The euro crisis

There are all too many alternatives

In the first of three pieces on Europe’s future, we look at Greece’s enraged howl of an election, which makes its eventual departure from the euro zone more likely

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Readers' comments


luigi bianchi

Like in the Tremonti videogame,a monster after another.The "markets" will believe that after Greece it's up to Portugal,and so on.Ad maiora!


Bad politicians, or bad policy? Is there anyone who could choose between these two? This is the dilemma greeks faced during recent elections.
The results was not a vote against euro. I thing that all the greeks are prepare to make sucrifices, within a system of justice and equality, as the results of greek elections are not yet final.


I am afraid that there is no 70% of Greeks in favor of the Euro currency. As you say in the article almost 70% of the votes in the elections went to parties blaming the IMF and its policies. When Greek people reply yes to polls about whether they want to stay in the euro or not they do so because they are thinking of the consequences. But when they are called to prove that they want to stay in the euro they go ahead and vote for Syriza, Independent Greeks, Golden Dawn, the Communist party and all other parties that say no to the IMF, consolidation measures and structural reforms. It is their right to do that, of course. But they should also ask all these parties for their alternative and solid plans in relation to the crisis. I haven't seen any.

TomAlex in reply to Antilogos

True, but there is no credible plan with the IMF 'salvation' package.
Sell, sell, sell, get poorer, poorer poorer with no end in sight, while the deficit keeps growing. If that's a plan, I'd rather go with no plan.


When the experts are seeing that they are creating “catch 22” situations with their austerity plans (sold into slavery) and creating growth? As the saying reveals; there are two things infinite... the universe... and people’s foolishness. We need to go away of the path of self destruction by abiding the Laws of Economics and start building-up an attitude of “loving our neighbours as oneself”. For your information Google “The World Monetary Order to Come”.


Tsipras is really a jerk, eh?

The Merkozy approach gives rise to such demagogues.

Firstly, the Greek people need to know the EU is their ally, not their enemy: that is no longer clear to them.

Secondly, they need to hear loud and clear from EU representatives that what Tsipras says is rubbish. There is no repudiation of debts. What has been imposed on the banks has already provoked tremendous damage around the continent.

It is useless to criticise the Greek people for voting for him, given the self-defeating EU policy. "The people" are not economists; they are scared and hurting. Do I convene elections to decide whether or not I need surgery - or do I ask the medical doctors?
If the country defaults, Greek pensioners can kiss their pension cheques good-bye - for many months.

TomAlex in reply to MilovanDjilas

True; however the alternative is voting for the people who got them to this point and following a disastrous troika recipe. It's not an issue of a bitter medicine, it's an issue of a medicine that does not work. And it was offered on a 'take it or leave it' basis. And the answer is definitely leave it, as it is disastrous. The problem is that there is no body on the 'leave it' camp with a clear and realistic plan.


Drama Queens!

MrRFox in reply to Super-pedrolx2

Quite - this thread (and this Article, and all the governmental responses) oozes emo-drama, and little else.

The PIIGS are insolvent in the "cash-flow sense", to borrow from the language of bankruptcy law. Unfortunately, there is no international tribunal that can take control of the situation and compel a well thought-out plan of reorganization/debt-relief. So the matter is left to the chaotic impulses of the mobs and those pols who pander to them in every EZ country. The outcome of that process is predictably grim.

Pity. There are many people (including me) who've made our careers out of formulating creative and equitable solutions to problems such as the one at issue here. But we're all on the sidelines and the amateurs have the hammer in their hands. As long as that situation persists, things get worse not better.

The only “technocrats” who are competent to resolve this matter are experienced bankruptcy judges and attorneys, IMO.

MilovanDjilas in reply to MrRFox

So, you admit your postings are aimed at convincing non-bankrupt countries to declare bankruptcy and line your pockets with money for "services rendered."

The last thing we need is to get the lawyers and the sharks involved.

MrRFox in reply to MilovanDjilas

Really, Milo - I consider myself among the most cynical of creatures that God has ever created, but I bow to you in that arena.

Difficult as it may be, we must all make the effort to keep open minds if we are going to think our way of this problem. Reflexive responses and emotionally satisfying diatribes may play well to the mass audience, but they aren't the stuff of which an effective and fair solution can be crafted.

