This article was published by The McAlvany Intelligence Advisor on Monday, July 6, 2015:
Greek citizens shouted “No!” to further austerity measures for the hapless country in exchange for more of what got it into trouble in the first place: other people’s money. The lopsided 60-40 vote astonished telephone pollsters, who predicted a much narrower victory for Greek Prime Minister Alexis Tsipras of the far-left Syriza party. Although the issues were far more complicated than the referendum made it appear, the 68-word ballot question made it easy: do you want more increases in taxes, more cuts in pension benefits, another increase in the VAT … or not? Translated into English, the ballot read:
Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank, and the International Monetary Fund [the “troika”], at the Eurogroup meeting held on June 25 and which consists of two documents:
The first document is called Reforms for the Completion of the Current Program and Beyond, and the second document is called Preliminary Debt Sustainability Analysis.
Those citizens who reject the institutions’ proposal vote Not Approved / NO
Those citizens who accept the institutions’ proposal vote Approved / YES
Greeks have been subjected to five years of austerity measures imposed by the troika with nothing but increasing unemployment and a deepening recession to show for it. Although 81 percent of them say they want to continue to use the euro, more than 60 percent of those voting on Sunday said they’re tired of playing the game.
The vote must be satisfying to Alexis Tsipras, who has said from the beginning that he doesn’t want to leave the European Union. He just wants a continuing flow of financial assistance without the limits, restrictions, and mandates that come with it. On Monday he is no doubt going to take his demands to the troika: an immediate 30 percent cut in what the country owes, plus a 20-year grace period to pay back the rest! Prior to the referendum, such demands were ignored. They aren’t being ignored now. German Chancellor Angela Merkel is meeting with French President Francoise Hollande, while members of the troika will be gathering to consider their diminishing number of options later on in the week.
In addition, Tsipras will be ordering the recapitalization of the banking system using the “bail-in” strategy that was used in the bailout of Cyprus two years ago. This time it’s really going to bite: 30 percent of every account holder’s balance over $8,800 will be whisked away and redeposited to the credit of the bank. Call it a tax, a contribution, an equity participation, or an exchange of equity for debt, what it really is is theft on a grand scale to be imposed on Greeks by their hero, Tsipras.
Citizens barely subsisting on the trickle of $67 a day that Tsipras is allowing them to withdraw from their ATMs are due for a shock: the banks are now sure to run out of cash no later than Wednesday. Food shortages are beginning to show up, while pensioners are suffering massive cuts in their retirement checks.
It’s a game of chicken. The question now is: who will blink first? Will Tsipras, newly endowed with the blessing of his electorate, back down and acquiesce to the demands of the troika over more tax increases, more cuts to pension plan benefits, more cuts to defense spending in order to revive the bailout? Or will the troika decide that spending another few billion euros to keep the EU from unravelling further be worth the candle? Will it decide that letting Greece leave Jean Monnet’s dream would give other members ideas of doing the same thing? Or is that dream too precious to let reality interfere, and just continue funding the Greek zombie forever?
There are already signs that the troika will let Tsipras have his way with them. German Finance Minister Wolfgang Schaeuble, one of the hardliners against giving Greece any more money until they live up to their promises, changed his tune on Saturday: “Whether with the euro or temporarily without it, only the Greeks can answer this question … it is clear that we will not leave the [Greek] people in the lurch.”
The deputy head of the Social Democrat party in Berlin added: “We must use all the possibilities in the EU budget to help Greece, which is still a member of the euro and the EU.”
The real underlying issue – how to get Greece back on track – was never discussed in any of the mainstream media commentaries. The only answer is allowing the free market, driven by individuals free to make investments, take risks, and provide products and services that are needed and useful to their customers, at a profit, to generate real growth in wealth and productivity. Greece is unique: its location makes shipping an essential industry. Its history makes it a unique attraction for well-to-do visitors. Its acres and miles of olive oil groves and other agricultural products are renowned and revered throughout the world.
Despite the resounding “NO!” sounded by disgusted, frustrated and suffering Greeks on Sunday, nothing is likely to change. The zombie will be bailed out once again, Tsipras will be hailed as a hero, the troika will have avoided another disaster that could have turned into a catastrophe, Greece will remain insolvent and its citizens will continue to suffer.
Bloomberg News: Greeks Head to Polls Divided on Vote to Chart New Course
Financial Times: Greek banks prepare plan to raid deposits to avert collapse
USAToday: Greeks vote in high-stakes referendum
Washington Post: The politics of the Greece referendum, explained
Bloomberg News: Greece Referendum: What Happens If They Vote ‘No’
The New American: Greek Referendum to Determine European Union’s Viability