Man-made catastrophes tend to happen in slow motion. The danger is evident but the steps required to avert it are too difficult, or controversial, or unclear. So we keep leaning over the parapet, just a bit longer, just a little further; the tipping point is only obvious when it is too late.

On the European debt crisis, we are now in planking mode. In a marathon teleconference set to continue today, Greek finance minister Evangelos Venizelos is desperately trying to hammer out a last-ditch deal with the EU and the IMF, which have put off the decision to release the next tranche of Greece’s bailout because the country has once again failed to implement agreed reforms and austerity measures. The program voted through the Greek parliament in a fog of tear gas at the end of June [see article below] has been rendered inadequate by delay—and by the fact that the measures taken so far have only plunged the country further into recession. According to Greek newspapers [1] the creditors’ demands include the lay-off or suspension of 70,000 public employees by the end of 2012; further cuts to wages and pensions; higher social security contributions; and yet more tax rises.

The threat is that if the EU and the IMF don’t like what the Greeks come up with they will take their toys and go home, leaving Greece to—what, exactly? And with what consequences for the rest of the Eurozone? Beyond the fact that the Greek government is due to run out of cash in mid October for wages and welfare payments, nobody seems to know. The Financial Times has produced a handy graphic [2] showing the chain reactions that might be triggered by default and, in a worst-case scenario, lead to a breakup of the euro; the steps along the way include “market turbulence,” “economy stalls,” “streets explode” and “social misery.” Like a malign goblin bent on making mischief, the rating agency Standard & Poor helped those predictions along today by downgrading Italy’s debt. The markets bumped down half a floor at stomach-churning speed.

In Greece, apart from deepening poverty [3], the pattern of “last chances” followed by painful reprieves has produced a stifling sense of dread, anxiety and drift. With each round, the government makes promises it lacks the will or the capacity to keep. Paralyzed before the task of ending large-scale tax evasion, unwilling to slash its public sector base (some, but not all, of whose members are also its clients), unable to sell the country’s assets even at Walmart prices, riven by dissent, George Papandreou’s socialist administration is flailing for quick fixes to offer its creditors. An ill-thought-out universal property tax announced this month, to be collected through electricity bills and enforced by the threat of power cuts, was meant to raise 2 billion euros; it failed to convince the money men at the EU and IMF. Rumors of an impending election or referendum don’t help. It’s not only the Europeans who’ve had it with Greek politicians: at home, disgust with the entire political class is close to boiling point.

Meanwhile the Eurozone’s leaders are just as paralyzed, divided and ineffective. Individually, they all defend the single currency (“If the euro fails, Europe fails,” in Angela Merkel’s phrase); collectively, they won’t step up to the measures needed to save it [4]. Torn between placating their own electorates (who don’t want to cough up for the Greeks, the Irish and the Portuguese) and appeasing the markets (which want a quick resolution), they fudge and prevaricate; the structural problems of the Eurozone—just like the structural problems of the Greek economy—remain beyond their reach.

But the game can’t go on for ever, and given the general failure of leadership and will, the gathering consensus is that Greece must be cut loose. Hence the new tougher line from the EU and IMF. Back in June, EU Commissioner Ollie Rehn declared there was “no Plan B” for Greece; but what he actually meant was that there was no Plan B yet . Since then, Merkel especially has been under fierce pressure not to keep throwing good money after bad; the wizards in her finance ministry have been working away on plans to protect the rest of Europe from a Greek default. That default has been “priced in” to the markets for some time; central banks are preparing for it as if for a hurricane, pledging extra liquidity to keep the system afloat. Judging by the rating agency Fitch’s announcement today, the preferred scenario now is for Greece to default on its loans without leaving the Euro—which, less than three months ago, was seen as impossible. The stage is being set for a collective sigh of regret for a peripheral country which just couldn’t get it together—and a barrage of talking heads explaining why this is the best outcome for the Eurozone, why the Italian downgrade can now be contained, why the FT’s worst-case scenario just won’t come to pass, at least until the next big crisis comes along.

Will that be such a bad thing for Greece? Plenty of learned economists and serious commentators argue that the country should long ago have jumped before it’s pushed, as Argentina did in 2002 [5]. I hope they’re right; I wish I thought they were. But their theories presuppose a faith in Greek politicians that I can’t quite share. They see a new beginning with the capacity to devalue, reform and develop in a more sustainable way. I see the government falling; an election that brings Antonis Samaras’s New Democracy to power on a populist and xenophobic platform; corruption and tax evasion continuing as before; people—even more than now—rummaging through rubbish bins; and all the country’s assets sold off anyway to multinational corporations, Russian and Chinese developers, anyone looking for a cheap deal in a sunny place. I have never, ever wanted so much to be wrong.

