Banking Oligarchs vs Greek People

by Elias Blum

I got this from a Reddit user called /u/Ghostwoods (original here), so I don’t claim any originality for it. But I wanted to repost it here, because I think it is the best analysis of the situation I’ve read so far.

For Greeks, the worst thing is accepting all the EU conditions and basically dropping out of the first world. For the German bankers, the worst thing is Greece refusing to pay anything. For the rest of us, the worst thing is Greece becoming a Russian satellite state.

The very worst outcomes are all vanishing unlikely — asteroid strikes, plague attacks by ISIS, Yog Sothoth erupting out of the Parthenon and spreading over the whole country, devouring every resident and catching their souls in an eternal hell of agony and madness, that sort of thing.

If we stick to what’s likely however, events fall into a small number of camps.

  1. Greece agrees to everything Germany wants, makes further deep cuts to pensions, welfare, government employees, tax breaks, etc. The EU then agrees to give Greece more loans — which in fact manifests as the EU funding sources giving huge amounts of money to French and German banks, and saying “Greece will pay us back for this”. Almost none of the money actually enters the Greek economy.
  2. Greece persuades the EU to let the debt’s timescales slide. Greece doesn’t make any further cuts, stays in the Euro, and keeps trying to pull itself out of the pit of shrunken economy that has been forced on it, without taking any further austerity-related damage, but still trying to repay what it can, when it can.
  3. The EU reluctantly agrees to let Greece off its debts, mostly or even entirely. The Greek government suddenly has a lot more resources to throw into trying to rebuild its economy. It stays in the Euro, and works to improve itself. German and French banks take a huge financial loss.
  4. Greece says “Fuck you”, and drops out of the Euro, refuses to repay the debts, but stays within the EU at large. Huge damage to the Euro. French and German banks lose a lot of money, and Spain, Portugal, Ireland and Italy all eye the situation with great interest, since they owe fortunes they can’t really repay too. Free of the debt burden, Greece sets about rebuilding.
  5. Greece says “No, really, TOTALLY fuck you,” and drops out of both the Euro and the EU. Russia — who have been very, very attentive to Greece over the last ten days — sign the pipeline agreement they’ve been offering Greece, along with the huge free aid package they’ve been offering. There are rumours that this deal will include the leasing of one or more Aegean islands to Russia for a century for use as a military base, as per Guantanamo Bay or Hong Kong. Using this vast influx of money (that, unlike EU aid, would actually go for the use of the Greek government), and a lot of Russian industrial attention, Greece rebuilds as the newest member of the Totally-Not-A-New-USSR sphere of influence. Ukraine faints in horror. NATO shits itself. We start edging towards a new, serious Cold War.

Now these options tend to run from best to worst for Germany and France, and from worst to best for the average Greek citizen.

There’s a very significant danger that if the Greek economy totally collapses — quite possible in (1) or (2) — that the fascist far right will take over. This is what happened to Germany in the early 1930s, and we all know how that turned out.

On the other hand, if Greece damages the German and French banks badly enough, there’s a similarly significant danger that the Euro will dissolve in a welter of debt and bad feeling. This would do huge damage to central Europe, economically, as well as greatly destabilizing the European political situation.

By far the smart move, as far as I can tell, would be (3) — the EU compelling the banks to abolish Greek debt and restructure Portugese, Spanish and Irish debt to more manageable levels. This seems to me to have the greatest chance of keeping Europe whole, maximising the potential livelihoods of EU citizens, and stopping the failure of the EU. However, neither the banks nor Greece really want this, and the EU itself is terrified that if it does this, it’ll have to offer an identical clean sweep deal to half of the rest of the EU. Bank wealth is based on debt, not holdings, so the central European banks would lose vast amounts of power. No-one wants to be the executive who wiped out half his bank’s resources, so this seems the least likely of the five.