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COMMENTARY
May 19, 2012
Choosing catastrophe
For some years now, and probably since they joined, it has been dead obvious that Greece would have to leave the eurozone.This is why I giggle when I read earnest news reports about European central banking officials unofficially preparing for the unthinkable: i.e. Greece leaving the eurozone. And why my sneaking admiration for the Greeks, who have strung the same bankers along for years, grows with each month they are able to stay in. And, just when the jig seemed finally to be up, their collective genius called another election - for six weeks after the last one. The chance a government will emerge from that, profoundly committed to meeting the country's austerity targets, is nil. But the hiatus accomplishes something more important. It gives every Greek one last chance to withdraw any bank savings, and convert anything else he can, into cash in the hardest available currency, before Greece returns to a drachma that will quickly evaporate from inflation. The vote, as it was in France, will be against austerity. The polls now indicate the Left coalition, "Syriza," which finished second in the deadlocked election on May 6, may sweep on June 17. Their campaign promise is to renegotiate everything that has been painfully negotiated with the eurozone lords and demand more bailouts. It is a joke so dry that no one is laughing. From this distance, the only interesting question is whether Golden Dawn, the extremely repulsive, actually fascist party that won 21 seats in the last round, will grow or shrink. They promise to evict all immigrants and plant landmines along the border with Turkey. Crazy times beget crazy governments as voters entertain escapist fantasies. The instinct to find and punish a scapegoat is among the ugliest features of human nature, and, as in the Weimar Republic, democracy gives this instinct full scope. The significance of the presidential election a fortnight ago in France was to my mind greater than most pundits allowed. They correctly observed that the new socialist president, François Hollande, could excite nobody. His promise to abandon some of Nicolas Sarkozy's austerity measures, and - you know, tax the rich a bit more - was greeted with a yawning nod. Everyone knows there are no good options. Sarkozy himself was viscerally detested. France wanted to see the back of the little fellow. Hollande's strength was his very mediocrity. France, in a condition not so bad as Greece, but patiently getting there like every other eurozone country including Germany in the end, voted for avoidance. One can almost imagine the NDP under Tom Mulcair coming to power in the next Canadian election in similar circumstances. People are already getting sick of the sight of Stephen Harper. They may replace a government that did not do enough to balance the books with one that will resume spending. This is the idea of "normal" conveyed by the phrase, "steady as she sinks." It all looks so boring - avoidance is an expression of ennui - and yet the gradual drift of the big ship onto the bigger shoals is slightly interesting. Once again, democracy entitles a people to choose between different versions of reality when the natural order presents only one. We cannot outspend our resources for ever, and sooner or later the reckoning comes. Meanwhile, a vote for "drift" is a vote for catastrophe. It is interesting to watch people choosing that. The addiction to debt now defines the West, and this week we watched, for instance, 16 Spanish banks receive the latest credit downgrades. It is a process financial journalists have begun to term "defibrillation," a development from "eurojitters." We watched a Spanish government almost smugly declare that there is no liquidity crisis; and, a day after the markets wiped away a considerable fraction of the banks' equity value, the markets bought back in. Most of the banks actually finished the week ahead. One could almost hear the collective sigh, of investors deciding, "Let's not worry about that." The official position of Europe's central bank and treasury officials is, contrary to what I said above, that they have no plans to cover Greeks defaulting or for any subsequent meltdown in Spain, Portugal, Italy, etc. Such things are, officially, "unthinkable." It is only unofficially that they sort of admit to working on them, night and day. Yet, in a sense, the official lie is truer than the unofficial truth. Bankers may work as long as they wish on financial devices in the face of chaos, but they have no control over political developments. All their efforts must assume politicians and voters will play along; that nations with long jealous histories of sovereignty will stonily agree to surrender, merely for the sake of fiscal rectitude. But, as the latest election results show and will show, there is no chance of that. David Warren
© Ottawa Citizen
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