Greece on the Brink: Chaos and Fakery as the Final Act Begins to Unfold

By John Ward

With signs of growing panic in the markets and Greek banking system, dirty tricks via post seem to be the order of the day in Athenian politics. The Establishment Parties and the EU continue to develop scenarios suggesting that the sky will fall in if Greeks vote to leave the eurozone, although opinion polls continue to show that – while support is moving increasing towards the anti-Troika Parties – the electorate has no strong desire (35% at most) to leave the EMU. It seems to The Slog, however, that if the Greeks can hold on and keep their heads, inflexible austerity as a strategy will be a dead duck in the eurozone by the time they come to vote again on June 16th anyway.

Large numbers of politically aware Greeks are this afternoon (Wednesday) discussing the as yet unseen contents of a letter allegedly from Prime Minister Papademos to President Karolos Papoulias. Mentioned in the transcript of the Coalition discussions, the note is rumoured to give a true picture of the Greek banking and economic situation. To not many observers’ surprise, the letter reputedly depicts Greece as a country flat on its back roughly five yards from an oncoming truck.

However a growing section of the political class suspects that the letter is a fake.

“I’ve seen  it,” says one source on the political Left, “and it isn’t signed by Papademos. Our perspective is that it’s more crude scare-tactics, a new attempt by Venizelos and New Democracy to terrify the voters.”

The ‘scaremongering’ explanation is that expounded by The Slog last Sunday – a piece that got enormous hits here, and went viral in Greece. But Sloggers should note that the piece contained the important phrase, ‘Maybe the first few months will be very tough’. This isn’t going to be a breeze, but nobody – not in Brussels, Berlin, Washington or Beijing – has anything to gain from a post-eurozone Greek collapse. It’s just that Brussels, Mario Draghi and Wolfie Schäuble have a great deal to lose from  the exit….hence the media terrorism. As Marketwatch notes this morning:

“Germany will realize the risks involved, eat its words and come up with a mega bailout. Instead of a ‘Grexit’ we’ll see a “Grashall Plan” — as a Marshall Plan for Greece will quickly be dubbed — to reflate its economy and keep the euro staggering on for a couple more years, at least.”

This morning – after a long gap – I had a conversation with the Slog’s Bankfurt Maulwurf on this topic. I’ve spent most of the morning checking out what he said – which was dramatic – and with luck the story may stand up more solidly later today.

But as we saw in March, clever plans can screw up badly. So the Greeks need to accept that, if the second election brings anti-Troikaism to power in Athens, things will be bumpy at first. And there are myriad signs of this already.

Greek 2023 bond yields rose past 30% for the first time this morning. Q1 in 2012 was the first during Greece’s ongoing crisis that saw more enterprises shutting down than opening, according to figures released on Tuesday by the Development Ministry’s General Secretariat for Commerce. Data showed that 8,361 new enterprises went into business in the January-March period, while 10,315 ceased operation.

Central bank chief Provopouluos  told President Karolos Papoulias  that savers withdrew at least 700 million euros last Monday. He was expecting outflows of a further 800 million euros by the close of business Wednesday.

But the Greek electorate needs to calm down. The tide of austerity is turning into the flow of stimulus in both Brussels and Berlin; and oddly, the Greeks could, if they remain firm, get their best-of-both result of rejecting the Troikanaut approach and staying in the euro. It’s a choice that remains theirs to achieve if they think through just how much Berlin-on-Brussels-by-Frankfurt doesn’t want them to exit….and leave a large hole of unpaid eurodebt behind.

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