Greece votes no

What did the EU members think, that Greeks would take their undeserved punishment until Angela Merkel and friends got bored? So now they’re in a panic. Good!

The euro and stock prices fell sharply in Asia on Monday after the Greeks had overwhelmingly rejected austerity measures demanded in return for bailout money, putting in doubt its continued place in the single currency.

U.S. equity futures dropped around 1.4 percent ESc1 while Japan’s Nikkei .N225 shares fell 1.4 percent and MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.5 percent.

Adding to the anxiety among investors, China’s stock market face a make-or-break week after a 30 percent plunge in the last three weeks forced officials to roll out an unprecedented series of steps at the weekend to prevent a full-blown market crash.

While early price actions have been choppy, dealers emphasized that markets were orderly with no signs of financial strain and expectations were high that the European Central Bank would step in early with a pledge of extra liquidity.

The Washington Post:

It remains unclear whether Tsipras’s gamble will pay. The European Council announced late Sunday that the continent’s leaders would convene an emergency summit Tuesday to discuss Greece. Finance ministers also will gather.

But Greece’s maverick finance minister, Yanis Varoufakis, will not be among them: He announced his resignation on his blog Monday morning, and suggested that Tsipras had asked him to step aside to appease European officials who had grown weary of his lectures about the destructive impact of austerity.

“I shall wear the creditors’ loathing with pride,” he wrote with typical bravado.

Ian Welsh explains:

It’s rarely clear in such situations if the people making decisions believe their own propaganda: did they think it was sustainable and wouldn’t lead to a crisis like this?  Did they know it would lead to a crisis and think the Greeks would sit still and take it (not completely unreasonable, actually, given how much pain people have accepted from plutocratic policies in the past.)

I don’t know, but I think it’s the winner’s curse: neoliberalism (and austerity is part of the neoliberal project), has been winning for so long that those who came of age and rose to power during it (essentially all our central bankers, technocrats and politicians) cannot imagine it would ever lose.  The look of incredulity is that of the three hundred pound bully when a 90 pound weakling doesn’t buckle.  (Again, this doesn’t mean that the technocrats don’t also think they’re doing the right thing morally.)

If I were them, and by that I mean “not me in their position, but them”, I would crush Greece flat and make an example of it.  If Greece comes out of this like Iceland, with a healthy economy in 3 years, then other populist movements (left or right) will receive proof that their policies can work. Democracy, as opposed to technocratic rule, will gain legitimacy, and so on.

This is not a prediction: as Machiavelli observed hundreds of years ago (People) are generally destroyed because they are unable to be either wholly good or wholly bad.  Doing the right thing from day one would have been an excellent policy.  Having done the wrong thing, these decision makers futures are intertwined with it: they will not keep their positions if Europe turns genuinely populist.  Worse, that populism will almost inevitably turn against their masters, the oligarchs.

This is unacceptable: to oligarchs Europe is one of the few places actually worth living.  Yes there are a few American cities, maybe you might want a vacation home in one of the nice Australian or Canadian cities; but that’s about it.  Tokyo’s great, but you don’t speak Japanese. Dubai, despite its beauty and being created exactly for oligarchs is too soulless and boring even for oligarchs.  Russia or China: well, China’s polluted, and if Putin or the Chinese Communist party says jump you do it, or you get dead or in jail.  Oligarchs don’t rule Russia or China, though they hope to in the future.

This is also a significant moment geopolitically.  Putin said that he won’t help Greece monetarily as long as it is in the EMU (uses the Euro.)  That’s as good as saying he’s open to helping them if they aren’t.  Greece is geographically important, can be used as a pipeline route (or terminus), and could offer Russia a warm water port.  There are deals to be made. It’s for this reason that the US Treasury secretary keeps telling the Europeans to cut the debt and make a deal: the US doesn’t give a damn about Greeks suffering; it does care if Greece swings towards Russia.

So the game continues, and it is actually important. Greece is a small country, but it’s not a country whose population is smaller than most cities, like Iceland. Its success or failure at standing up to austerity, neoliberalism and technocratic EUian ideology could make a large difference in whether other, even larger countries, decide to do so.  And by “other, even larger countries’ we mean essentially the entire south of the EU: Italy, Portugal and Spain. Ireland might consider it. Finland should consider it and after a few more years of pain in the Euro straitjacket, may well do so.

These countries subsidize the north, and especially Germany, by keeping the Euro cheaper than it would otherwise be (let alone the value of a reborn German Mark.)  If they go, Germany’s economy is suddenly going to look a lot less efficient and sell a lot less goods (oh, wait, every advantage Germans have isn’t because they are good people?)

Interesting times, my friends. This is power politics, with huge amounts of real power and massive amounts of money in play: not today, but as consequences of what happens now.  The fate of Greece matters, not so much in itself (except to Greeks and kind-hearted souls) but for what it will mean for Europe, NATO, Russia and all the countries in Europe.  It could be one of the dominoes which leads to the end of the neo-liberal era.

You’re watching history: while remaining sympathetic to those being ground to pulp by its wheels (or between screams while caught in said wheels), let me suggest that you enjoy the view.