Greece reflects growing economic turmoil

By Stephen Lendman

Straightjacket Eurozone rules trap 17 dissimilar countries. Greece proved most vulnerable. It's cratering under imposed austerity. It's the epicenter of Europe's deepening economic crisis. Fed up Greeks want change. May 6 parliamentary elections favored anti-austerity candidates.

Coalition talks failed. On June 17, new elections may or may not settle things. Round one runner-up SYRIZA (the Coalition of the Radical Left) campaigned on "tear(ing) up the barbaric accord." 

On Greece's NET TV, its leader Alexis Tsipras said:

"We are being asked to agree to the destruction of Greek society. SYRIZA won't betray the Greek people."

It's expected to emerge first and gain an automatic extra 50 parliamentary seats. Polls show it's gaining strength. With or without enough support, forming an anti-austerity coalition looks problematic. 

How far an eventual government will go remains to be seen. Policies usually belie campaign rhetoric. Beleaguered Greeks want promises made fulfilled. Getting relief is another matter entirely.

According to Michael Hudson:

Across Europe, "(l)eft-wing parties, socialist parties, labor parties all say that they're going to preserve the social contract, and as soon as they get into power, they sell out to their financial backers, they double cross labor."

Preserving Europe and saving banks comes first. People needs don't matter. Sacrifice demands deep social cuts, unemployment, and poverty. Few have the political will to refuse. So far, no Eurozone country dared. 

Expect hard times to get harder unless public rage forces revolutionary change. That's a bridge not yet crossed.

On May 11, the Financial Times headlined "Greece is falling out of Europe," saying:

Greeks reject austerity. "You can scarcely blame them for throwing out a corrupt political establishment. It is also indisputable that the economic prescription written by its international creditors is astonishingly harsh."

Nonetheless, the FT claims:

"Greece is sailing between the Scylla of creditor-imposed depression and the Charybdis of the chaos of unilateral debt repudiation and exit from the euro."

Breaking up is hard to do. So is major surgery. Healing and recovery take time. It's done because the alternative is unacceptable. Greece faced that choice long ago. It kicked the can down the road and did nothing. It agreed to impoverish its people to pay bankers.

It delayed, equivocated, sacked an elected prime minister, and replaced him with a Goldman Sachs connected unelected one. Temporary government will serve until elections produce a new one.

Council of State (the Supreme Administrative Court of Greece) head Panagiotis Pikramemos serves as interim premier. President Karolos Papoulias appointed him. Technocrats are in charge until post-election. It's main task is to prepare for June 17. According to Greece's constitution, it can't enact new laws.

Earlier Pikramemos ruled that bailout conditions and IMF mandates don't violate Greece's constitution. Austerity remains policy. A SYRIZA-led government may be too weak to change it. 

Elections rarely settle things. Whether public rage shifts the balance isn't known. It's close to exploding. People don't want new bums replacing old ones. They won't likely get what they want. 

Likely coalition partners SYRIZA and the Democratic Left (DIMAR), its spinoff, oppose austerity. They also insist Greece must maintain the euro "at all costs." Tsipras said leaving would be "disastrous." He'll "do all (he) can" to prevent it. 

To form a new government, he'll need one or more conservative partners unless SYRIZA's popularity soars well above its 28% level. DIMAR has around 5%.

Keeping the euro requires following Troika (EU, ECB and IMF) diktats. Otherwise expect Eurozone expulsion. Bailout funds going mostly to bankers end. SYRIZA faces heavy pressure to yield.

Tsipras wants bailout terms renegotiated. He pledged to cancel "austerity measures and (rebuild Greece) from the ruins left behind by the parties of the cuts." 

No concrete demands were made. Troika leaders won't renegotiate. A SYRIZA-led government won't get much choice. In the end, expect business as usual to continue. At most, Troika rules may be modestly softened. It'll be too little to matter. What's next is anyone's guess.

Opinions vary on Greece leaving the euro. Some analysts ask if it's ready to go it alone? Others say it's inevitable. Will exiting trigger other departures? Other troubled economies could follow. Ireland, Spain and Portugal are especially vulnerable.

Falling euro currency valuations suggest uncertainty. Even before exiting, Greek banks could collapse. From January 2010 through March 2012, nearly one-third of deposits were withdrawn. In recent days, nearly another $1 billion sought safety. More does daily to avoid devaluation if the drachma's restored.

Greek bankers told President Papoulias they're worried about surviving if depositors shift funds abroad. According to economist Yannis Loannides, it's a "very serious problem." The only way to stop a bank run is for the ECB to guarantee deposits heldby regional lenders to guard against contagion.