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Europe

May 16, 2012

Rundle: Greece is now the cutting edge of the world

Greece is a harbinger of what will happen not merely in Europe, but across the world over the next decade as the vast global superbubble of neoliberalism slowly deflates.

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“Everything’s fine out the window … oh no, look, I can see society collapsing,” said Paul, a French-Greek journalist working in Athens. Out his window is Ermou, the wide shopping street that leads down to Syntagma Square. I’d phoned him to see what was going on, and to check the “Greece in turmoil” line that has become de rigeur in the official coverage of the crisis.

Paul didn’t need much of an invitation to take the piss out of that line. What has happened in the development of the Greek-European crisis — and the inter-connected coverage of it — has been extraordinary, but also indicative of the topsy-turvy world of capitalism, finance, and its relation to everyday life. It is a lesson worth following closely, because Greece is a harbinger of what will happen not merely in Europe, but across the world over the next decade as the vast global superbubble of neoliberalism slowly deflates.

Six months ago, Greece really was starting to fray — due to the determination of the two major parties, PASOK and New Democracy, to impose the austerity measures of the EU “memorandum” no matter how stupid or self-defeating — and the deep frustration of the public at the impasse between the political system and popular feeling.

But then, after six months of “technocratic” rule (really, EU satrapy), an election was held, and lo and behold, the hold of the major parties was broken, and new forces — Syriza, a leftist outfit, and Independent Greeks, a right-wing nationalist breakaway — managed to break through, gaining about 50 and 30 seats respectively. The vote may have scattered across several parties but the result was clear — 60% of votes went to parties that rejected the terms of the memorandum. At the same time, 80% of Greeks want to stay in the euro and the EU. They reject the old parties, but they also reject the notion that the only way to square away the debt is needless pain enacted for largely ceremonial purposes.

So, in other words, the people’s desires have entirely transformed the structure of Greek politics. Or, as it might otherwise be called, democracy. For surely, if democracy means anything, it means the capacity of a vote to up-end everything. In any real democracy, the party structure should collapse and recombine every 25-30 years or so. Large parties are, after all, coalitions of temporarily united values and interests. When the circumstances change, so should they.

That is what has happened in Greece. Rather than the shell-game of finance capitalism dictating the terms, people have made a fairly clear statement of what they want — the social-political has come to the centre of society, as it should. What the morons who constitute the ranks of financial journalism call “chaos” is really the exact opposite — it is politics, people expressing their will in a non-violent form, and then trying to negotiate an arrangement between differing manifestations of ideas and interests.

Chaos, by contrast, can be seen on the screen on every finance trader across the Western world, where stocks, shares, currencies move according to no rational basis, driven by the echo chamber of rumour. The idea that the business of everyday life should be governed by these processes rather than by the rational activity of production for use, indicates the nihilism at the heart of the market, its alliance with dead matter — numbers, money, power — rather than life.

The Greeks have rebelled against this. It looks like their rebellion will continue — with the failure of the latest attempts to form a coalition government the country is going back to the polls. Syriza, the left coalition that had taken 5% of the vote in the last election, and 17% in this, is now polling in the mid-twenties.

Such a result — if it occurred in the new elections, to take place in mid-June — would give Syriza the 50-seat bonus still in place. That would give them about 120 seats out of 300. Presuming that Democratic Left retained 10 seats or so — they would lose some seats back to Syriza — then there would be extreme pressure on Independent Greeks — the right-wing breakaway party — to support Syriza in their shared belief, a rejection of the austerity measures contained in the second memorandum.

That would deliver a government expressing the popular sentiment — in Europe but rejecting the memorandum. That is the scenario — a rational democratic one — that finance journalists call “the nightmare”. It is, but not in the manner they suggest. The truth is, that if Syriza forms government while rejecting the memorandum, but refuses to unilaterally leave the euro, then it is really Europe’s problem, not Greece’s. The usual groupthink that has everyone writing articles as to how Greece will leave the euro next week, etc, fails to take account of the fact that there is no easy way to expel a country from the eurozone. The onus is on the EU to do the expelling.

