Greece is on fire with austerity


To the surprise of some fatalistic observers, the Greek parliament actually approved its “austerity package” on Sunday, 199-74.  Even though the fate of both Greece and the Eurozone hinged on this vote, almost 10 percent of those brave and dedicated members of parliament didn’t bother to vote at all.  The two big Greek parties, the Socialists and New Democracy, ended up kicking out a couple dozen rebellious members apiece, to restore party discipline. 

The third major party, the Popular Orthodox Rally, refused to sign on to the austerity deal, and actually withdrew from the governing coalition entirely.  Note that Popular Orthodox is the “far right” party in Greece.  The Western press will find it somewhat confusing that deep, heartless, brutal spending cuts don’t have universal appeal to the “far right” around the globe.

If this deal didn’t go through, it was almost inevitable that Greece would default on its massive debt, probably triggering similar responses from other Eurozone basket cases, and bringing down the European Union.  The EU has been trying to hold itself together by presenting Greece as a “special case,” but Spain and Portugal feel pretty special, too.

The day has not been completely saved.  The EU is worried that Sunday’s agreement will evaporate in a haze of second thoughts and ugly parliamentary elections, so they want assurances that any future Greek government will honor its austerity commitments.  That’s a very important point that should be pondered by Americans as we sidle up to our own austerity crisis. 

Today’s Congress can drop plenty of spending obligations on its successors, but it cannot as easily enforce fiscal discipline upon them.  Spending like there’s no tomorrow is easy, especially when the fertile soil of those Big Government dollars instantly produces a horde of government employees who are guaranteed to howl about losing their jobs, and dependents who will be equally vocal about lost benefits, when future spending restraint is proposed.  Opponents of Greece’s austerity deal, which will cut 150,000 government jobs over the next three years, are complaining about how all those laid-off government workers will cause the already horrible 21 percent unemployment rate to soar.  The sheer lack of money to actually pay the Army of Debt will always seem like less of a problem to some, than watching thousands of government workers apply for unemployment benefits – which, of course, also cost money.

The Greek public is very good at non-verbal communication, and chose to express itself by setting Athens on fire, as reported by Reuters:

Cinemas, cafes, shops and banks were set ablaze in central Athens as black-masked protesters fought riot police outside parliament.

State television reported the violence spread to the tourist islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece. Shops were looted in the capital where police said 34 buildings were ablaze.

Prime Minister Lucas Papademos denounced the worst breakdown of order since 2008 when violence gripped Greece for weeks after police shot a 15-year-old schoolboy.

“Vandalism, violence and destruction have no place in a democratic country and won’t be tolerated,” he told parliament as it prepared to vote on the new 130 billion euro bailout to save Greece from a chaotic bankruptcy.

Papademos puts his finger on the problem with that statement.  Vandalism, violence, and destruction have no place in a democratic country… and Greece is on the verge of losing its status as a democratic country, one way or the other.  It spent its democracy over the past forty years, and there’s nothing left in the bank.  Socialist countries cannot remain functioning democracies for long.  The level of compulsive force necessary to keep their bankrupt systems running always trumps the consent of the governed eventually.  Once in a while, you find a pleasant international backwater, in which a small, homogenous country can use profits from trading with robust neighbors to keep socialism floating for more than a few generations.  Greece is not one of those places.

The chaos outside parliament showed how tough it will be to implement the measures. A Reuters photographer saw buildings in Athens engulfed in flames and huge plumes of smoke rose in the night sky.

“We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down,” conservative lawmaker Costis Hatzidakis told parliament.

The air in Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths who smashed marble balustrades and hurled stones and petrol bombs.

Terrified Greeks and tourists fled the rock-strewn streets and the clouds of stinging gas, cramming into hotel lobbies for shelter as lines of riot police

Tourism is one of Greece’s major industries.  In fact, according to a UK Guardian celebration of its resilience last summer, it accounts for “one in five jobs, and almost 18 percent of GDP.”  Terrified tourists fleeing clouds of tear gas will do wonders for an already depressed economy.  Greece has so much to offer tourists that they’ve been willing to take the risk of getting caught up in riots, but they might become noticeably less eager if the path to austerity gets much uglier.

And it’s about to get uglier.  You see, the only practical method of getting future parliaments to stick with the austerity program is to establish an escrow account for holding new European Union loans, thus ensuring the money actually gets spent to pay off Greece’s creditors.  Many of the Greeks rioting in the streets today view this, correctly, as a major loss of sovereignty.  The European Union member most strongly advocating the escrow account concept is Germany.

Germans are not popular in Greece.  From a New York Times report on this weekend’s riots:

“Greece will become a protectorate,” said Natalia Stefanou, 45, a shoe store employee at a protest outside the Parliament on Sunday. She said she had not been paid since September and may soon lose her job entirely. “It’s not me I’m worried about, though,” she said. “I’ve got two children, aged 14 and 15. What kind of country are we going to leave them?”

Anti-German sentiment is also on the rise in Greece, where memories of the Nazi occupation during World War II are still vivid. “This is worse than the ’40s,” said Stella Papafagou, 82, who wore a surgical mask at the demonstration to fend off the tear gas. “This time the government is following the Germans’ orders. I would prefer to die with dignity than with my head bent down.”

(Emphasis mine.)  Irony: it’s what history is made of.

Leftist supervillain George Soros gave an interview to the German Der Speigel over the weekend in which he criticized German chancellor Angela Merkel for failing to embrace Keynesian stimulus wisdom and pumping more money, with fewer conditions and lower interest rates, into EU crisis zones like Greece.  “Markets do not correct their own excesses,” Soros explained.  “Either there is too much demand or too little. This is what the economist John Maynard Keynes explained to the world, except that he is not listened to by some people in Germany. But Keynes explained it very well – when there is a deficiency of demand, you have to use public policy to stimulate the economy.”

And when there’s no more money to fund all this “stimulus” spending, overseen by global politicians who can only be forced to do the right thing by imposing internationally-supervised escrow accounts?  What happens when there are no higher authorities to run those escrow accounts?  Why, you do the one thing George Soros really wants you to do: print money.  Tons and tons of it. 

When that doesn’t work, and inflation tears the economy apart, you dispense with democracy and free markets, imposing ever more powerful government upon the desperate populace.  Only wise central planners can battle inflation, after all!

Such governments tend to be staffed with names that can be found in the Rolodexes of people like George Soros.  Politicians in bankrupt states, like Greece and America, sound insane when they babble about more “stimulus” spending, after trillions have already been wasted, but they’re following a very old script, and taking lots of advice from people like Soros.  You’re not supposed to think too hard about the decades of leftist policy that got these nations to the point where the high interest rates on future borrowing, which Soros denounces, became inevitable.  American voters will also be told not to think about that stuff in 2014 or 2016.

More votes await Greece on Wednesday.  The protesters will make sure members of Parliament can see plenty of burning buildings through the windows, as they deliberate.  If the austerity deal falls apart, and the international community doesn’t burn more billions rescuing it, Greece will default in March, with further defaults from other tottering Euro member states likely to follow.  Handle things the Soros way, and these bankrupt governments might be able to limp past one or two more elections, before dissolving amid even more painful and far-reaching crises.  The belief that tomorrow will never come retains a powerful allure.