Greece And The Euro

Looks like Prime Minister Papandreou has backed off of his plan to hold a referendum on the EU "rescue" [read: punishment] plan for Greece. Lots of pressure from EU members, especially France and Germany, and also from the US.

I could be wrong, but in the end I think it will make no difference. The Euro zone was a jerry-built house that is likely to collapse sooner or later, what ever happens with Greece. The Greek people could still trigger a fall of the Papandreou government and cause early elections. Even if that doesn't happen, the mood of the electorate is not likely to be any better when elections are scheduled next year. That is, I don't think another year of pain and austerity, recession, lost jobs and poverty in order to avoid displeasing German bankers who dominate the European Central Bank will improve their willingness to passively accept their fate.

What might alleviate the displeasure in Greece as well as in Italy, Spain and Portugal would be an ECB program to expand the economy. That doesn't seem to be in the cards. The beatings will continue until morale improves.

It can't help the situation that the European Commission agent in Athens to "help" the Greeks is Horst Reichenbach, a German former official of the European Bank for Reconstruction and Development. Not surprisingly, older Greeks remember the last time that Germans came to run the affairs of Athens. They aren't fond memories.

The late historian Tony Judt, in his seminal history, Post War, revealed the extent to which young Europeans of the World War II generation received their first experiences of government planning during German occupation. They learned the techniques and were exposed to a vision of the possibilities. The European project has been, to a greater extent than most Americans realize, an outgrowth of that experience. One legacy has been a tension between a generation who view themselves as European and an overlapping generation who take a more nationalist view of self-determination as an ideal.

It isn't yet clear how the tension will be resolved in Greece. I wouldn't bet against a return of nationalism.