Let’s look at the cradle of democracy, shall we?
The Greeks have been basking in the reflected glory of those halcyon days of early Athens when the Aegean sun shone brightly for them. The problem is that they have been basking for far too long and now it’s time to pay the piper…or the troika…as the case may be.
As you probably know, the “troika” is comprised of those bothersome bureaucrats from the IMF, the ECB and the EC…also known respectively as the International Monetary Fund, the European Central Bank and the European Commission.
The troika is due to return to Athens in September to make a ruling on whether to release additional funny money to Greece.
To make matters more complicated still, during September, the Greek parliament will have to pass a number of measures to generate €11.5 billion in savings for 2013-14. With a high degree of austerity fatigue in Greece, we can expect social unrest. It’s been a quite summer but there is nothing that flares tempers more around the Mediterranean and Aegean seas than a hard dose of austerity.
If the troika decides not to play ball, then Greece would default and exit the EZ. The Greek government aims to renegotiate the second bailout program when the troika returns to town so that they can kick the austerity (and riot) can down the road.
Basically, they will say…
”Listen guys (and Angela), things have been tough but we’ll get there. We always do. We’re Greeks. We’re the founders of democracy. You can count on us. We just need a couple years’ more than we first thought. But if you can give us an extra 2 years, we’ll get the deficit down to 3% of GDP for sure. We just need more time”.
Doesn’t it remind you of that guy being shaken down by the mobsters who are threatening to break a leg or two.
The problem with Greece is that despite their protestations, they have a dubious history when it comes to paying their debts.
They were bailing on their bills as far back as the 4th century BC. In fact, they’ve defaulted at least 5 times in the past 200 years or so. And it’s not just Greece. Plenty of governments have defaulted over the centuries. It’s what they do.
But if the troika plays hardball and does not grant the Greek government any concessions, then the governing coalition will probably collapse and it will be “Sayonara Eurozone”.
So it’s probably reasonable to expect some more fireworks from the birthplace of democracy / bastion of bailouts over the coming month.
Next stop…Italy. O mama mia!
