... or of the IMF, or the ECB, or the EU.
The Greek economy shrank over the past twelve months by 5.5%.
Among 15 to 24-year-old Greeks the unemployment rate is 42%.
If the Greek government were to seek to borrow on the international markets now they would expect to pay 25.08% interest for two-year funds.
The German government, whose commercial banks are highly exposed to Greek debt (perhaps even ‘existentially’ exposed, as we seem to use the adjective now), but much of whose electorate is intensely hostile to any further loans to the Greeks, has proposed a ‘restructuring’ of Greek debt whereby some losses would be imposed on bond holders – votes at present being a little more valued than banks.
The European Central Bank, which, as I understand it, now holds much recycled debt from Greece and other ‘peripheral’ EU countries. Has warned that compulsory restructuring is ‘unacceptable’ (interesting how some people’s or organisations’ ‘acceptance’ becomes essential whilst others’ becomes eminently ignorable). The ECB has also signalled its intention to raise European interest rates again in the near future.
Other European countries, and the US, are said to worry that any compulsory Greek debt restructuring could ‘alarm’ markets and place other, not quite so peripheral countries in jeopardy, such as Spain – whose economy is too large to be ‘bailed out’.
Is there any realistic prospect of a ‘safe landing’?
I should perhaps apologise to my German readers (who, Mr Google informs me, are surprisingly predominant in a small field - whereas, sadly, I appear to have none in Greece). I truly don't think the German people are any more short-sighted or selfish than the rest of us: we all get confused sometimes and anxious to protect our own interests, so far as we can apprehend them in a complex political and economic situation.
Perhaps, as a correction to my immediately previous post, I should cite this (‘Reprofiling’), and, for good measure refer my reader to this (‘The New Normal’), which, all combined, poses the question whether corrupt privilege is so entrenched in our system that it can never be reclaimed for the public good, or whether the financial system is so inescapably compromised and crippled with its distortions that its collapse may be only a matter of (not very much) time.
A few days ago I went to hear Nicole Foss, who, as Stonleigh, is one of the authors of The Automatic Earth blog, give a talk in Bridport. She is anxious not to be dismissive of the possible positive responses individuals can make to the depression she sees coming, but the upbeat, post-apocalypse reconstruction part of the message seems a little bit thin and pious. I'm surprised she doesn't link into some of the commentary on the social and economic collapse in post-communist Russia and how much less resilient to that sort of thing American and western European communities would be.
I also think that, like many blogging commentators, she seems too concerned in completing her interpretative model to take much interest in what people at the economic coal face are doing (though there is a lot more detailed stuff on the blog). It's as if they were writing a modern Gibbon's Decline and Fall in advance. I expect she would counter that the situation is well beyond the control of anyone at the coal face. That is probably true, but it still might not mean that they won't have some significant influence on the way in which it all falls apart. In Bridport a section of the audience actually found her talk quite amusing in a superior kind of way, and she slightly plays to that reaction. There are other blogs that I find more enlightening on the economic/social/political situation than Automatic Earth, or perhaps that seem more psychologically engaged.
In the end the judgement we make as people living in the world has to be about something other than understanding, or even knowing all the facts, and so it has to carry with it the recognition that it may very well be wrong.
Nevertheless I think her underlying analysis is convincing that an excessive and very uncomfortable economic correction is inevitable; that it will be what hits us first; but that energy and resource scarcity thereafter will prevent us ever 'getting back to normal'.
It's easy to fall back into thinking that, despite ups and downs, overall things will go on broadly as we think they always have done. But that is to ignore the very steep upward changes there have been over the past few decades - like thinking the rocket we lit a few minutes ago is actually a steady-state fixture in the sky. And, as another maker responded, the point is that we are all riding on the rocket rather than looking up at it in the sky.
