A Lesson from the Greek Bailout That Just Goes On and On
Last weekend brought news that the pooh-bahs of the European Union will now consider a default a real possibility. They were aiming for some sort of a deal by Monday. Monday brought no deal. This weekend arrived with news that the pooh-bahs would engage in "quiet diplomacy."
And so, despite months of alternating pleas and threats by its European overlords, peppered by its own counter-proposals and, naturally, counter-threats, the Greek government will likely get the bailout relief it seeks. Not that anyone should be surprised. Kicking the can generally takes precedence over resolution of a problem when said resolution entails the likelihood that politicians might face disapproval and their bank cronies - whether of the sovereign, investment, or commercial variety - face significant losses.
But even if the ultimate resolution takes a more dramatic turn, skirting the possibility or even the eventuality of default, you know that governments and central banks will pull out all the stops and do whatever is necessary to avoid a crisis that could spread beyond Greece and Europe. After all, they've been pulling out all the stops ever since 2008. Why stop pulling the stops now?
It's all led me to consider a possible lesson for us all:
The inevitable resolution of our ongoing debt-fueled crisis may be years away, far longer than many of us had imagined.
The two important concepts here are "inevitable" and "far longer." It's not that resolution can be avoided forever. And it does seem likely that, when it comes, it will be more rather than less dramatic in nature. But it's time we accept the possibility that it may not happen any time soon.
After all, how many times have we been told that:
What are we to think?
Some claim the crisis is over and we're back on the road to increasing prosperity and (at least in the economic sense) happiness. The latest evidence presented is increased retail sales, increasing job openings, some uptick in wage increases. While we may not attribute great weight to their positive prognostications, we ought not ignore the reality that, while many Americans feel stuck in the mud economically, things are humming along for some Americans at the moment. And you'd be hard-pressed to find that wave of discontent that some predicted would wash over the land after 2008, causing social unrest with the ultimate possibility of not just reform, but an overturning of our political system in the face of ongoing economic collapse. There may be many Americans struggling out there, but "collapse" just doesn't capture what's going on at the moment.
Even if you don't subscribe to the theory that we've turned a corner, you might at least admit we're in some sort of hiatus. Just don't make the mistake of spinning your rotors and hovering like a helicopter over the landscape waiting for the other shoe to drop. This may not even yet be the calm before the storm. It could take years for anything of substance to shake up our economic and financial system with anything readable on the Richter scale.
Indeed, at least to this observer, it now appears that those in positions of power - heads of state, Wall Street executives, banking mavens, their academic minions, and all the other ancillaries who carry out their wishes - may have learned enough from the 2008 crisis to extend our ongoing crisis far beyond anything many of us imagined.
So follow the next installment of the so-called "Greek crisis" if you're so moved. Perhaps the ginned up drama surpasses all your other choices for entertainment or distraction. Just don't expect the media reports to be any more than a staged play meant to keep the system intact and yet again push out the day of reckoning.
With markets closed, the weekend gives negotiators trying to avert a Greek exit from the euro some room to lay out a road map for what will be a high-stakes week with an emergency summit of EU chiefs on Monday. The clock is running down on a June 30 deadline to make payments and work out a new deal amid disagreements on pensions, sales tax and a deficit target.While reports of negotiations, winners, losers, and compromise continue to swirl, the media continues to feast at the trough of government folly - in this case European governments. Having promised the benefits of a social welfare state without the demographics or fiscal policy to support such promises, the consequences that naturally follow take center stage. The Greek government, among the most egregious collection of politicians making impossible promises to win elections, now play the ingenue at the mercy of the dastardly villain represented by the European central bank and government.
German Chancellor Angela Merkel and her French counterpart, Francois Hollande, spoke by phone Friday. As leaders of the two biggest economies in the 19-nation euro bloc, they’ve presented a united front against Greek Prime Minister Alexis Tsipras, who has spent his five months in power trying to roll back the austerity policies underpinning the country’s bailout.But one look into the photographic images of the faces of Merkel and Tsipras should disabuse you of any thought that one side or the other represents right or wrong. The play's the thing.
And so, despite months of alternating pleas and threats by its European overlords, peppered by its own counter-proposals and, naturally, counter-threats, the Greek government will likely get the bailout relief it seeks. Not that anyone should be surprised. Kicking the can generally takes precedence over resolution of a problem when said resolution entails the likelihood that politicians might face disapproval and their bank cronies - whether of the sovereign, investment, or commercial variety - face significant losses.
But even if the ultimate resolution takes a more dramatic turn, skirting the possibility or even the eventuality of default, you know that governments and central banks will pull out all the stops and do whatever is necessary to avoid a crisis that could spread beyond Greece and Europe. After all, they've been pulling out all the stops ever since 2008. Why stop pulling the stops now?
It's all led me to consider a possible lesson for us all:
The inevitable resolution of our ongoing debt-fueled crisis may be years away, far longer than many of us had imagined.
The two important concepts here are "inevitable" and "far longer." It's not that resolution can be avoided forever. And it does seem likely that, when it comes, it will be more rather than less dramatic in nature. But it's time we accept the possibility that it may not happen any time soon.
After all, how many times have we been told that:
- the US dollar will collapse at any moment
- inflation will spike, leading to hyperinflation and economic collapse
- deflation will accelerate and plunge us into a Depression worse than the 1930s
What are we to think?
Some claim the crisis is over and we're back on the road to increasing prosperity and (at least in the economic sense) happiness. The latest evidence presented is increased retail sales, increasing job openings, some uptick in wage increases. While we may not attribute great weight to their positive prognostications, we ought not ignore the reality that, while many Americans feel stuck in the mud economically, things are humming along for some Americans at the moment. And you'd be hard-pressed to find that wave of discontent that some predicted would wash over the land after 2008, causing social unrest with the ultimate possibility of not just reform, but an overturning of our political system in the face of ongoing economic collapse. There may be many Americans struggling out there, but "collapse" just doesn't capture what's going on at the moment.
Even if you don't subscribe to the theory that we've turned a corner, you might at least admit we're in some sort of hiatus. Just don't make the mistake of spinning your rotors and hovering like a helicopter over the landscape waiting for the other shoe to drop. This may not even yet be the calm before the storm. It could take years for anything of substance to shake up our economic and financial system with anything readable on the Richter scale.
Indeed, at least to this observer, it now appears that those in positions of power - heads of state, Wall Street executives, banking mavens, their academic minions, and all the other ancillaries who carry out their wishes - may have learned enough from the 2008 crisis to extend our ongoing crisis far beyond anything many of us imagined.
So follow the next installment of the so-called "Greek crisis" if you're so moved. Perhaps the ginned up drama surpasses all your other choices for entertainment or distraction. Just don't expect the media reports to be any more than a staged play meant to keep the system intact and yet again push out the day of reckoning.
Comments