That these countries are "insolvent" in the technical sense is clear, and saying it isn't so won't change that reality, Milo. Resolving cases of insolvent debtors is what the bankruptcy process has been doing for hundreds of years. There's a pool of experience there that can find a way out of this if invited to do so.

And don't worry about the cost - even sharks have a sense of communal responsibility - maybe, in theory. In any case, one suspects the best of them will not expect to be paid for their contributions.

MilovanDjilas in reply to MrRFox

I studied and later worked in Washington DC for almost a decade - and I have very clear ideas about Anglo-American lawyers (not to mention an arsenal of anti-lawyer jokes acquired during my years in North America).
No, which countries are "insolvent" is not clear. The PIG countries yes, but international speculation is now pointed at Spain and Italy, attempting to push us into insolvency (the same is true for Slovenia at the moment).
BTW, Italian sovereign debt is 60% financed by our own domestic sources - a statistic that is now rising. Therefore I will thank foreigners to stick their noses out of the contractual agreements existing between the Republic of Italy and its own private-law juridical persons/financiers/citizens.
Italy has always paid its own debts and we will continue to pay our own debts faithfully. Our banks are the world's oldest, with many founded in the 1400's. They have weathered other crises, including war, hyperinflation, plague, foreign occupation, natural disasters, religious oppression and genocide, and we will weather the Euro-crisis also.
"Physician Heal Thyself"

MrRFox in reply to MilovanDjilas

Some time we'll have to swap lawyer jokes; few people have a lower opinion of lawyers as a group than other lawyers, though the reasons may differ. This part of your post catches the eye -

"No, which countries are "insolvent" is not clear."

Perhaps you have a different view, but according to orthodox usage, any country that needs non-commercial international transfers to discharge its international obligations as they become due is insolvent in the cash-flow sense. I'm pretty sure this test would pin the tail on Greece, Portugal and Spain. IDK about Italy and Ireland.

Agree that we are eventually are going to make it to the other side of this financial killing-ground that Europe is navigating. It's really just a question of how much damage is inflicted in the process. The guys running the show now have made damn near every mistake in the book at least once, and some several times – they’re the ones who got Europe into this mess, right? Do you sincerely believe they have what it takes to see us safely through this? Are you willing to bet your financial life that they do?

MilovanDjilas in reply to MrRFox

I agree with your analysis about mistakes. Definitely, the politicians need to be replaced. I spent 20 minutes chatting with Mario Draghi in front of a Washington DC steakhouse about 20 years ago, and I confess to having a weakness for the man: pleasant, unruffled, competent and confident - so I will defend him.

According to the standard definition, Portugal, Ireland and Greece - although perhaps Portugal could return to private markets next year, providing that there WILL BE a private market in Euros...
Spain still finances itself (just sold €2.9 billion at 12- and 18- months, 2.95% and 3.3% respectively, a few hours ago).
Ditto for Italy.
When I am in my calmer moments (we have all spent the last 3 days attached to the TV and internet here), I must admit that Spain and Italy are in little danger of being insolvent - that is, completely unable to place debt instruments on the market; we are in more likely danger of not being able to sell long-term bonds (10-years, for example).

Have you heard that instead of white mice scientists have begun using lawyers for medical experiments?
Apparently there are more of them around and you become less attached to them.

MrRFox in reply to MilovanDjilas

Um ... yeah, and it keeps the PETA people off their backs too.

Wonder how the bond auctions would have gone without the ECB and other GSEs/GLEs in buying with both hands? Even Greece managed to sell bonds a while back. So who bought them?

MilovanDjilas in reply to MrRFox

Presumably mostly domestic institutions?

Italy sold 3.5 billion at 3 years, with yields stable (from last month) at 3.9%. Coverage was healthy enough at 1.52X (mostly Italian investors through domestic savings institutions. We sold over half of our maturities/rollovers through April - over 200 billion. For the rest of the year we are selling about 20 billion monthly - not very much.

Spain only has €45 billion to roll over for the rest of the year - 6 billion monthly. In a 1-trillion-euro economy this is not so much.

