Beck, Τ. (2015) “Groundhog Day in Greece, VoxEU Organisation, 02 Φεβρουαρίου.
The Greek-Troika conflict is roiling markets, boardrooms and cabinet offices around the world. Crises are best solved by recognising losses, allocating them and moving on, so the biggest risk, this column argues, is that a compromise kicks the can further down the road. As the can rolls on, the scenery becomes politically and socially less attractive – fuelling the rise of political animosities, nationalism, and fringe parties. Greece is a special case but indicative of the core problem – deficient EZ governance structures that mean societies are stuck with increasing socioeconomic exclusion and political despair. The crisis will continue until the necessary further deepening of EZ institutional structures is completed.
In the movie Groundhog Day, a weatherman finds himself living the same day over and over again. Eurozone policymakers might be forgiven if they also feel like they are stuck in a time loop, forced into a déjà-vu experience with a possible Grexit scenario. After a quiet 2014, the Eurozone is back in crisis mode, though not in a panic.
- The new Greek government is insisting on an international debt conference and a significant cut in its sovereign debt.
Most of the other Eurozone governments and the ECB, together now holders of 80% of this debt and whose taxpayers would thus have to pay for such debt restructuring, won’t have any of it.
- Few weeks remain until the Greek government might run out of cash to pay all its obligations, and Greek banks are losing access to ECB liquidity.
The Eurozone seems again to be heading straight towards the cliff.
While many observers considered the worst of the crisis over and the risk of a break-up of the Eurozone gone in late 2013/early 2014, this re-emergence of the crisis is not surprising. Different strands of economics provide different answers to why the Greek crisis has not only re-emerged, but might stay with us for quite some time, as I will discuss in the following. I will argue that, ultimately, at the core of the crisis is a governance deficiency within the Eurozone. And as long as this is not addressed, there are many more Groundhog Days to come!
Σχετικές αναρτήσεις:
- Stearns, J. & Deen, M. (2015) “Greece Asks ECB to Keep Banks Afloat, Tsipras Pitches Deal“, Bloomberg Business, 01 Φεβρουαρίου.
- Wright, Τ. (2015) “Will Syriza’s Victory in Greece Mean Easing Austerity?“, Newsweek, 29 Ιανουαρίου.
- Feldman, N. (2015) “Greece Turns Left, Europe Goes Right“, BloombergView, 30 Ιανουαρίου.