This Sunday Greece is holding a general election in a very tense and fraught environment. It looks likely that the “radical” left wing group Syriza will win, with the threat that they will default on Greece’s debts and possibly lead it out of the Euro, back to the Drachma. Meanwhile Golden Dawn remain a real menace to migrants on the streets of Greece, and there are rumours that they have connections with what is sometimes called the “Deep State,” internal security and police who hold a secret longing for a return to the days of dictatorship and a deep hatred of the left. The London Review of Books published a good and very disturbing account of the behaviour of Golden Dawn and its links to this alleged Deep State, written by a journalist who managed to get some way into the organization. Meanwhile the European Central Bank has announced a new run of quantitative easing, perhaps intended to send a message to the Greek electorate that they might expect some support in their austerity plans, but the austerity program the Greek electorate is facing is shockingly tight and extremely disruptive.
Given this environment, and being safely ensconced far away from the trouble, I have thought of a few possible outcomes of the election, and have a few questions about what might happen. Even though I think asking a question and answering it yourself is the first mark of a dickhead, here are some of my questions with my thoughts on the possible answers.
- Will Syriza win? The polls seem to give them an edge but maybe the possibility of a real default will lead Greeks to return to the status quo
- How will Golden Dawn react? It seems to me that there is a very real possibility they will try and instigate some kind of communal violence, and the state doesn’t seem interested in confronting Golden Dawn
- Will the Deep State act to preserve the interests of the elite? Assuming this Deep State is even a thing, will it react to a communist victory by moving to interfere in the functionings of democracy? If it is true that a large minority of powerful people still hanker after the era of the Generals, will they move to act on this?
- Will Syriza back down on default and exit? Some are suggesting Syriza have been mellowing their rhetoric on default and exit as the election looms, but this could just be a campaigning tactic. Even if they really are starting to feel the heat, backing down on key parts of their platform will probably break them apart and bring about more instability. It seems to me they’re going to be hard-pressed not to follow through on core policies
- What will the effect of this be on other countries, especially the UK? The UK is slated for a referendum on EU membership if the Torie win in 2017. If Greece exits and it is not a catastrophe for Greece or the EU, this will potentially influence that referendum, since the pro-exit people will be able to point to Greece as an example. Likewise if exit is disastrous for Greece. If Greece starts a chain of exits by highly-indebted or highly anti-EU countries it could spell tough times for the EU. Will the much-maligned Greek left be the trigger for a conservative rebellion in the UK?
I don’t have an opinion on what Greeks or Syriza should do, being too far away and too ignorant to have strong views, and although I think much of the narrative on Greece and its economic problems is shallow and ideologically driven, and I’m generally not in favour of the Euro, I can’t say what I think is right or wrong about the whole sorry mess. If Syriza win I hope the transition to radical left leadership happens without neo-fascist street violence, and if Greece exits I hope they are able to solve their economic problems quickly and with minimum fuss. If a Greek exit begins a chain reaction that sees the EU scaled back a bit and maybe made more fiscally flexible I think that would be a good thing, though it won’t change British angst about the EU so long as the free movement of people remains at the heart of the project. But I really really hope that if Syriza win, their victory doesn’t lead to a long period of instability that turns Greece into the neo-fascist cradle for all of Europe. That would spell trouble far beyond Greece’s borders, and well beyond this election, and I hope the Greek people are able to avert such a disaster regardless of how they vote this weekend.
Compromise and Conceit 
January 24, 2015 at 8:54 am
Hmm. The zeitgeist is active when a modest proposal to write off debt widely acknowledged to be unrecoverable is seen, even by you, as coming from the “radical left”. As far as I can see, Syriza is a long way even from Attlee.
January 24, 2015 at 6:50 pm
Given how often we hear that defaulting on debt is terrible, I’d like to see them do so so that we can have a better answer on what happens when a modern Western country tells its creditors to go eat a dick.
Either:
A) nothing too bad will happen and there will at long last be a better relationship between creditors and debtors where the creditors realise that lending money is not a one way bet, or
B) the next Mad Max film will be shot in Greece for the added authenticity it offers. And I won’t have to put up with “default on debt” being the first option for people who’ve run the full length of the borrow and spend rope.