MilovanDjilas in reply to MrRFox

In Italy's case, definitely not.
In Spain's case, not yet... I think the commercial banks are in fairly good shape. The crisis - as in Germany - is with the local Savings & Loans - which were hitherto unregulated (oohhhh - that sounds familiar, eh? Yes, I was in Washington in 1988).
I do not think the Savings Banks are big investors in Spanish bonds - their investments were tied up in real estate and they are being rapidly consolidated to raise core capital.
Italy has been a rich country for a long time, and there are €8.6 trillion in aggregate private savings (6X gdp) floating around - in fact, much of the demand for German bonds, driving down yields and increasing the spreads, are actually coming from Italy: our financial system has around €250 billion of exposure to Germany.
But should it be necessary to re-capitalise our banks, this is achieved easily enough - the problem (political) is the dilution of shareholder control, as the municipal foundations behind most of our banks are loathe to relinquish control. Unicredit for example was instructed by the European Banking Authority at the end of last year to raise €8 billion in new equity capital - 2 months later they had done that (with some help from Abu Dhabi).


Please correct your graphics: in the previous elections there was no 50 seat-bonus for the party which came first, so PASOK's tally corresponds to its share of the vote.

This very undemocratic bonus which gives the largest party 20% of the total seats (!!!) was voted by the New Democracy deputies when they were last in power. According to the relevant Greek law, this kinds of changes in the electoral law only apply in the second-to-next election.


and none of the parties wanting less austerity state where the money will come from. It's a simple question can someone please ask them ?

Chris Benton

Referring back to an earlier post why do we in the western economies asume that we will ALWAYS get richer ? Having ridden a debt fuelled wave of unparalleled wealth for more than a decade we have suddenly found that the bill needs paying and we are now 'poor' . However we are still far richer than 10 or 20 years ago with the added bonus of a source of cheap goods made by people willing to accept far lower living standards in the newly rising economies.
No politician would ever dare to say this I guess but what we need is a managed return to levels of prosperity where a meal out, a trip to a beautician, new cars every 4 or 5 years etc. and large homes with the inevitably high price tags are seen as luxuries rather than the norm supported by ystems which aggressively limit the ability of individuals to take out loans where there is no collateral (ok I am in my 50s but I do remember when it was impossible to arrange a loan for something as insubstantive as a holiday) . Surely an economy which celebrated the ability of all to live with electricity , running water , affordable medical care, education, a living income at retirement and luxuries such as cars, TVs etc. is a cause for celebration not concern - just how much stuff can you own ? . It is not just the Greeks who need to understand that !
YES I do understand that the whole edifice is now constructed on the premise that consumers will aspire to a BMW or the latest flat screen technology , financed through borrowing but there are other ways to live - we just need to accept our time at the top table is over and we will increasingly have to share the world's wealth with others - or risk them treating us as we treated them in the past !

mvr36 in reply to Chris Benton

As long as the banker scum rake in massive profits and bonuses at our expense, suffer austerity we will not.

I might listen when you have hanged Lloyd Blankfein and Jamie Dimon for being dirty thieves. But not before.

Chris Benton in reply to mvr36

Banks ARE to blame for much of the problem , including their refusal to accept that their pay should reflect the mess they made ! However I think that it's also important to remember the following;
- No one FORCED anyone to use their home as a source of inexhaustible income by constantly remortgaging. The banks made profits but many saw it as a legitimate form of income (DIY Ponsy scheme !)
- Governments could have said to their electorate that it was important to keep some cash back for the eventual changes that would happen when 'readjustment' took place . Instead they borrowed against fictional equity to increase living standards and allowed consumers to do the same. Thus ignoring the cyclical nature of economics.
- This increased living standard led people to believe that a world where a meal out was the norm and that the accumulation of needless items of clothing , electricals ," extra virgin olive oil" etc. was not only desirable but essential.
In short most of us took some part in the disaster.


I cannot see how Greece can reject the bailout. The sovereign debt crisis was no mirage. Creditors have already taken over 50% "haircuts". None of them will lend to Greece again. Eurozone has offered a bailout which the Greeks want to reject because of the stringent strings attached. If Eurozone does not bailout Greece, I cannot see China or USA or any other country offering to bailout Greece.

So from where will any Greek govt. get the money to employ 100,000 more people and offer pensions equal to final salaries? Printing money is the only option which means exit Euro enter Drachma. Given Greece's current economic state Drachma will be terribly weak, yet it may fuel exports. But printing more Drachmas (the economists version of "free press") will in all likelihood result in hyperinflation, not to mention the bank runs that this article talks about. This is not a real option.

