It was not just Greece which joined the Eurozone
with phony financial numbers. Italy's were even
worse. Actually, almost all of them did to a
lesser or greater extent. Even the two main
founder members, Germany and France, fudged their
figures somewhat -- and France more than
somewhat. Why did the Eurozone ever come into
existence in the first place? Because France was
frightened stiff of the German Deutschemark and a
Germany that had reunited with communist East
Germany in 1990 and could grow even stronger. It
was a political fudge before it became a currency fudge.
Keith
At 17:26 21/06/2011, you wrote:
June 20, 2011 NY Times
The Great Greek Illusion
By
<http://topics.nytimes.com/top/news/international/columns/rogercohen/?inline=nyt-per>ROGER
COHEN
LONDON Greece has long held emotional sway
over Europe. All the
cradle-of-Western-civilization talk earned it
leniency, even indulgence. The European Union
was not ready to go mano-a-mano with the birthplace of democracy.
Past glory is a wonderful thing and a lousy
guide for present policy. Thats true in the
Holy Land, in Kosovo and in Athens. Greece
should not have been allowed into the euro. It
failed to join in 1999 because it did not meet
fiscal criteria. When it did meet them in 2001,
the fix came through phony budget numbers.
But Europes bold monetary union required an
Athenian imprimatur to be fully European. So everyone turned a blind eye.
In fact, recent history would have been a much
better guide. Greece has had an awful past
century. Lets begin with the wars of 1912-13
that wrested northern Greece from Ottoman
control. Then came the massive population
exchange, or ethnic cleansing, negotiated at
Lausanne in 1923 under which about 400,000
Muslims were forced to move from Greece to
Turkey and at least 1.2 million Greek Orthodox
Christians from Turkey to Greece.
That upheaval was followed by the 1930s
dictatorship of General Metaxas; the brutal
German occupation of 1941-44; and a devastating
civil war in the late 1940s that bequeathed an
ideological struggle between left and right whose visceral quality endures.
The rightist military dictatorship of 1967-74
that rounded up and exiled leftists fanned the
embers of the civil war. The ongoing conflict
with Turkey over Cyprus, involving its own
population exchanges, ensures the memory of
1923 has not been entirely laid to rest.
So forget Socrates. Read Bruce Clarks excellent
Twice a Stranger on the effects of the
Lausanne population exchange and the psyche of
modern Greece. Clark writes of Greece as a
society where blood ties are far more important
than loyalty to the state or to business partners.
Thats not a state of mind conducive to
tax-paying, collective effort or balanced public
finances. It doesnt rule them out but it
doesnt help. Its no surprise that Greece took
the euro as a means to live on the never-never
ending up with a debt load equivalent to 150
percent of gross domestic product and rising.
Yes, E.U. membership provided some balm to Greek
wounds. Thats the great merit of the E.U.: It
detoxifies history. But Greece remains a nation
suspicious of outsiders when youve been
lorded over by the Ottomans you dont want to be
lorded over by central bankers and a place
where state structures command scant loyalty.
That does not bode well. It suggests the latest
bailout, after the $158 billion last year, may just be good money chasing bad.
Ive never seen Europe in such dire straits.
Greece is full of the aganaktismenoi , or the
outraged, who resent the sharp cuts and sales of
state industries made necessary because there is
no drachma to devalue in order to regain competitiveness.
Like protesters in Spain, they feel the poor and
unemployed are paying for the errors of
politicians, the evasions of the rich, and the
whole globalized system that rewards the
tech-savvy initiated while punishing those left behind.
Their anger is understandable.
In many ways the euro crisis, the European
crisis, is an apt symbol of our times. A
borderless order conceived by technocrats,
sustained over a heady period by low interest
rates, appreciated by the moneyed classes who
made more money, is today facing popular revolt
combined with the relentless pressure of its contradictions.
Strikes and violent protest are one measure of a
Europe that now leaves many citizens unmoved by
the great achievements of European integration.
Open borders are beginning to close again.
Turkey is turning its back on the Union. Germany
has checked out from its postwar European
idealism. America lambasts Europe for its
military fecklessness. Many Greeks and Spaniards
feel Europe is no more than a scam.
The bottom line is this: A monetary union among
radically divergent economies without the
buttress of fiscal or political union has no convincing historical precedent.
For a while, the easy-money boom allowed
everyone to overlook the fact that peripheral
economies like Greeces or Portugals were not
gaining competitiveness or converging, but
amassing unsustainable deficits and debt. Now the hard facts are plain.
Given explosive Greek politics, German
exasperation and the limits of what the Greek
people will accept, I think the best imaginable
outcome over time is probably an orderly Greek
default rather than a disorderly one.
Theres simply no readiness to take the
fundamental steps like approving the issue of
E-bonds underwritten by all the euro areas
taxpayers or the creation of a European Union
finance ministry that would convince markets
the euro zone is ready to assume the logic of
monetary union. As a result, the trends already
evident away from convergence will continue over time.
Greece was not ready for the euro. Its classical
past was of less relevance than its recent past.
A lie is like a snowball: The longer it rolls,
the bigger it gets. No salvage operation can hide that.
You can follow Roger Cohen on Twitter at
<http://twitter.com/nytimescohen>twitter.com/nytimescohen .
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/06/
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