\u201cIt\u2019s all been said before, but not yet by everyone\u201c\u009d<\/em> (Karl Valentin)<\/p><\/blockquote>\n
The financial situation in Greece is muddied and nothing definite is known. Specific figures are not available, at least not publicly. Speculation flourishes. But an end to Tsipras\u2019 government\u2019s poker game with the Troika seems to be in sight. Greece will run out of funds by the end of June at the latest. Then a decision must be made, one way or another, unless the Troika helps out once more with new money. The financial coup in which the IMF loans are paid via special drawing rights created for emergencies cannot be repeated. Gambling on further multi-billion Euro emergency liquidity assistance <\/b>(ELA) from the ECB, however, hasn\u2019t been ruled out. Additionally, the hope that if necessary the creditor countries of the European Stability Mechanism (ESM) deliver once more without real reforms is not unfounded.<\/p>\n
<\/p>\n
Continuously Breaking the Rules<\/b><\/p>\n
Why did the Greek experiment get so out of hand? The core problem of the EMU is the multiple violation of the agreed upon Maastricht rules. The Stability and Growth Pact was unable to guarantee the fiscal rules, and German politicians were actively involved in the breach of contract. Even the agreed fiscal pact is just a paper tiger. Breach of the rules is programmed into it when sinners sit in judgement on sinners. The worst <\/b>is the breach <\/b>of the no bail-out clause. <\/b>At the height of the Euro Crisis in 2010, politicians unceremoniously overrode <\/b>the no bail-out rule, undermining the fundamental principle of action and liability. In doing this, however, they have opened the door to the moral hazard.<\/p>\n
With establishment of <\/b>the ESM came the installation of a transfer union. Via the enormous rescue package all are liable for the debts of the others. In the EMU organized irresponsibility prevails and a life at the expense of others has become lucrative. The development of budget crisis states here in Germany shows where that leads. Beneficiary countries remain so, Bavaria being the exception. Meanwhile, more and more countries are holding out their hands for money. <\/b>By contrast, the number of donor countries is constantly shrinking. Since the ECB began operating monetary state financing on a large scale, it has been breaking the agreed upon rule. OMT programs, the trillion-Euro buy up program and the misuse of the PA emergency loans are equivalent to the fall of man. The budget constraints of the members have been softened, and life on another\u2019s dime <\/b>is becoming as sure as the day is long. The economists\u2019 most recent, polemical attack on Germany\u2019s harping on about principles is nonsense. In the EMU it is clear what greater pragmatism leads to.<\/p>\n
Living Beyond One\u2019s Means<\/b><\/p>\n
What makes economic sense given the current situation? Regarding the Greek crisis, there are only two alternatives: Helping Greece to help itself or Greece\u2019s exit from the EMU. Both scenarios have one thing in common, which is that Greece has to end the practice of living beyond its means once and for all. It must no longer spend more than it earns. In terms of helping Greece to help itself, the simple formula of lenders is as follows: Money in exchange for reforms. More competitive goods and factor markets, consolidated government budgets and reformed welfare states are needed. <\/b>However, up until now Tsipras\u201c\u02dc government has had an allergic reaction to these ingredients. A policy of austerity is vilified as anti-social. The demand for neoliberal (structural) reforms is demonized as a diktat <\/b>of foreign (German) powers.<\/p>\n
The other alternative is a Grexit, and economists are divided regarding what the resulting economic effects of such an action would be. Some are of the opinion that the international competitiveness of the Greek economy is increasing as a result of the devaluation of the drachma. Others point to previous negative experiences with devaluations. If a currency devalues in nominal terms, the domestic price level rises. When higher prices drive nominal wages, the drachma doesn\u2019t devaluate in real terms, and positive effects fail to materialize. Accordingly, if Greece wants to get anywhere, it must tighten its belt, even in the case of its departure from the EMU. There is no way around the hated policy of neoliberal reforms. However, a diktat by external, foreign powers does not exist.<\/p>\n
Short-term Dominates Long-term Thinking<\/b><\/p>\n
