, exited the Eurozone and declared bankruptcy.  Also, might some additional suffering be better than Greece becoming a failed state?  Secondarily, several of the key players in the whole process–which has been going on for five and a half years–do not see eye-to-eye.

There are a couple of quite interesting articles in the German periodical, Spiegel Online International, which point-out several of the odd couplings.  German Finance Minister Wolfgang Schauble and his Greek counterpart, Yanis Varoufakis seem to have almost a vindictive relationship.  In fact, other Eurozone finance ministers try to separate them by holding the bail-out negotiations through smaller groups. That’s hardly a valid approach to problem-solving.  The Spiegel link is:

At the same time, German Chancellor Angela Merkel believes that Greece, as much as possible, should be kept in the Euro.  Mr. Schauble, on-the-other-hand, has often declared publicly that a “Grexit”, Greece leaving the common currency, would not be a major detriment to the solvency of the Eurozone.  It’s difficult to determine how much of Schauble’s bluster is a standard negotiation ploy, to weaken one’s opponent’s position, and how much it is the German’s honest belief.  As all-powerful as Mrs. Merkel seems to be outside Germany, however, she knows that Mr. Schauble is somewhat of a rock star among his government colleagues.  That Spiegel link is:

In fact, it appears that the heavy lifting in the negotiations process seems to have been taken-over by the respective heads-of-state, rather than their finance ministers.  Is that due to the two key players–Schauble, who is an attorney, and Varaofakis, an economist–never seeming to get along since Tsipras and his Syriza Party took over the Greek government?

Additionally, there is the long-simmering hopes–whether realistic, or not–that the initial trade union, the E U, and then the financial union, sharing the common currency, would prove that the whole would be greater than the sum of the parts.  Part of the rationale behind the formation of the initial Common Market in 1957, which in time morphed into the E U and the Eurozone, was the belief that promoting common political and economic well-being would lead to on-going peace on the continent.

Yes, things have been peaceful since World War II.  So far, however, not everyone is happy with the economic and political realities of having ones affairs determined from from outside one’s own country. This sentiment exists all over Europe, but mostly in the north.  But, as usual, only time will tell.


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  1. #1 by cheekos on June 29, 2015 - 8:37 PM

    It is important to remember that in more normal circumstances, where a country has its own currency, the normal solution would have been to devalue the currency. That has little effect on the locals within the country; however, it causes imports to be more expensive and exports are more attractive to external markets. In the long run, that situation has been fairly successful–if properly managed–over the years. Within the Eurozone; however, a devaluation of a shared currency is no longer an option.

  2. #2 by cheekos on July 3, 2015 - 12:13 PM

    The linked column, by Professor Paul Krugman, Nobel Laureate Professor at Princeton, in his regular bi-weekly column in the NY Times:

  3. #3 by cheekos on July 3, 2015 - 1:19 PM

    One Greek’s take on Greece, by Nikos Konstandaras, as linked in The International NY Times:

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