I'm cynically amused by the indignant bleatings of so many bureaucrats, Eurocrats and technocrats about the temerity of the Greek government in calling for a referendum on the European bailout proposals for that country, so that the nation's citizens can decide for themselves whether they're in favor of them or not. The European 'powers that be' are so used to dictating solutions, in defiance of democratic norms, that they're outraged at the thought that their plans and proposals may actually be rejected by those upon whom they're trying to impose them. As Daniel Hannan put it:
I wish I could convey the sheer horror that [the Greek] proposal provoked in Brussels. The first rule of the Eurocracy is “no referendums”. Brussels functionaries believe that their work is too important to be subject to the prejudices of hoi polloi (for once, the Greek phrase seems apposite). Referendums are always seen as irresponsible; but, at a time when the euro is teetering on the brink, Papandreou’s proposal was seen as an act of ingratitude bordering on treason.
Across the palaces and chanceries of the continent, Euro-elites closed ranks. Nicolas Sarkozy’s spokesman described Papandreou’s announcement as “irrational and dangerous”, Angela Merkel’s called it “irritating”, Silvio Berlusconi’s “negative”. Such phrases, in the mouths of government officials, suggest purple, choking rage.
The Athens establishment lined up with them. Antonis Samaras, the leader of New Democracy, vowed – with splendid disregard for his party’s name – to prevent a referendum “at all costs”. Constantine Michalos, the president of the Athens Chamber of Commerce, called the proposal “an act of political blackmail”. All these insults were provoked by the suggestion that people be allowed to determine their future through the ballot box.
There's more at the link.
Of course, there's a serious risk that the Greeks may reject the rescue package; in which case, the Eurozone (i.e. those European nations which have adopted the Euro as their common currency) will be plunged into chaos. Greece will almost certainly have to default on its massive indebtedness, and leave the Eurozone, and reinstitute its former currency, the drachma. Its economy will likely collapse as a result, or at least suffer years of serious disruption. On the other hand, there are many (including myself) who'll affirm that the Greeks have brought that result on themselves. Economic corruption and greed have been so endemic there that it's a wonder Greece has survived this long. As the Telegraph points out, 'There are more Porsche Cayennes registered in Greece than taxpayers declaring an income of 50,000 euros (£43,800 - about US $68,500) or more'.
The same reluctance to allow voters a say in European matters is evident in many other countries, of course. Britain's major political parties have steadfastly refused to call a referendum on whether that country should withdraw from the European Union or not, despite evidence that seven out of ten voters want such a referendum. German Chancellor Merkel and her ministers have outraged many members of the Bundestag by prevaricating - some would say outright lying - over the implications of the successive Eurozone bailout schemes, appearing to subvert Germany's constitution and sidestep its electorate in the process.
(Here in the USA, we've seen the same reluctance on the part of those who govern us to take any heed of our views. Remember Obamacare? Opinion poll after opinion poll showed that the overwhelming majority of the American electorate hated it and wanted it stopped . . . but it was rammed through anyway. The same lesson applies here as much as in Europe: those in power don't care what the electorate thinks. They believe they know better than we do.)
I said last week that the European 'rescue package' was doomed to failure. It's coming unraveled even faster than I thought . . . and all the consequences previously discussed are now almost inevitable and unstoppable. As Ambrose Evans-Pritchard correctly observes:
Greece’s astonishing decision to call a referendum – "a supreme act of democracy and of patriotism", in the words of premier George Papandreou – has more or less killed last week’s EU summit deal.
The markets cannot wait three months to find out the result, and nor is China going to lend much money to the EFSF bail-out fund until this is cleared up. The whole edifice is already at risk of crumbling. Société Générale is down 15pc this morning. The FTSE MIB index in Milan has crashed 7pc. Italian bond spreads have jumped to 450 basis points.
Unless the European Central Bank step in very soon and on a massive scale to shore up Italy, the game is up. We will have a spectacular smash-up.
. . .
When the history books are written, I think scholarship will be very harsh on the handful of men running EMU monetary policy over the last three to four years. They are not as bad as the Chicago Fed of 1930 to 1932, but not much better.
So no, like the Spartans, Thebans, and Thespians at the Pass of Thermopylae, the Greeks were sacrificed to buy time for the alliance.
The referendum is a healthy reminder that Europe is a collection of sovereign democracies, tied by treaty law for certain arrangements. It is a union only in name.
. . .
And as my old friend Gideon Rachman at the FT writes this morning: the Greek vote is “a hammer blow aimed at the most sensitive spot of the whole European construction – its lacks of popular support and legitimacy.”
Again, more at the link.
The EU's troubles can't help but spread to the rest of the world as well. It's going to be grim for all of us, friends. Hang in there.
Peter
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