So everything from here on is uncharted. The technocratic Greek government — which remains in place — paid off an €5 billion-plus bond issue that came due today — but interest is due on hundreds of billions of euros of debt in the next month — much of it euro-debt — and the country has less than a billion euros in foreign reserves. So the EU would have to decisively refuse to underwrite the next series of payments — which would simply go from one euro account to another — in order to force the crisis.

The sensible solution would be the one proposed by new French President Francois Hollande — that bad Greek debt be swapped for eurobonds, and that the private debt take an 80-90% haircut, and that a rational 10-20 year paydown of what debt remains be negotiated without strangling the Greek economy — which would then shrink the economy further, and make it impossible for the country to repay its debts. It is utterly irrational, but so too is neoliberalism — it is the equivalent of the Incas believing that only human sacrifice would keep the sun rising, and that the advance of the conquistadors meant that they should redouble their efforts of tearing hearts out of chests on the top of ziggurats, rather than responding to the immediate threat in a rational and direct manner.

Every number quoted by the finance journalists — the hundreds of billions of euros owed, the terms coming due — are all bullshit. All that is due is the interest payments, and most of those are ludicrously inflated by the shell-game that got Greece into this mess in the first place — the sudden downrating of Greek debt by ratings agencies part-owned by the very banks that would profit from a hike in interest rates in the first place. Most finance journalists are simply unthinking propagandists of a system they have neither the intelligence nor the desire to examine.

Greece is now the cutting edge of the world. And Syriza is the most advanced political expression around. The party that the finance journalists call “strident” and lump in with the Nazi freak-show of Golden Dawn, is in reality an expression of the rationality within modernity — the idea that complex systems such as finance capital should be tools of humanity, rather than vice versa. People who think that the world can be covered by noting the movements of the FTSE, the Dow and the Kak better get used to what is happening in Greece, because it will soon be happening elsewhere.

Of course, with a month before the new elections, it is always possible that the voters in Greece will return to a mainstream pro-memorandum party, guided by fear. Should that occur, the relationship between the polity and the people will be sundered afresh, and everything up to civil war will have happened. Should Syriza triumph, then history will have happened, and Europe, the markets and their trailing sycophants in the financial press will have to adjust. Look away from the screen and out the window, and you might see the world.

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28 comments

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28 thoughts on “Rundle: Greece is now the cutting edge of the world

  1. cairns50

    fantastic article, the pity is 99% of austrlians will not read it

    and more importantly the politicians that do read it as surely there will be a fw of them

    will simply take no notice, i can already imagine there utterances

    “oh just another rant by a raving left wing journo”

    bravo guy

  2. shanghai

    great article

  3. cannedheat

    So true but be prepared for ‘something else’ to happen. Dysfunction has infinite variety.

  4. puddleduck

    Fabulous article Guy! Should be on the front page of the major dailies.

    Democracy. Who’da thunk it?

  5. kookla

    Guy Rundle – you are brilliant and so right. You seem to be on the same path as David Graeber’s Debt: The First 5,000 Years which everyone should read today!

  6. form1planet

    Brilliant article Guy. So weird that such a basic concept – that the economy should serve humanity instead of the other way round – is so radical. We seem to operate under the notion that we are helpless slaves to the whims of the market, but the laws of thermodynamics (y’know, the ones that cause climate change) will meekly do our bidding.

  7. Frank Campbell

    “Most finance journalists are simply unthinking propagandists of a system they have neither the intelligence nor the desire to examine.”

    What a surprise. If they did, they’d be unemployed.

    But Rundle didn’t examine the system either. Only now, when it’s patently obvious that Greeks won’t tolerate paying for casino capitalism forever (5 years so far for Greece), does he elect Greece as “the cutting edge of the world”. The European souffle has been sagging slowly since 2007. No solutions from the Left yet- coopted as it was into the system- and no certainty that the Greek Left can offer coherence either.

    Let’s see some analysis of Syriza ideology and policy, not just Rundle bombast.

  8. Mat Horne

    Excellent

  9. Jimmy

    All Australians should read this article and ask themselves why they want to pursuit the same “expansionary austerity” rubbish proposed by Abbott that is being rejected in Greece when we have such low debt levels that they can’t evenuse that as an excuse.