Maria Margaronis

* From The Nation, Tuesday, September 20, 2011 - 11:22:
http://www.thenation.com/blog/163501/going-going-greece-brink?rel=emailNation

Greece in Crisis: Protest, Violence and Necessity

The Greek parliament has just passed the package of savage austerity measures and privatizations required to get the last tranche of a 110 billion euro loan from the EU and IMF; without it, the country would have been broke by mid-July. Outside in Syntagma Square, protesters in cycling masks are running from clouds of teargas. Since yesterday, the square has been filled with surging crowds pushed back by riot police; Greek TV reports that 500 people aged between 15 and 65 have been treated in the metro station for respiratory problems and injuries.

Ambulances can’t get anywhere near the scene. The Twitter feeds give the flavor: “Fog of chemicals around #Syntagma they keep gas bombing us situation getting worse again”—“People are trapped at the sqr gas bombed from all sides”—“More doctors and supplies needed urgently at Syntagma Square in Greece. Please help”—“Police just hit directly to us. We were running, I saw a man spitting blood, 3 more fainted 3 steps away from me. Its really bad”—“Greek ministry of finance is on fire.”

By the skin of its teeth, Greece has escaped imminent bankruptcy; the Eurozone is safe for another week or two as the EU and IMF try to hammer out a second rescue package. Jose Manuel Barroso and Herbert von Rompuy, the presidents of the European Commission and Council, have hailed an “important step forward along the path of fiscal consolidation and growth-enhancing structural reform.” But the long-term prognosis is far from positive. First, the cuts and privatizations will not be easy to implement, leaving plenty of wiggle room for lenders later on. Second, this year’s austerity program has only plunged the country deeper into recession; even the EU and the IMF project that the debt and the interest on it are likely to keep rising, and the consensus is that Greece will have to default sooner or later anyway. Third, it isn’t clear how much more austerity the Greeks are willing or able to take. Almost a quarter already live below the poverty line; 50,000 businesses have closed in the last year; youth unemployment is at 42 percent; people are at breaking point.

It’s very hard to predict what is likely to happen next. The government still has to pass an enabling law on Thursday to speed up the pace of reform; after that, it has to put the austerity measures into practice. If it stumbles and is forced to call elections, Antonis Samaras, the leader of the opposition conservative party New Democracy, is most likely to win. He has no substantive alternative solution to the crisis, but has made populist hay by promising to “renegotiate” Greece’s loan agreement and to rescind a law granting citizenship to children born in Greece to legally settled immigrants.

The “aganaktismenoi” who have occupied Syntagma since the end of May are a new force in Greece—a popular movement that embraces leftists, centrists, nationalists, radical democrats and the apolitical, united by a collective allergy to traditional politics, with its cronyism and self-interest, its petty-mindedness and parochial machismo, its corruption and dishonesty. Some of them have been camped in the square for weeks, engaged in an experiment in direct democracy; whether that will survive today’s cataclysm of violence remains to be seen. Yesterday, peaceful protesters tried to stop the black clad agitators who were ripping up marble slabs and setting fire to vans and rubbish bins; today’s indiscriminate assault by the police has changed the atmosphere.

Classical analogies for modern Greek politics are always irritating. But today I can’t help thinking about tragedy, not in the tabloid sense of something terrible happening but as a clash between irreconcilable laws, or Free Will banging its head against Necessity. My heart is with the protesters, with their spirit and recklessness and energy and desire, but my head knows that parliament had to pass the appalling measures, because at this point the alternative would be worse, for Greece and also, perhaps, for the rest of Europe. Due to the long recalcitrance and rigidity of European leaders and their refusal to challenge the dominance of the markets; due to Greek politicians’ even longer failure to set their house in order; due to the absurd time pressure placed on this decision, there was, as EU commissioner Olli Rehn put it, “no Plan B.”

The tragic flaw is in Greece’s own responsibility for its problems, which has allowed Northern European pundits and politicians to demonize its people as incorrigibly lazy, feckless, criminal and corrupt: There simply wasn’t enough solidarity from outside the country to support a heroic last stand against austerity, the banks and the IMF. Perhaps political and economic pressure will soften the measures and ease the terms of Greece’s loans; perhaps, when default eventually comes, Greece will be better prepared to weather it. Perhaps the sight of a European country being forced to its knees might prompt a belated rethinking of the European project and the relationship between democracy and the markets. Perhaps. Otherwise, as one tweet coming out of Athens put it, “You are all in Syntagma Square. You just don’t know it yet.”

Maria Margaronis

* From The Nation Wednesday, June 29, 2011 - 11:59:
http://www.thenation.com/blog/161743/greece-crisis-protest-violence-and-necessity