What will actually happen politically? In politics, short-term thinking dominates. Long-term returns are weighted less than short-term costs. This applies to Tsipras\u2019 government and the Troika. The direct costs of a Grexit for the Greek government are considerable. Greece would be cut off from the international capital market, and would have to bear the burden of the still necessary (neoliberal) reforms on its own. It would not receive help in the form of foreign capital. But if Tsipras\u2019 government fulfills the (neo-Marxist) election promises and blocks the necessary reforms, unemployment will continue to rise, inflation will explode, and poverty will reach new heights. Being voted out of office is unavoidable in this case. They will therefore try to remain at the fleshpots of the EMU.<\/p>\n
The Troika is unlikely to prefer a Grexit. Fears of a \u201cLehman effect\u201c\u009d remain. The constant reference to the low risk of infection of such a move is like whistling in the dark. \u00c2\u00a0If Greece does exit, the true costs of the fiscal (ESM) and monetary rescue operation (i.e. adjustments on government securities, Target II) will no longer be able to be hidden. They would have a financial impact in the countries and the ECB. Politicians in particular might fear the reactions of the voters. Meanwhile the ECB is likely to be preoccupied with another fear. With the Grexit it would ultimately become clear that the EMU is scheduled for revocation. Greece\u2019s exit could mean the beginning of the end for the EMU. This would be a nightmare for the highly paid bureaucrats of the ECB.<\/p>\n
Conclusion<\/b><\/p>\n
The negotiations will end in horse-trading. Greece will not drop out of the EMU, the Troika will pay the remaining installment of the aid program, and a third aid program will be negotiated in autumn. The Greek side will engage in a few cosmetic reforms of the labor market and the welfare state. They will hold out the prospect of allowing further privatization, reforming the tax system and improving public administration. What they will actually do is, like their predecessors, very little. <\/ins>The Troika will accommodate Greece\u2019s wishes and significantly reduce the required primary surplus. Then Tsipras\u2019 government will have the necessary \u201cpocket money\u201c\u009d for their (socialist) election promises. Dealing with the problems will once more be postponed to a future date, but at that time another group of politicians will govern. Such is politics.<\/p>\n
<\/p>\n
Hinweis:<\/strong> Das ist die englische Version des Blog-Beitrags „Eine unendliche Geschichte. Griechenland, die letzte? Wohl kaum!“<\/a>. Michael Labate hat den Beitrag \u00fcbersetzt. Herzlichen Dank!<\/p>\n
<\/p>\n
Blog-Beitr\u00e4ge zum Griechenland-Poker:<\/b><\/p>\n
Hartmut Kliemt: Was wir \u00fcber den \u201cGrexit\u201c\u009d jetzt schon wissen<\/a><\/p>\n
Henning Klodt: Nach dem Grexit<\/a><\/p>\n
Dieter Smeets: Das Tauziehen um Griechenlands Schulden<\/a><\/p>\n
Wolf Sch\u00e4fer: Wenn der Euro zur Staatsr\u00e4son \u00fcberh\u00f6ht wird<\/a><\/p>\n
Mathias Erlei: Rettungsprogramme in der Europ\u00e4ischen W\u00e4hrungsunion. Eine spieltheoretische Rekonstruktion <\/a><\/p>\n
Norbert Berthold: Eine unendliche Geschichte. Griechenland, Klappe die letzte? Wohl kaum!<\/a><\/p>\n
Norbert Berthold: Europa, Marktwirtschaft und Varoufakis. Ist ein Grexit \u201eanti-europ\u00e4isch\u201c?<\/a><\/p>\n
Thomas Apolte: Die griechische Trag\u00f6die. Warum sich niemand zu handeln traut<\/a><\/p>\n
Norbert Berthold: Die EWU verwahrlost ordnungspolitisch. Ein Drama in f\u00fcnf Akten<\/a><\/p>\n
Jan Schnellenbach: Kann man verlorene Steuermoral wieder aufbauen? Ein (nicht nur) griechisches Problem<\/a><\/p>\n
Norbert Berthold: Allein gegen Alle. Griechenland spielt weiter Vabanque. <\/a><\/p>\n
Norbert Berthold: Die EWU am Scheideweg. Permanente Transfers oder tempor\u00e4rer Grexit?<\/a><\/p>\n
Juergen B. Donges: Griechische Man\u00f6ver in der Eurozone. Droht aus Spanien \u00e4hnliches Ungemach?<\/a><\/p>\n
Norbert Berthold: Briefe in die griechische Vergangenheit. Giannis Varoufakis: Abgezockt oder unf\u00e4hig?<\/a><\/p>\n
Wolf Sch\u00e4fer: Mit \u201eGewissheit\u201c im Euro. Das strategische Spiel der Griechen<\/a><\/p>\n
Norbert Berthold: Immer \u00c4rger mit Griechenland. Ein Pyrrhus-Sieg der \u201cInstitutionen\u201c\u009d?<\/a><\/p>\n
Dieter Smeets: Nach der Rettung ist vor der Rettung. Griechenland und kein (Rettungs-)Ende!<\/a><\/p>\n
Roland Vaubel: Sch\u00e4ubles Scherbenhaufen<\/a><\/p>\n
Norbert Berthold: Trojanisches Pferd. Der Brief des Giannis Varoufakis<\/a><\/p>\n
Uwe Vollmer: Scheidung auf griechisch. Wie realistisch ist der \u201cGrexit\u201c\u009d?<\/a><\/p>\n
Norbert Berthold: Was erlauben Griechenland? Schwach wie Flasche leer<\/a><\/p>\n
Dieter Smeets: Poker um Griechenland<\/a><\/p>\n
Norbert Berthold: Sie kamen, sahen und verloren. Haben sich Alexis Tsipras und Giannis Varoufakis verzockt?<\/a><\/p>\n