    Also when considering the line “Chaos, by contrast, can be seen on the screen on every finance trader across the Western world, where stocks, shares, currencies move according to no rational basis, driven by the echo chamber of rumour.” People should look at the CBA’s profit and share price now in comparison to it’s profit and share price pre GFC.

  10. Mark Heydon

    Agree with the above posters, an excellent article with so many gems in it.

    “Chaos, by contrast, can be seen on the screen on every finance trader across the Western world, where stocks, shares, currencies move according to no rational basis, driven by the echo chamber of rumour. The idea that the business of everyday life should be governed by these processes rather than by the rational activity of production for use, indicates the nihilism at the heart of the market, its alliance with dead matter — numbers, money, power — rather than life.”

    Why do so few understand this?

  11. Jimmy

    Joe Hockey today first refused to commit the Coalition to the NDIS as he “isn’t going to promise what he can’t deliver” and then;

    “Mr Hockey was tackled on the Coalition’s commitment to provide tax cuts without a carbon tax, saying the cuts would be made to the tax tables as they stood today, not to the new rates that come into force when the carbon tax is introduced.” So will they delicer tax cuts that actually increase the tax rates?
    And
    “In a wide-ranging speech that analysed last week’s federal budget, Mr Hockey flagged a hardline fiscal strategy from the Coalition if it was to win the next election.” SO we are going to wind back means testing of the private health rebate, subsidise Nannies, make the paid parental leave scheme ridiculously generous, pay big business to stop polluting, deliver tax cuts and increased welfare and still have a “hardline fiscal strategy” – sounds like Greece is looking pretty good if Abbott becomes PM.

  12. Jimmy

    Joe H.oc key today first refused to commit the Coal ition to the NDIS as he “isn’t going to promise what he can’t del iver” and then;

    “Mr Hockey was tackled on the Coal ition’s commitment to provide tax cuts without a carbon tax, saying the cuts would be made to the tax tables as they stood today, not to the new rates that come into force when the carbon tax is introduced.” So will they del iver tax cuts that actuall y increase the tax rates?
    And
    “In a wide-ranging speech that ana l ysed last week’s federal budget, Mr Hockey flagged a hardl ine fiscal strategy from the Coal ition if it was to win the next election.” SO we are going to wind back means testing of the private health rebate, subsidise Nannies, make the paid parental leave scheme ridiculousl y generous, pay big business to stop polluting, del iver tax cuts and increased welfare and still have a “hardl ine fiscal strategy” – sounds like Greece is looking pretty good if Abb ott becomes PM.

  13. CHRISTOPHER DUNNE

    Nothing like the collapse of the world financial markets’ hegemony to get Guy’s juices flowing is there? Bubble economics, the massive rush of debt cocaine and now tottering sovereigns in Europe is all coming together, and Guy is loving it. I have to admit it’s hard not to watch this economic clusterf#ck and not feel a little of the old Schadenfreude, especially since I’ve been shouting at the TV since Greenspan’s 1diotic nostrums were being wafted about like they were holy incense.

    Look, if the Greeks invented Democracy, they’ve got the right to re-invent it, and if they have to chuck the money lenders out of the public square to do it, well, so be it. German and French banks can, and most probably will, go to hell in the process.

  14. michael r james

    Dare I say it but I believe Rundle has seen the light since I last berated him for his previous London-centric anti-Euro rant.

    And yes, all the screeching that the sky would fall in if the French had the temerity to vote in Hollande! And the neocons screeching of TINA (There Is No Alternative). It is very curious indeed that much of Europe’s immediate fate rests in his hands. The thing is, like GR writes, Hollande has a plan and being a trained economist (indeed one of the most boring kinds for part of his career: an auditor!) and graduate of the ENA grande ecole (also of Sciences Po, from which Sarko had dropped out of just before he got expelled because of failure to master required English!) he kinda knows what he talks about. Well, as much as any economist.

    I wonder if he made progress in persuading Merkel in his visit last night? I have always said that eventually the Germans will come round and accept both the Euro Bonds idea, and allow the ECB to do some judicious money printing. Especially as these things can be done while still retaining (and enforcing) those hard-won austerity measures (if you can call effective tax collection in Greece and Italy as “austerity” measures). Of course those undisciplined Mediterraneans will not be allowed to control any new growth funds provided.

