Why Greece will bring the euro down with it

Greece is a borderline failed state. Its society lacks cohesiveness and is deeply divided. Its economy is in shock. If the country’s history is any guide to its future, there is serious trouble ahead.

More than a year ago, when the troika of institutions that now oversees Ireland’s bailout first landed in Athens, there was hope that developed Europe’s most poorly governed country could be put on the right track.

A new government was then in place and its most senior figures seemed serious about radical reform. Many Greeks, particularly the young and the educated who recognise how dysfunctional their country is, backed rupture. There was much talk of opportunity in crisis.

That talk is no longer to be heard. The crisis now presents nothing but threats and risks.

This, in many ways, is unsurprising. The chronic dysfunctionality of the Greek state is long established. Since independence almost two centuries ago, Greece has experienced civil war, uprisings, mass displacement of people, dictatorships and terrorism.

There is no better reflection of its state’s failings than the issue that has drawn the world’s attention to the country over the past 18 months: budgetary chaos. According to a study by economic historians Carmen Reinhart and Kenneth Rogoff, the Greek state has been in default for almost one out of every two years since it was founded in the 1820s. Struggling under the second highest public debt burden in the world, it looks to be heading that way again. Read full article in the Irish Times...

From Athens

Debt rescheduling or threat of suicide

Debt rescheduling is at the centre of debates in Constitution Square where, for the past two weeks, the Athens “Angry Ones” have gathered by the thousands every evening to demonstrate their anger at the country’s economic and social situation. Among these is Yannis Varoufakis, professor of economics at the University of Athens. He sent a letter to the Prime Minister Georges Papandreou, writes Pantelis Kapsis in Greek daily, To Vima. Kapsis is one of the most influential leader writers in Greece. Professor Varoufakis invited Papandreou to come down to the square to “tell the demonstrators that the time has come to raise their heads and face facts. We will not obtain a penny from Europe if we don’t apply the measures it is imposing”.

But for Kapsis, even if the Prime Minister did convince his fellow citizens of the merits of the austerity plan and of the massive privatisations that it requires, “in any case, we will default – because we will not be able to obtain a new loan or to pay back our debt”. “Professor Varoufakis isn’t crazy,” continues Kapsis, “he also knows that Europe doesn’t want Greece to go bankrupt, thus the need to reopen the debate over Eurobonds [creating a common debt instrument for the euro]. But we know that some want to exclude Greece from the euro. The rescheduling [of the debt] is just an ointment. It’s like threatening to commit suicide...it remains to be seen if it will happen”.