I acknowledge that this stance is taken in willful blindness of the actual human costs. Ultimately, given that I have no actual power of the choice or the outcome I don’t think my callousness manages to rise to the level of being a moral decision. Its like placing a bet on radioactive decay – the observer’s opinion isn’t going to impact anything.
January 25, 2015 at 10:43 am
Of course people and companies default on debt all the time. Sovereign debt is a bit different, since it calls into question the solvency of the ultimate guarantor of the credit system (sort of, like, it’s okay if I fuck up, or you do, but when God does, that’s a problem..). That said, many countries do default, often serially (Argentina, Russia, Peru..). What usually happens is that the Very Serious people say that this is the end of access to the financial system for that country, and its people are now doomed to eat their shoes in darkness, but life goes on and in a very few years the VSPs lend them large sums again.
January 25, 2015 at 10:14 pm
Peter that’s why I put the radical in scare quotes – I think it’s only radical (for a left party) within the context of a very constrained economic debate.
I find it amazing that the people who designed the political and currency union aspects of the EU didn’t think about this kind of default and exit scenario. I wonder if Draghi’s quantitative easing announcement that he pushed through was an attempt to set up a framework for debt relief if Syriza get serious about default, but it seems like a last minute scramble if that is the case – you’d think they’d have considered these issues when they designed the currency and banking system of the EU …
I guess we’ll find out soon. My money is on Paul’s option A…
January 26, 2015 at 5:36 pm
@Peter T: I agree, the repeated non-effect of defaults by countries like Argentina is part of why people advocate Greece defaulting. But I understand Argentina to be a net exporter of food and basically everything else they really need (i.e. they’d probably want more medicine, but having low expectations handles that sufficiently).
By contrast, Greece is a money pit incapable of feeding itself or maintaining it’s populace in the style to which they have become accustomed (i.e. a modern Western nation way of life with the addition of streets that no one bothers to clean). The fall from that may be harder – or it may be a total non-event.
Either way, having Greece default would be interesting to either demonstrate that there is a point where you don’t want to default, or move the needle even more towards “Everyone should default at the drop of a hat.”
Of course, the real winners in any default would be people who believe that lending money should not be 100% risk free to avoid a moral hazard (unless European central banks get their way…). Ideally, Greece would start by saying “We want a haircut of 75%” and if anyone (I’m looking at you, hedge fund managers) tries to play hardball the Greeks negotiating position is “We can’t really afford an army now, but assassins are relatively cheap and I can offer diplomatic immunity to people.” [1]
“the people who designed the political and currency union aspects of the EU didn’t think about this kind of default and exit scenario”
The geniuses who gave us currency union aren’t specifically the same idiot who proclaimed then end of boom and bust in the UK, but they belong to the same broad coalition of European idiots. Specifically European politicians.
[1] I don’t think diplomatic immunity quite works that way – but it does in Lethal Weapon 2, which is basically enough evidence for me…
February 20, 2015 at 2:02 pm
Despite my expectation that Europe would kick this can down the road for another couple of years it looks like the Greek loan situation could be wrapped up in a couple of days [1]: http://www.theguardian.com/business/economics-blog/2015/feb/19/greece-runs-up-the-austerity-white-flag-in-brussels
I’m posting this mainly so I can quote the linked article:
“There is a phrase for what Germany is seeking to do to Greece: a Carthaginian peace. It dates back to the Punic wars when Rome emerged victorious in its long struggle with Carthage but refused to allow its opponent the chance of an honourable surrender. Instead, it enforced a brutal settlement, burning Carthage to the ground and enslaving those inhabitants it did not massacre.”
I’d have to note that my (limited) understanding is that the Punic War that ended in this “Carthaginian peace” is the only one that didn’t result in a follow up war a couple of years later. If that were to hold true for Greece and the Euro, it’d be nice to see Europe actually bite the bullet for once.
In related news, you can almost hear the Guardian journalist sobbing at idea that the nasty Germans will beat the socialist Greece government (and it’s far right allies) [2]. And before anyone says “That’s an opinion piece, they’re allowed to have an opinion [3]”, it’s actually linked under Analysis, not opinion.