    This is called making good use of a crisis.
    Forget SuperSarko, it might just be SuperHollande! (alas not quite the same ring to it).

  15. michael r james

    After writing my first post, just to be clear on a few issues raised by Guy.

    ” The truth is, that if Syriza forms government while rejecting the memorandum, but refuses to unilaterally leave the euro, then it is really Europe’s problem, not Greece’s.”

    Yes and no. Mostly no. If Syriza really digs in and rejects the existing agreements (which remember include writing down of 100 billion euro debt) then there is little choice by the Europeans: by default the next transfers will not happen. I don’t think Hollande would argue otherwise. This leads quickly to Greece going bankrupt, capital flight etc. Disaster.

    There may be a strong emotional logic in Europeans trying to keep Greece within the Euro project but the reality is that Greece is less than 1.5% of EU GDP, the smallest. Their loss will not impact the rest of Europe. Despite all the noise and panic about skies falling in (domino theory; hmm where have we heard that before?), it probably would not –perhaps it might have a year or so back but not today. It can even be argued that jettisoning Greece will make the rest of Europe’s problems (Ireland, Portugal, Spain, Italy) easier to focus on and deal with.

    The repeat election is a good thing because of several reasons. First, is that more Greeks get an opportunity to vote (only 50% voted this time). Second, there should be time for the Greek voters to pay attention to the options available, and for the parties to explain it unvarnished. Third, there may be a completely new set of options available courtesy of Hollande.

    The options available are pretty stark and one wonders if Syriza will really push their total opposition to the existing European agreement when (1) >75% of Greeks continue to wish to stay in the Eurozone (2) crashing out of the Euro (and of the EU, they go together) will be unavoidably disastrous for the Greeks and they know it (hence (1)).

    These Greeks are not blessed with ability to compromise but one can only hope that Alexis Tsipras (Syriza leader) being of new generation and perhaps less ideological, while betting on gaining the upper hand in new elections (we’ll see) will in fact bend to the inevitable and agree to a Hollande plan to stimulate growth. The problem might be that the Greek voters might have locked themselves into this mutually incompatible scenario: stay in Euro but reject agreement.

    Since Syriza is of the Left, one can even see a productive interaction between the new French president from the Partie Socialist and Tsipras to sell the new options.

  16. michael r james

    Finally, and I am sure Guy is aware of this, but if Syriza does gain a majority in the new elections, and does unilaterally reject the European agreement (any possible Hollande plan will be conditional on most of the so-called austerity plan being retained) then no further Euro bail-out money will be forthcoming. The Greek banks will collapse overnight (the government would have to freeze deposits), government salaries cannot be paid and the economy and country will collapse overnight. The only reason why Greece looks like a modern Euro country today is because of all the European grants over the last 15 years and of course the cheap Euros. They will revert to the poorest of the poorest without any rich euro uncle to throw them a few scraps.

    Already one imagines that the Generals are handwringing over the useless damned civilian politicians. Once Greece is no longer part of the EU there is no reason for them to be restrained. This scenario should also be at the front of Greek’s minds as they weight their options.

  17. rubiginosa

    Most finance journalists are simply unthinking propagandists of a system they have neither the intelligence nor the desire to examine.

  18. zut alors

    ‘… the shell-game of finance capitalism…’

    When will we wake up that it’s a big shell-game run by sharks.

    A fine read, Guy.

  19. Graeme Thornton

    Bloody good read guy. I too wonder about the daily ‘panic’ of is the market up or down- but its jobs for a bunch of journos is all. Daily – twenty years !

  20. JimmyK

    I like the sentiment in this article but it can’t be taken seriously. If the euro countries don’t pay the Greeks surely there is not enough in the kitty for the Greeks to pay their bills, not interest but pensions and salaries.
    This is why they would need to leave the euro ( rather then the EU having to work out how to expel them). The govt would need to print money to pay the salaries, and they can’t print euro’s.

