Sunday, July 05, 2015
Greece - Damned If You Do, Damned If You Don't
It's something of a "heads I win, tails you lose" proposition. Be it Yes or No, the Greek people are pretty much screwed either way.
As observed in Der Spiegel, even if the Greeks accept the terms they'll be stuck with debts they have no reasonable prospect of repaying - as in none, ever.
The German press seems to be blaming their Chancellor, Angela Merkel, for being too soft on the Greek's Syrzia government. The cover of the German edition speaks for itself.
The Guardian is predicting a 61% win for the No side. Doubtless some will say that given the referendum was called on such short notice, even that win is less than decisive.
What's totally unclear is how the IMF and European Union will respond. They might go thermonuclear and expel Greece, the Grexit option which is sort of like holding a gun to the Greek people's head and another to your own.
Having done a lot of insolvency work in my time, it's dismaying to see how irrelevant reality is to this disaster. The Euros, especially Merkel, need to understand that there are no debtors prisons any more. There was a time not all that long ago when we forgave Germany for debts and a lot of other things right up to and including the Holocaust. The quality of mercy thing...
When you're dealing with an insolvent you need to find a deal that works for creditor and debtor alike. It has to give the creditor more than they could receive otherwise while leaving the debtor motivated to pay what it can. There has to be light at the end of the tunnel. If you leave the debtor without hope, usually you're both screwed.
Athens' creditors need to accept reality, figure out how much Greek debt needs to be forgiven, and strike a deal. Or not.
As for the No side, they're already celebrating their referendum win. This is a big day, especially for young Greeks who played no role in their country's collapse but were looking at paying a punitive price indefinitely. I think this picture captures their mood perfectly.