[1] Call it two weeks once we allow for the requisite stuffing around for last last minute deals
[2] The guardian seems relative calm over those far right allies for a paper that posts at least one opinion a week blasting the Republicans in the US.
[3] The Guardian’s left wing tone is pretty common in news articles, but it’s easy for readers who are on look out for it to read an opinion piece and mistake it for a news article [4]. That probably contributes towards views that it’s reporting is biased. And I’d say it’s true of other papers too given how hyperlinks don’t really show which section you’re in [5]
[4] Unless it’s like Polly Toynbee or George Monbiot. You’d have to be an idiot to mistake them for news instead of opinion.
[5] I recall seeing something insulting a Wall Street Journal contributor for not really being published by the Wall Street Journal when the WSJ opinion section was online under separate name/domain.
February 21, 2015 at 6:51 pm
I’m not convinced we should read too much into the current situation. If I’m reading it right, a four-month extension has been agreed under business-as-usual terms (i.e. maintaining austerity). Given that the Syriza government was elected 3 or 4 weeks before the deadline for default, it seems unlikely that they could negotiate much else except a temporary extension. Unless the government they were replacing was much more competent and visionary than we’re led to believe, it seems unlikely that contingency plans would have been in place for Grexit, and even the most competent government in the world would baulk at setting up such a plan in four weeks – let alone a government with limited political experience that has just been elected to replace a completely different one. Given they didn’t have time to prepare for Grexit, they must have been acutely aware that they have no bluff to call – everyone knows they don’t have the ability to exit so their threats are hollow. But four months from now they will have had enough time to prepare, so they can negotiate properly. To my mind this suggests that the EU has kicked the can down the road, and Tsipras and Varoufakis decision to surrender is no sign that they are going to tolerate austerity long-term – it’s just a sign that they are vaguely rational and have the best interests of the Greeks at heart[1].
It’s also not a Carthaginian peace. The destruction of Carthage did not represent a return to the status quo, which is what this deal seems to be. That’s just classic Guardian hyperbole.
While I agree that the Guardian’s confusion of “analysis” and “opinion” can be a source of bias, I think all papers do this now, both subtly and not so subtly, and it’s more a case of having to know your paper’s bias rather than being able to choose one that doesn’t have a bias. I would also dispute your judgment of Monbiot – although he is obviously speaking from a very strong political perspective, I think it’s fair to say his articles are often amongst the most “analytical” that one can expect from a modern newspaper, rather than mere “opinion” (the distinction being a purely newspaper-invented fiction, I suppose) – he actually provides a link to a fully referenced version of his opinion pieces, and he even occasionally deigns to go below the line and engage commenters, which is almost unheard of from journalists with their pretentions of grandeur (Julie Bindel – I think – is the only other journalist at the Guardian I know of who does this, and my dislike of her opinions on sex work is, I hope, well-established, but it’s good to see her engage occasionally in the debate she sparks).
This isn’t to say of course that one should agree with Monbiot’s analysis, but at least he gives something resembling a real argument.
I have been planning a post in praise of the guardian, actually. I think it is one of the few remaining newspapers in the world that actually does investigative reporting, rather than regurgitating press releases, and I think that’s really admirable[2]. In the last few years its work on human trafficking in Dubai, HSBC tax evasion, Swiss banking, Snowden’s revelations on spying, Guantanamo Bay, rendition and torture, have all been excellent and I don’t think many other papers come close to that level of careful investigation.
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fn1: Though “deciding not to shred your currency on three weeks’ notice” is a pretty low standard for judging whether a government has everyone’s best interests at heart.
fn2: Under definitions of “admirable” like “still attempts to cleave to the bare minimum standards to be considered better than toilet paper”[3]
fn3: This is why I don’t read the Telegraph. I mostly read newspapers on my iPad, and it would be a disaster if I tried to wipe my arse with the thing.
February 23, 2015 at 9:49 am
”I’m not convinced we should read too much into the current situation. If I’m reading it right, a four-month extension has been agreed under business-as-usual terms (i.e. maintaining austerity).”