  21. AR

    JimK – until the EU, somehow, expels them, then in fact the Greeks can print enough euros (worth the same as a ‘german’ euro) to fire their power stations.
    It is a good example of the old axiom, “owe the bank a couple of thousand and you have a problem, owe them a couple of billion and they have a problem”.
    In this case the “bank” is basically French private banks’ bondholders and, given their congenital duplicity and unalloyed hubris, they cannot, will not, dare not, declare the debt unrecoverable.
    As usual, Guy brings a fresh view of a tired, tedious & tendentious dilemma and shows that it is only so because the sclerotic and self interested cannot get off the neocon tiger.

  22. Graham R

    At times like this I like to remember that salient Truth: All Debt Is Imaginary.

  23. Mr Rabbit (aka Steve 777)

    World financial markets sometimes resemble a glorified casino. Or perhaps a gigantic Ponzi scheme, totally divorced from any notion of productive investment. Various Greek governments over the years must have been pretty incompetent but Global Finance advanced Greece billions, surely knowing the risks, until a few got panicky and everything fell in a heap.

    Finance is an enabler but of itself produces nothing. All too often Finance becomes separated from reality and goes off creating imaginary billions which inevitably and catastrophically evaporate. And it’s everyone that suffers, not just the players and often they get off scot free. Isn’t there a way to separate the gamblers from the real world? Lock them up in a high roller casino in a resort somewhere where they can play with monopoly money and argue over who has the biggest dick?

  24. calyptorhynchus

    For Incas read Aztecs and for ziggurat read pyramid. And the Aztecs didn’t redouble their sacrifices when the Spanish tried to take over, they fought. If it wasn’t for Cortes’ use of Mexican allies (anti-Aztec Mexicans), he would never have won.

  25. Hamis Hill

    Weimar republic, post-war reparations debt, hyerinflation, debt magically repaid, Greece leaves euro repays debt with hyperinflated Drachma (take it or leave it) History repeats. History??? What is History??

  26. Eleni

    I live in Athens,Greece and I found your article extremely inspiring. Thank you.
    The past two years, here in Greece, have been very difficult for every single citizen; rich and poor. We have been made to feel like this “Global economic instability” is ALL our fault!! That every single person living in this country is lazy (sits around drinking frappe at the beach all day etc etc) , that every single person is a public servant enjoying his/her pension at 50 (again sunbathing at the beach with a frappe) and that every single person cheats on their taxes or doesn’t pay them at all!
    Firstly, for all those people who DO not live in Greece..I would just like you to know that the picture isn’t exactly the way it is portrayed. I am a 35 year old freelance photographer. I literally run around all day from 7.00am to 9.00pm on most days.In the past year my pay has been cut 60%. I am NOT lazy.I pay ALL my taxes.I do not drink frappe.I go to the beach on a Sunday maybe. I am not the only one. Personally, I do not know anyone (in my circle of friends and acquaintances) who doesn’t work all day (only friends who have been made redundant- 5 in the past 2 years). I do not know anyone who doesn’t pay their taxes and I do not know of any 50 year olds that are retired. There are lazy people in every single country on this planet. There are also people who cheat on their taxes in every single country on this planet (maybe in some countries it is a little more difficult to do so but they DO).
    Secondly, I truly believe that half of our politicians should be locked away. I put the blame 80% politicians 20% citizens who take advantage of the politician’s uselessness (if some people get away with cheating on their taxes, it’s THEIR inability to ‘catch’ them!) Isn’t it funny how most of our politicians have bank accounts in Switzerland and villas on Greek Islands? Hmmmmm….

    You hit the nail right on the head when you said that we are scared to vote for Syriza. We desperately want change but the media is terrifying us into believing to stick to voting for one of the mainstream pro-memorandum parties. Europe is also scaring us into believing that we will get through this ONLY if we strictly abide by the memorandum.

    Most of us are truly confused.It is going to be an interesting second election.

  27. Crapocular

    Pretty good article!

  28. Gouraros Nikos

    goodmornig (well it is morning here )

    excellent article, very true of the situation here in Greece.
    I could never imagine someone from australia could have such a clear view of how things are moving on here. Anyway…
    Thank you, because your article renew my hopes for the parie i voted for the last elections and will do for the next one (17 june). Things here are tough for SYRIZA as the war, media war, against him is relentless.

    I can ensure you, that for my part, this article will be shown to greek people.

    Thank you
    Nikos

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