the Irresistible Force and the Immovable Object meet again

Another day, another sideshow in the Punch and Judy sideshow that is the slow crawl towards Grexit. It’s getting tiresome, because this is a crisis of leadership – problems don’t go away by whistling a dancing tune and come up with ever more outlandish ways of looking the other way.

At the heart of the matter is that Greece doesn’t like austerity, and doesn’t want to exit the Euro. They can have that, provided there’s a permanent influx of other people’s money. Those other people are getting shirty about this, and are saying that the price of our money is that we get to run your country in a different way. That different way looks pretty rough to me – there’s no way it’s going to stick.

Greece has promised to pass laws introducing controversial economic reforms by Wednesday. These include reforming the VAT system, overhauling pensions and signing up to plans that ensure immediate spending cuts in the event of breaching creditor-mandated budget targets.

In the end Greece needs to find the cojones to seize control of their own destiny and quit the Euro – because it’s clear that the price of support is getting dearer and dearer. In the long run things that can’t go on, don’t, but it takes time to resolve the conundrum of the irresistible force and the immovable object. In the long run, of course, we’re all dead – it’s not surprising that most of the Oxi came from the young, who have most long run left πŸ˜‰ By the looks of it the consensus of avoiding Grexit at all costs is losing the fight as it drags on. One of the flecks of gold panned from the endless tailings of random wibble from G Dubya Bush was

If money isn’t loosened up, this sucker could go down

Dubya in a moment of clarity

Fortune favours the brave and the decisive in situations like that, those that look at the predicament they are in and who take decisive action early to try and influence the outcome. I kinda like the pithy summary of

“The facts tell us what to do and how to do it, but it is our humanity which tells us that we must do something and why we must do it.”
β€” Sully Sullenberger

Sullenberger was piloting a jet aircraft over New York when suddenly a flock of geese stopped the clockwork 3000ft above the city. Unlike the Greeks and the Troika with their endless river of make-believe deadlines, he had three and a half minutes to bring things to a definite conclusion.

Tsipras failed the Greek people in asking them in a referendum ‘do you want the particular form of austerity that was on offer in early July’. He should have asked them the straight question

This much austerity or more, or leave the Euro?

At the moment it looks like he went to the country, asked them their opinion in an incomplete manner, then tore it up the confusing result[ref]Since writing this I have learned that referenda are advisory not binding in Greece which makes this a little bit more understandable[/ref]. This is not a fellow I would want in the cockpit.

Financial problems don’t get better through fudging them. The Ermine didn’t fudge the problem of my career going down the pan in 2009, within a month I had shifted savings to ISAs and drove my spending down to be able to save the maximum possible. I lived on the minimum wage plus an ISA allowance and saving the ISA with the rest going into pension savings to stop paying tax and NI on it. It worked – I was able to leave after three years and coast for three years more before I can get those pension savings. It wasn’t fun spending minimum wage while working at a higher level, because I couldn’t afford the middle class distractions that compensate for the suckyness of the way the job was going. I was lucky to be able to jump to a different project, but unlucky to run into the wall in the first place.

Sometimes you have to accept that all solutions before you stink, but that some of them are more ugly than others. The Greeks can either be a lot poorer soon, but then stop getting poorer and possibly turn things round, or they can face becoming incrementally poorer without a clear end stop, dependent on the unknown future grace and favour of others.

this fine Greek graffito says it well
a fine Greek graffito

Greece has a lot going for it – but not in the Euro, and all the time they spend chasing the chimera of less austerity within the Euro the situation is degrading. Everyone with movable assets has been moving them, that much is sensible. The middle class’s savings will be destroyed, just like they were in Germany – twice. They will be destroyed in the fall of the drachma or destroyed in trying to stave off the impact of austerity – basically the choice is death of their savings fast or slow.

It’s all too easy to choose the slow death approach by trying to avoid making a decision, but it nearly always makes the outcome worse. This ain’t going to end well. Germany can afford to throw money down this money pit, but are getting increasingly unwilling to do so. The question is can Greece afford to live the way that the Troika want them to, and I venture probably not. We’ll get to watch this movie again.


5 thoughts on “the Irresistible Force and the Immovable Object meet again”

  1. I fear your right on this one Ermine. We’ll be back to the last few days at some point in the future.

    However I fear that the impact on Greece of an exit from the Euro would be worse than many think. They have little to no export market that could drag them out of trouble. Sure they’d be plenty of punters looking for cheap holidays there but tourism in Greece is a mature market and I’m not convinced it has the long term growth potential required to benefit the economy, besides attracting the capital investment won’t be easy (initially at least).


  2. Germany is a pretty poor leader for Europe now the Americans have left

    If everything in the EU falls down to bickering about money and doing what Bild puts on its front page:

    – what would happen if the Russians annexed part or all of a country like Lithuania or Estonia with a big Russian population

    – if you are Italian and your economy hasn’t grown for 15 years why not vote to leave the Euro

    – why vote to remain in the German club if you are English and the very thought of even the Scots having a say in running your country drove you to an apoplexy of rage

    Its not like the EU really cared about big chunks of Georgia or the Ukraine

    There is is a hell of a lot of risk of default in Southern Europe and war in Eastern Europe which isn’t really priced in at the moment

    Equally our EU referendum looks likely to me to be as decisive as the Scottish one we just did


  3. It seems that Greece massively borrowed at low EU-wide interest rates.

    Where did the money go?

    I read about v generous pensions available at an early age, but then I hear that pensioners are starving on tuppence ha’penny a day.

    I read that the Greeks don’t pay tax, and the authorities can’t be bothered to collect it. So everyone should have more in their pockets.

    So why isn’t everyone in Greece awash with cash? Just what did the state and the individuals spend it all on…?


  4. @UTMT I can see it will be tough, but at the moment the settlement robs them of all agency. They were happy with a disgracefully depreciating currency, and if that’s how Greeks want to live, good luck to ’em. Hard money seems to sit ill with the lifestyle, and it’s rough that to succeed with the Euro you have to live like Germans!

    @Neverland I’m going to treasure

    > Germany is a pretty poor leader for Europe now the Americans have left

    but in all fairness they’ve spent a good number of decades trying to overcome the memory what happened last time there was strong German leadership, so it’s not that surprising they’re not really that good.

    @Richard one could ask the same question about Britain’s homeowners, we’ll find out one of these days πŸ˜‰ I guess the answer is the same – decades of fine living a bit above their means. Pensions of 92% of final salary seem out of this world, particularly if taken early and lfie expectancy not being particularly low!


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