Yeah, my comment was written on Friday before the EU powers-that-be had an opportunity to vote for “Lunch now, decisions later.” My excitement that Europe may actually have an outcome (any outcome) was unrealistic in the face of Euro-torpia. I pledge that the next time I think the EU may have reached a decision that I will hedge and umm and evade until it becomes clear that they’ve managed to dodge being in the room with a binding, meaningful vote. [1]
”I think all papers do this now, both subtly and not so subtly, and it’s more a case of having to know your paper’s bias rather than being able to choose one that doesn’t have a bias.”
Yeah, it’s more an issue of finding the ones with the weaker biases (or a willingness to publish other views) and making sure you get a range of views rather than finding a (mythical) unbiased source.
” I would also dispute your judgment of Monbiot – … I think it’s fair to say his articles are often amongst the most “analytical” that one can expect from a modern newspaper, rather than mere “opinion””
As I recall, I’m the one who (years ago) actually defended Monbiot to you so that you were willing to accept he may possibly not be speaking purely as a self-hating toff. And generally I agree that he puts in the homework required to demonstrate a good argument, but that was obviously not the case in his recent piece dealing with the Greek finances [2]. In that he just spouted a bunch of Socialist Alternative talking points on lending [3] then threw up a fairly badly thought out idea without any analysis.
That said, I have a fair bit of time for him. I once emailed him and someone he was debating AGW with some questions and he took the time to respond while the other guy didn’t [5]. But his understanding of, or willingness to think much about, economics and banking is woeful.
[1] Yes, I really distain the European approach to “Problems next week are better than tough solutions today.” Note this isn’t a shot at the Greek leadership, as your argument that they only had a couple of weeks (plus the entire time they were promising to do just this) is relatively reasonable.
[2] http://www.theguardian.com/commentisfree/2015/feb/17/currency-scheme-1930s-save-greek-economy-eurozone-crisis
[3] Are these people really saying that all loans would have to be fully collateralised? How the hell would you cope with the fact that lent money could be spent, then that income re-deposited and re-borrowed? That’s just going to leverage it in a different fashion… Unless you get into a nightmare of dollar source tracking which would instead make money good or bad… depending on whether it’s the result of a loan… [4]
[4] These anti-banking rants really make my head hurt as I can’t imagine how to close the holes they complain about without massive issues (i.e. people starving because they don’t have cash this week and can’t get short term money).
[5] And in my case that was enough to get me to drop anti-AGW positions, hence my reasoning that engaging sceptics in an open minded and respectful manner is the best way to get them to change their mind.
February 24, 2015 at 8:39 am
I think maybe the Troika and the other EU people have no interest in what we might consider a resolution, because they have settled on a policy for Greece – unrelenting austerity – and that policy is in place, so any delays in changing that policy suit them. Kicking the can down the road helps them maintain a policy that they think works. So long as Greece is on temporary bailout terms it’s Greece that has to force the change. So from the Troika’s perspective I guess this particular kicking of the can is not representative of a lack of resolution. This contrasts I think with something like decisions on free movement of people or carbon emissions, where the EU keeps talking about change but then puts it off to the next meeting.
Let’s leave the discussion of Guardian bias for when I get around to writing that article. In Monbiot’s defense re: misunderstanding banking, it’s really hard for people outside of the industry (e.g. me!) to have much sympathy or goodwill towards banks at the moment, and I think that leads us to be very suspicious of their motives. e.g. HSBC was money-laundering for criminals, and the libor riggers were deliberately subverting sanctions on Iran. From the outside the banking industry appears to have poisoned its own well so effectively that it’s hard for outsiders to extend much benefit of the doubt … but I try to avoid whingeing about banks on this blog because I know nothing about the mechanics of what is, at its base, an essential industry.
February 24, 2015 at 12:23 pm
“I think that leads us to be very suspicious of their motives. e.g. HSBC was money-laundering for criminals, and the libor riggers were deliberately subverting sanctions on Iran.”
