The humiliation of Greece

The humiliation of Greece

Greece is going through an unprecedented national humiliation, and it's not pretty to watch.

A German television station has just published a poll which finds that 76 per cent of people there do not believe Greece is capable of paying back its debts.
In other words, most Germans believe that the enormous rescue package that will be probably be announced in the next few days is essentially a gift to the Greeks, regardless of any political spin about eventual repayment.

Not surprisingly, many Germans are upset, and question the wisdom of giving so much money to the profligate Greeks. Some are even suggesting it may be in Greece’s own interests to leave the Eurozone at this stage. One MP from the Free Democrats party, which is part of Angela Merkel's ruling coalition, is quoted in today's papers as saying "You don’t help an alcoholic by putting a bottle of schnapps in front of him".

So that's what it has come to. Greece is the sovereign equivalent of an embarrassing alcoholic, who always promises to kick the habit, but whom nobody believes. 

Here in Athens, there’s plenty of resentment towards the Germans. "It seems as if they want to see blood on the streets before they'll give us any aid" one economic commentator told me.  More hot-headed voices invoke the bitter memory of the Nazi occupation. But anger is not the only sentiment. This article in the New York Times describes a mood of contrition and shame in Greece

http://www.nytimes.com/2010/04/28/opinion/28iht-edkostandaras.html?scp=1&sq=The%20Kindness%20of%20Strangers&st=cse. 

The events of the past few days have also raised disturbing questions about the power of the credit-ratings agency.

Standard and Poors downgrades Greece, Portugal and Spain, and suddenly all of Europe is sent into an enormous panic. The future of national economies, and the welfare of many millions, seems to depend on the judgement of S & P, and the other agencies, Moody, and Fitch.

And yes, you are right, these are the same agencies which played such an inglorious role in America's sub-prime mortgage crisis, not so long ago. Robert Peston, the BBC Business Editors, has a good piece on this.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/04/rating_agencies_who_made_them.html
 
One thing is now very clear; if European leaders are to avert a financial and economic crisis spreading across the continent, the people of Greece will pay a heavy economic price.

The next round of austerity cuts will be brutal. So what is the mood on the streets of Athens?  You've seen the TV pictures of the protests and strikes, and they do make for dramatic images.

But, let's be honest, TV news is always going to struggle to capture the complexity, and range, of national emotions. For what it's worth, I still believe that the demonstrations on the streets of Athens in recent months have not been overwhelming in scale, and many Greeks seem to feel, however reluctantly, that they must keep faith with Prime Minister George Papandreou, and swallow the bitter austerity medicine.

Now, of course, that could change in the near future, as more cuts are announced, and the recession bites. 

Put simply, there are no rosy scenarios for Greece in the near future.