Tuesday, July 7, 2015

Ambrose Evans-Pritchard — Europe is blowing itself apart over Greece - and nobody seems able to stop it


Implosion. Europe facing Humpty-Dumpty moment.
Like a tragedy from Euripides, the long struggle between Greece and Europe's creditor powers is reaching a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the greater European order in the process.
Yep. And with a market melt-down underway in China, looking and more like the popping of debt bubble. Ukraine turning into a failed state in the midst of civil war. Russia is sanctioned. Commodity prices are tanking. MENA on fire. ISIS expanding into North Africa and Central Asia. Anyone think this is starting to look like the wheels of the global order coming off?

Meanwhile, a million people turn out for Pope Francis in Ecuador to hear him back President Correa's populist reforms contra the elite. 

And in the US Bernie Sanders is creating a much bigger stir than he or anyone else expected.

You can fool some of the some of the time, but you can't fool all the people all of the time. Maybe the world is waking up.

13 comments:

Anonymous said...

Despite all this, I predict a murky, not very satisfactory, but somewhat workable compromise deal will be forged for the near term - with some external intervention and cajoling.

After that I don't know. One thing that is going on is that the Merkel-Troika era is passing, and these guys have to look out for their legacy. A new European center is emerging, and people have to decide whether to get on board with it or go down with the dead-enders.

The bad relations between Russia and the US aren't helping. With a better relationship there, the Russians and the US could be working more cooperatively on forging a European compromise.

Andy Blatchford said...

"A new European centre is emerging"

Where Dan? Not seeing that over here, quite the opposite.

Tom Hickey said...

Ambrose Evans-Pritchard: Washington is bringing its immense diplomatic power to bear, calling openly on the EU to put "Greece on a path toward debt sustainability" and sort out the festering problem once and for all.

Unknown said...

Tom,

Not going to happen. The EuroZone rules of engagement make it almost certain that Greece will not be bailed out. The rules were designed by to put an end to Keynesian policy in Europe. That is what they are accomplishing. So no agreement on any deal that can be accepted after the "No" vote.

Anonymous said...

Europe needs to be rescued from itself from time to time. Self-immolation via weird fanatical obsessions and crazed ideologues seems to be a recurrent theme in European history.

Merkel needs to decide whether she wants to go down in the long tradition of European crackpot leaders who put manic, doomed, puritanical principles ahead of practical results - or instead go with the side of doing this that actually give good results.

mike norman said...

People have woken up, Tom, but their chained to their beds.

Tom Hickey said...

Well, we will have to see what happens.

One of the three things will happen.

1. Sense will prevail and Greece will work out a plan with the EZ to meet its obligations while ending the depression in Greece through some restructuring.

2. Greece will cave to austerity, become mired in debt depression and threaten to become a failed state — I should say another failed state along with Ukraine, which is already insolvent and on IMF life-support.

3. Greece will leave the EZ with the high probability that it will move toward the orbit of the BRICS.

Obviously #1 is the sane solution and the only solution acceptable to the US, UK, and some EZ nations, who will therefore exert tremendous pressure to force it. But it only takes one holdout.

The level of uncertainty is high and depends on how strongly the Anglo-American alliance wants to twist arms and is willing to break legs if need be.

Anonymous said...

The US has to be worried about the double-whammy of this crisis combined with the China market drops. At what point does the back-channel diplomacy have to become higher-profile action?

Calgacus said...

"A Europe of Equals": Report from Athens as Greek Voters Seek Alternatives to Austerity interview with Paul Mason, Varoufakis, Richard Wolff, Tsakalotos & Economist Richard Wolff on Roots of Greek Crisis, Debt Relief & Rise of Anti-Capitalism in Europe> are worth reading too.

AEP's idea that Tsipras didn't think he would win is implausible. Tsipras has self-confidence. Was reading a couple years old Levy Institute meeting transcript - Tsipras said then he expected to become PM in a couple months, years before he actually did.

Unknown said...

Calgacus,

I agree with you regarding AEP and Tsipras. AEP has been a conduit of deliberate leaks from Syriza, and I believe that this portrayal of Tsipras by AEP works well towards the end aim of getting out of the EuroZone, and at the same time, not being the one to violate the treaties that have been signed. That maximizes the probability of IMF and/or BRICS financing, along with the humanitarian aid that would be needed, as Greece re-establishes a new sovereign currency. The IMF default has to be viewed by the US and therefore the IMF as being caused by the EuroCrats, and not Greece.

IMO, the replacement of YV by Euclid T. was designed to be a show of weakness to the "EU functionaries". It is fairly clear, that Euclid T. showing up at the meeting without a proposal. was a deliberate act, designed to ignite fury - which it did. I will bet, that the proposal the Greece Government comes up with late on Thursday, or early on Friday (they will push to make it as late as they can) will be something that will be designed to be unacceptable to the EuroGroup FMs, but something fairly reasonable that will enable Greece to survive if accepted.

The hubris with which the Eurocrats are acting will be used by Greece to enable a Grexit on terms favorable to Greece, and those that enable circumstance that make rapid recovery for Greece possible.

NeilW said...

The Greeks have built a national consensus. Euclid has been there to feel the waters and see what is required.

The problem with changing things in Greece is that the government has given no indication it is in control of the state bureaucracy and the military.

Which of course means that the separation from the Euro is going to be difficult.

The strategy of the Greeks is a bit of a mystery. It may be that they don't have one.

lastgreek said...

The strategy of the Greeks is a bit of a mystery. It may be that they don't have one.

System D

NeilW said...

Interesting that Galbraith half confirms this piece