Greece has no option but to take the EU bailout and live with the strings attached. They can kick around a few politicians, but that will not change the reality of living in a bankrupt state.


Greeks have to choose between Euro and Drachma? Sorry banker stooges of the Economist, every country in Europe would be better off without the Euro. Only the thieving banks wouldn't be.

Tomas Marny in reply to mvr36

Really? And who makes money on common FX operations? Who makes money on hedging businesses against exchange rate risk? And, last but not least, who removes fundamentals from any free floating exchange rates with purely speculative operations with currencies (in fact, smaller countries with low currency mass must either fix their rate to a more robust currency or accept that their currency is a mere toy).

Therefore, to have a single market with dozens of different currencies is a non-sense that prevents free exchange of goods and services and is bonanza for banks and speculators rather than supports it and harms banks.

mvr36 in reply to Tomas Marny

The Euro is a dream world for speculator scum. Now countries are trapped in a situation where they cannot devalue, and gaining leverage by influencing only a handful of politicians or placing stooges in the one Central Bank (Draghi, Goldman Sachs parasite) is much easier. And the volumes are bigger too. Easier to get access to LTRO's and the likes, easier to get massive bailouts ad guarantees and socialization of losses.

We in Netherlands and Germany didn't have such problems we have now before the wealth-destroying Euro (a banker project) was introduced. The Euro is our misfortune.

If we promise to hang any banker that tries to bet against a currency, no such problems as you describe would happen. Parasites like Blankfiend and Jamie Demon need to be rooted out. Not praised because they are not geniuses they are thieving parasites.


Putting such different countries in a currency unions was a terrible mistake...paralleling oddly subprime mortgages.
The Euro allowed a lot of credit to flow to dangerous customers and viola. Only there will be no political will in the North to pay for it nor in the South to endure the pain of reform. It is dead
just a matter of a few more elections.
Alexis? a typical populist politician of the worst sort.


I am afraid that the situation is worst than 6 May. A post-election Poll, organized by ALPHA TV, a major Greek TV Channel, on 10 May, shows that SYRIZA, (Mr Tsipras left coalition)this time, comes first with 27,7% (11% up from 6 May,) while the center right party, New Democracy comes second with 20,3% (1.5% up from 6May) and center left PASOK goes further down to 12,6 %.This means that the "rebell" is still strong, with unpredictable developments.

mvr36 in reply to pontios

That's not bad, that's good news! Finally people are waking up that our politicians are giving away our money to the bankers and are making laws on bankers orders. This must stop. To use a 20th century analogy, the people who voted 'rebel' are the resistance, the EU/IMF/bankers represent a certain Empire numbered between 2 and 4.

We the resistance will finally win, let's hope Empire 'between 2 and 4' will go peacefully unlike its 20th century equivalent.

nosheepzone in reply to mvr36

you are deluded - the money is not being given away to the bankers the money does not exist. the money is being borrowed from the bankers and not paid back. the rest of us either through the eu or the imf are then having to bail out greece.

voting in a government which promises to things with money it does not have is sheer fantasy. greece may elect the party which promises the impossible but it will just have to keep having elections until it elects a party which only promises the possible.

Jeff Collins

The Greek people are rebelling against enforced austerity measures same with Spanish and now French also. This anti-austerity rhetoric doing the rounds in the most indebted countries is quite remarkable in that the people of Europe seem to be working against themselves and their future. Austerity measures are there to correct the mistakes of the past. You can not move forward until you have dealt with historic issues and wipe the decks clean. Greed, complacency and a far too satiated hunger for debt financing have all come back to bite and the people of Europe are not willing to take their punishment. I wonder if all the people in Greece voting for Right wing parties and protesting against enforced government austerity measures always paid their taxes on time and in full every month?

I wonder are the people of France willing to sacrifice their fairly standard 35 hour working week or lessen the power of their unions for want of a better future and the good of their country

I wonder will the people of Ireland accept that the majority of them had a role to play in the property bubble that burst and vote Yes for the fiscal treaty.

For the people of Europe this is all of our mess to deal with, if you are going to do the crime be willing to do the time.

