Thursday 23 July 2015

In a world of their own

I just had an exchange with the Telegraph's economics wunderkind on Twitter. I ain't too impressed. You've seen the extensive work we've done on Greek corruption and the global impact of it, but Ambrose Evans Pritchard asserts "I could write identical corruption stories about Austria or Belgium". In the bluntest terms, no you fucking well couldn't mate. Not if you're on this planet.

"You can't generalise from micro-corruption to macro-economics" says he. Well, that's true, but we're not talking about "micro-corruption". We're talking about grand larceny of epic proportions. The Greek government is leaking billions in every direction. It's not a currency crisis, it's not even a debt crisis. This is a theft crisis.

You can criticize the EU for its own hubris in thinking such an absurdity as the Euro would not hit the rocks taking on basketcase economies, but it takes two to tango. The EU wanted Greece in the grand experiment but Greece saw them coming. To them the EU was just another pot to be raided.

But this escapes the media scribblers. They've been predicting a collapse of the Euro for so long, not because of any particular insight, but because of that basic human instinct of wanting to see something big fail. It's why we all had our eyes glued to the telly when those aircraft hit the world trade centre. But the truth of it is, the eurozone GDP is gargantuan compared with the poxy economy of tiny Greece. The Euro survived 2008 and Greece is inconsequential now. What we've seen is pure theatricals.

After repeated bogus reassurances that Greece would get their act together, in comes Syriza, rips up reform agreements, sabotages the port privatisation talks and defaults on debt. From the tone set the EU then knew full well where the next bailouts to prop up the government were going. Straight into a black hole. Greece failed to make any serious reforms and can't be trusted to make them.

To say that austerity hasn't worked is a total misreading of the whole thing. Greece has not implemented any austerity measures in any meaningful sense - and the debt Greece has is the only leverage the EU has to ensure that they do stop the bleeding. If they don't Greece will continue to be a liability. It's also a strong message to Italy and the others. The benefits of the single market are not inherent to simply being in the EU - it is a product of playing by rules.

Evans-Pritchard accuses me of victim blaming when in reality Greece has effectively been caught with its fingers in the till and refusing to honour the terms of previous agreements. No state can function like that.

Evans-Pritchard is caught up in the theatre, not really realising what's going on. The Euro was not in any great danger from a Greek default as there is no contagion threat this time. So why then was it the big story? There are any number of bigger concerns in the EU right now that we're not hearing about, not least Ukraine. The answer is simple. The EU wanted it to be a big story.

A nice big story like this underscores the need for a new EU treaty that affords the EU the powers it needs, not only to tackle Greece but also the other basketcases - not just for the security of the Euro but also because the failures of the Greek and Italian states are a liability on many other scores too.

Such a treaty I would support, but obviously not with Britain as a member of the EU. That's why we need out so we can let the EU get on with it. Cameron won't get reform - he'll get relegation - the worst of both worlds.

This is why I've been looking at Greece in the first place. This sets the tone for Cameron's renegotiation and has massive ramifications for how the Brexit referendum goes in terms of what Cameron will attempt to sell us. In and of itself, the Syriza saga is otherwise an issue of little economic significance.

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