By John Ward
News broke in Athens this morning to the effect that the European Commission’s Greek fiscal task force, under the leadership of Horst Reichenbach, is to make its set-up in Athens permanent.
Well now, that didn’t take long did it?
Reichenbach’s team size is to be quadrupled from 10 to 40 officials responsible for monitoring the implementation of reforms that Greece has pledged to its Troika creditors. The European Commission’s task force leader and his team are to set up office in the Regulatory Authority for Energy (RAE) building in the central Athens district of Gazi this week. Reichenbach is currently seeking out a location for permanent offices. Greek newspaper Kathimerini has been told by sources in the existing set-up that Greek employees at the regulatory authority are extremely angry, and ‘reluctant to share space with representatives of the country’s foreign creditors’.
Reichenbach said in March that budget visibility had improved hugely, allowing authorities to have an overview of spending at national, regional and local level for the first time. Asked about the further spending cuts, Reichenbach said that Greece has “tested the limits of what people can bear.” Whether this represented a scientific experiment or merely a by-product was unclear. But looking across the media as a whole on this wet bank holiday Monday, it is abundantly clear that the Brussels-by-Berlin mentality has not been shaken – or even so much as stirred – by electoral rejections of th EU’s one-sided punishment of the guilty.
As well as France’s rejection of the ozy in Merkozy last night, German Chancellor Angela Merkel’s centre-right coalition lost power in the state of Schleswig-Holstein…and Irish FiskalPakt rejectors are now 13/8 on favourites at Paddy Power. But having a French President demanding growth, an ECB boss saying we need growth, and a Greek electorate saying ‘no more cuts’ still isn’t bringing home to the more zealous europhiles that the euro crisis has (a) demonstrated a dangerous failure of the currency, and (b) consists of far more than lazy Meds who borrowed too much and now can’t be arsed to pay the loans back.
Wolfgang Münchau, for instance, offers up another long lesson in ‘sensible’ loan repayment in today’s FT:
‘The solution can come only from a combination of two instruments – debt monetisation through the European Central Bank and default into the European Stability Mechanism, the €500bn rescue fund that becomes operational in July.’
Er…fine, but what about the enormous risk of monetising debt with all its consequences of leveraged obligations? The issue continues to be tackled purely on the basis ‘we must repay’, without any regard at all to the broader banking insanities that lie behind the financial repression of the Clubmeds…or the innate instability of a one-currency-fits-all economic unit where Nordeuro is getting stronger, and Sudeuro weaker. The fundamental economic imbalance just keeps bouncing off the heads of eurocrats in Brussels, and europrats in Berlin.
When the crisis first showed itself in mid 2010, Greece had €300bn of debt, held overwhelmingly by private creditors and governed by Greek law. Had Greece notbeen in the eurozone, it could have effected a painful but straightforward exercise in the judicious mix of devaluation and default. But being an unfortunate relegation zone player in the euroclub, the first was impossible, and the second strictly verboten.
The Slog wrote at the time, “debt forgiveness in southern Europe is the only viable solution”, but Wall Street screamed “foul!”, and the EU advanced expensive bailout loans. The sole ‘benefits’ for Greece were ludicrous austerity – and a further debt €70bn of sovereign debt. Over those two years furthermore, while Greece’s debt went up alongside harsh austerity, most of the large private creditors who had hard-sold the cheap sovereign credit used variations on the theme of QE and asset purchases by central banks to exit without losses.
The scam is breathtaking in its easy get-out for one half of the guilty, and almost obscene in its mistreatment of the other half. But this reality has still to penetrate the Belgio-Teutonic mindset….whose creature the Troika has just imposed a debt-restructure deal doomed to render Greece further indebted still.
In the cold light of wet Mondays, let us just pause for a moment here and see what dark dogs of war have been unleashed as part of yesterday’s Troika-rejection euphoria in Greece. A blatantly neo-Nazi, thuggish political group has entered the Assembly. It’s second biggest Party is hard Left. The Communists have doubled their vote. And nobody now can form a government without their help. Well done, residents of the eurocracy. Well done Wolfgang Mänchau, a man unwilling to hear the British viewpoint because “I am a German living in Brussels”. You have given birth to a Hobgoblin. Now pray tell us, how do you propose to house-train it?