“Europe’s ruling elite is now openly talking about whether Greece might leave the euro, breaking a two-and-a-half year taboo,” writes the United Kingdom’s Guardian.
German Chancellor Angela Merkel, a lonely voice of strength and sanity among the nations of Europe, spelled out the obvious to an audience of students this week in a very straightforward way:
“What’s completely normal to you – that you can’t permanently spend more than you take in – that applies to states as well. You can vote for whomever you like, but at the end there’s no way around it.”
Absolutely. From her lips to the Greeks’ ears.
The entire world is a bit breathless today as the Greeks try to decide whether to stay on their suicidal spending spree or turn back toward sustainability. Their decision – recent elections were inconclusive, and an additional election is coming June 17 – may help determine whether the world pulls out of its financial funk or dives more deeply into it.
And that most certainly includes the United States.
If Greeks fool themselves into thinking that 1) the rest of the Eurozone will continue bailing them out or that 2) they’ll be just fine pulling out of the euro and reissuing the drachma, then they risk falling into mass civil unrest. The contagion could spread to other European nations, as well as world financial markets – which have already been buffeted by the track Greece is on.
The situation could also spell trouble for the future of the euro itself – which, truth be known, was always on shaky ground. It’s a dubious notion that a currency could hold together nation-states that have such differing spending patterns and civil service benefits.
Nations have long flouted the laws of economics, and great empires have succumbed to that hubris throughout all of recorded history. But while economic principles remain the same, the situations change and each era grows its own set of problems. We are, as one expert noted, in uncharted territory today.
Ground zero, at this point, is Athens. And there is no easy way out.
“If Greece stays in the euro,” Nick Parsons, head of strategy at National Australia Bank, writes in the Guardian, “it faces a long, slow depression in an effort to remain solvent. If it exits, it could see the collapse of the domestic banking system, the decimation of private savings and a crippling increase in the cost of imported goods and energy.”
Some experts see a more stable scenario if the Greeks keep their wits about them – but so far they have not. In the alternative, one expert predicts “chaos.” Another predicts inflation, skyrocketing interest rates and shortages of basic goods. Several experts say unease would spread to bank depositors in Portugual, Spain and Ireland.
Making the situation more tenuous still is the fact that recent elections in France, Italy and Germany have lurched those countries away from fiscal sanity too.
When will voters – here included – understand that Western society’s spending has been unsustainable – and that, by definition, something that is not sustainable won’t be sustained indefinitely?