Jeff Collins in reply to mvr36

What are the fraudulent products you are referring to you I'm not aware of them? If you are implying that GS and other investment banks should be made suffer losses for taking on too much risk or leverage then certainly I agree, but so should anyone else who over-leveraged themselves in the pursuit of a better lifestyle all over the world when they could not afford it. Everyone is very good at pointing the finger in the banks direction when perhaps it might be advised to look in the mirror first.

Giant Tortoise iawmaij in reply to mvr36

It still does not change the tax income < government spending problem.

While I do question if just austerity fixes the problem, change of status quo (tax, labour market, government spending) is necessary. And you know what, people who bought European debts is not only investment banks, many folks (including European) pension plans and bank saving also depends on stability of the financial markets...

OliverTw in reply to Jeff Collins

I agree with you Jeff. People don't want to take responsibility for past undue advantages and for having lived over their means.

Not only are political rights granted under a democracy, but also responsibility for actions taken or inaction.

European people are, in a immature way, electing governments that speak the langage of illusion and false promises, instead of waking up and facing reality now.

Germany and Europe should not accept that behavior and force Greece out of the Euro zone in case it fails to accept austerity.


The only solution to this tragedy is to teach the meanings of ''honesty'' and ''working'' in shools in greece; otherwise it will never end; but the money the eu poring into Greece will.

btw, are there any words in greek that stand for those two words?

_dimis_ in reply to sgok

You do realize that this is too much, right?

If you look around you and look on Greek immigrants all over the world, you will hardly find people believing that those immigrants are lazy or dishonest. This by itself suggests your exaggeration. I hope you get it. The issue is much more complicated than that.

IOANNA M. GR in reply to sgok

The problem in Greece is that: the educational system does not provide the suitable job for the right person. The majority of people doesn't like the job they are doing, because there were almost no chance, in their youth to got the qualifications they needed for what they are talended. I know that sound very odd, but that's it. The educational system does not support men and women with specific talends and specific areas of intelligence. So you can see a very intelligent woman to clean houses, and a very stupit one, to have a very important job in the public sector, just because her father knew a minister. Or, you can see someone with a univerciry deegre in economics to be very bad at it, and be very good at mechanical engineerings.
In Greece is very difficult for someone to do the job he wants.


Enough already you lying greedy socialist Greeks - GO be gone and leave the Euro and go back to your depreciating worthless drachma. Portugal, Spain, Italy and France and Belgium will soon join you in any case in leaving the Euro.

j5kFUwQMrm in reply to hikeandski

Of course, let's see whether the banks of the remaining euro zone countries have the capability to do that. And let's see who will buy BMWs, Mercs and Nokias in the countries you mentionned. I wonder how much much of the money that the Greek state borrowed ended up in German products through consumer spending. What happens in Greece is due to our inability to organize our state, the great socialist borrowing of the 80s,and the majority of people who are unable to switch from sleeping to working. Our politicians are incompetent, but Mrs. Merkel has a lot to do with the crisis. You can read many articles on how the 1st support pack had irrational demands, to punish Greece and keep other countries from this road. Same approach in other countries as well. She doesn't want to print more money (irrational), not eurobonds etc. And don't worry, if you can cope with Greece, then there is Portugal, Spain etc. Let's see how much it will take to create the new communist Europe. Mrs Merkel doesn't remember where she comes from and how much Germany gained from all these countries.


There is a solution for Greece, lower the wages, lower the burden of middle and small sized businesses, ease the labor law and crack down the union, people needs to realize its much better to have lower wages than massive unemployment. make the economy more competitive through a real and painful reform.

TomAlex in reply to Apzat

This is stupid. Anyone who knows anything about the situation will tell you that the competitiveness problem is bureaucracy and the legal framework, not wages. If you change existing contract and slash the wages of people who bring 10 times the money they make to the company(whereas the CEO brings losses and gets paid 20 times more than these people), they will just leave and go abroad. Meanwhile the state loses direct and indirect taxes, pension funds collapse and like I said those who can, leave the country. And, if you would be willing to work or invest in a country where the government intervenes to change by law existing contracts, go ahead. What do you think would happen if one were to apply your solution and void contracts to foreign football players playing for greek ball clubs? What would UEFA do? Or do you think that football players are first class citizens and the rest are second class?



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