I’m sure I can find “healthcare professionals” who reject HIV/AIDS links or “climate scientists” who don’t believe AGW is happening. For less theory based abrogations of duty there are corrupt cops and childcare professionals who abuse kids.
In every case these things are bad, and in some cases criminal. But having a position that an industry can “poisoned its own well so effectively that it’s hard for outsiders to extend much benefit of the doubt” is troublesome. This is like saying that some politicians are dodgy therefore everyone who tries to influence public opinion or change the world is dodgy by association.
To say that (some) bankers have broken the law or (at least) broken trust with their clients is a bad thing and they should be punished for it. But this is closer to computing professionals being involved in hacking, and I don’t hear anyone saying that Apple is untrustworthy because hackers exist.
February 24, 2015 at 10:43 pm
I don’t think you’ll find many of them, and you certainly won’t find “entire organizations of scientists supporting money laundering for drug dealers,” “widespread mortgage fraud at an industrial level bringing about an epochal depression” or “tax evasion that is clearly against international norms by an entire organization.” But poisoning the well does happen in science, e.g. the stupid ongoing debate about dietary risks, Andrew Wakefield’s singular efforts on vaccination. I would also add: the over-conservatism of climate scientists, which leads the general public to think that we can keep pretending climate change is a problem for tomorrow (though we all know it is the “moral challenge of our time,” haha!) These are problems that this field has to deal with and doesn’t/hasn’t always dealt with well. Note that as part of my position on the misuse of the term “anti-science” I have consistently argued that people who cite Wakefield’s paper in defense of their anti-vax views are not anti-science: the fault here is with the journal that published his crappy study, not with people who cite it, and if subsequently this reduces the public’s trust in science then scientists need to deal with that. Likewise, the banking industry needs to deal with the fact that a lot of banks have engaged in fraud on an institutional scale, have attempted to subvert significant international agreements on money-laundering and terrorism, and have rigged international interest rate markets[1].
Also, I think you may recall Monbiot had an extremely negative (and in my opinion completely unreasonable) reaction to climategate, excoriating scientists over their poor behavior. I think this is evidence that he has form for expecting moral standards of actors in the public field, and reacting against the whole group when they appear to fail to meet his standards. In the climategate case I think he was wrong; I guess you think he is wrong in the banking case; we can probably both agree that this isn’t the best analytical framework; but applying an even-handed standard of high professional standards is not, imho, a bad thing, even if it’s naive. And “not cooperating with murderous Mexican druglords” is a pretty low standard that it appears several banks in the past few years have been unable to live up to. Would you trust a money-launderer with your money?
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fn1: though I have to say in this case, wtf? Our govts set up a system where banks came to some kind of gentleman’s agreement about the value of a number that fundamentally affects their profitability, and then were surprised that these banks were manipulating that number. Hmmm. Born yesterday, or colluding with criminals? You be the judge …
February 25, 2015 at 11:13 am
“tax evasion that is clearly against international norms by an entire organization.”
“Would you trust a money-launderer with your money?”
The question I’d want the answer to (and have not investigated) is how deep the rot goes.
Obviously the sales guy who’s snorting blow of a sex slave in a cartel compound knows he’s doing something illegal and there’d be a range of other people involved (e.g. his boss, some of the compliance & AML team, maybe an operations guy or two) but it could still be a tiny part of the overall organisation. The bank I work for isn’t particularly big and it employs about 40,000 people across a vast range of activities most of which don’t encourage (or actively prevent) you understanding what the other areas are up to. To put it in perspective, it’d be like saying “The climate scientists at Melbourne Uni are dodgy, so the medical lecturers in all other Australian universities are suspect too.”
From memory, the libor scandal was just that – the very small group of people involved in setting the libor number gamed it to increase their profits (and bonuses). I’d expect the other scandals to have a similar basis with say 100 people involved in each scandal who are able to understand that what is going on is bad.
So the key question isn’t “Was the bank doing something dodgy” but “How deep do you have to cut to get this cancer out?” Another perspective is the head of the IPCC is currently being investigated for sexual harassment, but I’d hesitate to assume that other climate scientists have a predilection towards dick-pics just because the head of their organisation is alleged to.