Greece-y Kid Stuff

Is Greece about to be put out of the European Union? Does it matter? What are the economic impacts to the World?

China's current stock market meltdown (dude, seems like its down 5-6% every day) caught me off guard because I thought the previous period of meltdown a few months back was enough. That earlier meltdown was because the Chinese Central Bank raised holding requirements for the investment banks which bound to cause tightening. But I assumed in February or so that all that had been properly metabolized by Shanghai and Hong Kong. Weird argument to make: I figure since those markets are moved as much by gov't fiat as investor activity that big ups/downs are potentially more likely and more predictable than western markets. (I could be wrong...I have no reason to think the way I do...but until I am smarter I struggle through dumbness) But the fact that the perturbations--large perturbations at that!--are still...perturbating...indicates that the Chinese market needs more time to absorb gov't-inspired tightening than I anticipated. In other words, the tightening is still tightening.

The reason I bring that up is because now that Greece has finally and formally been spurned by the Europeans (re: Germans), one wonders if China could be a financial backer for the Greeks. But if their markets are ping-pong-ing around like the Knicks' title hopes, I'm assuming Greece will find no succor at the other end of the Silk Road.

Putin has hinted that he'd like a closer relationship with Greece but Russia's finances are not exactly top notch at the moment and Putin's blather has always had a high school cafeteria kinda casual about it, he's just exploiting the media coverage of these events more than the events themselves. In the 1970s Russian overtures to Greece would've been verboten at the upper levels of USA's national security team. But nowadays, Greece don't seem so vital to the American plan. Putin has grown steadily more bellicose in the last few years, he's gearing the war machine up for...something...and splintering Europe might amuse Putin greatly.

Confession: I always kinda liked Putin, for an iron-fisted Russian tyrant he seems unusually enlightened to my eye and has generally allowed the Russian middle class to expand (as best it can) which to my mind is the paramount activity for any head of state anywhere. The last few years have been tough on Putin, he's had to scramble more than usual to hold power, external forces have not been kind to him and internal forces may be gathering strength (hey, baby, its Russia, you know somewhere the long knives are gettin' ready). Putin still has long range bombers, ICBMS and nuclear-tipped subs, he's still dangerous to the USA and the int'l system in general. And so whoever comes after him. USA is probably not better served by antagonizing him, indeed propping him up may well be the best move for peace.

At any rate, Russia is at the breaking point, can't imagine it has much to offer Greece. And I don't see the Greek people or gov't being terribly eager to line up behind Smiln' Vlad.

USA? Heh, heh. Like John Calipari taking the Sacramento Kings gig, I don't see that happening. Americans' need for Greece pretty much ends after freshman year. Can't see Congress agreeing on a bailout for the bloated labor costs of Greece--hell, we've got our own bloated labor costs to ignore. The Greeks voted for Socialism and they just got Socialized.

The IMF is the only show in town for Greece and a 'No' vote today is probably just the next step on that path. This has always been the answer but thanks to a coupla years' worth of media circus, the Greeks have been able to stretch the debt as far as physically possible. The folks in power knew this was going to happen, they more or less even knew when it would happen, but Greece held out as long as they could (only to have the wing nut splinter party holding the bag when the music stopped). To be fair, Germany never looked like they were going to help. They always knew this was headed IMF-ways. The Greek population for generations believed the Socialist message: work for less now and we'll pay you big fat pensions later. Except that the gov't has no way of guaranteeing that they can do that, it was always an empty promise. Like Enron employees, the Greek people were always buying into something that wasn't real. Now the Greeks that have spent a lifetime of making less for the promise of more are gonna get even less. 'Austerity' is when your gov't needs another gov't to save its ass. Austerity is not something you get to vote on, it is something that is imposed upon you.

Back to the original questions: Is Greece gonna get put out of the EU? I'd say yes. Doesn't like they get to stay nor do they want to. The Greeks probably think that being part of the EU did nothing for them but really it allowed the ruling parties of Greece to be stupider than usual, running up debts that didn't build infrastructure. German backing was a windfall that Greece failed to take advantage of.

Does it matter? I'd say what doesn't kill Europe will only make it stronger, if Greece wasn't meant to be in the Union then the Union is better for getting rid of it. And the EU now has a precedent for how to put recalcitrant countries out of the order if need be. So will Portugal, Italy, Ireland and Spain choose austerity from Germany or austerity from the IMF? If Greece makes IMF-style suffering look good then the EU might be in some trouble but I don't see that happening. I suspect the next batch of needy countries will be more accommodating to German demands.

What are the econ impacts? I have no idea. Greece is gonna be in a bad way for a while, gonna be desperately in need of tourist dollars for the foreseeable future. But the rest of Europe may well be better off. The IMF is still European money but its impact is of a different order.

At the heart of the European Union is a need for a European identity, for folks living on the continent to see themselves and their heritage as something larger than just the country they come from. If the EU fails, some say that European-ness fails, that all squabbles of the last 500 years are still festering and could be unleashed if the Euro can't compete. But festering squabbles never really go away even if the Euro is everybody's favorite form of currency, likewise European-ness doesn't fade even if some folks start liking the Drachma (trust me: they won't). This Union isn't the first attempt at a Union and I'm guessing it won't be the last, it'll endure if it fails. But its got some maturing to do and today is the day Europe moved on from the Greece-y kid stuff.