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Our latest guest blog from Advisory Council Member Bryan Gould – The Greek Crisis

Posted: June 29th, 2011 | Author: | Filed under: The People's Pledge Blog | Tags: , , , | 7 Comments »

Europe’s politicians and bankers have no one to blame but themselves for Greece’s current agony, but they insist that the price of their foolishness should be paid – not by any sacrifice on their own part – but instead by ordinary Greeks.

The euro-zone was always a disaster waiting to happen.  Yet, even now that the inevitable has arrived, the architects of the arrangement insist that is for the Greeks to accommodate painful reality, and that their own illusions and self-deceptions should remain intact and unchallenged.

We do not need the benefit of hindsight to know that it was always going to turn out like this.  Many of us warned from the outset (and even before that, when the euro-zone’s predecessor – the Exchange Rate Mechanism – was coming unstuck) that the euro owed much more to the grandiose posturing of politicians than to economic rationality.

Writing in the Guardian on 14 August 2000, for example, I warned that “in a single economy, subject to a single monetary policy, productive capacity will concentrate in the most productive parts of that economy. Monetary policy will necessarily be framed in the interests of that most productive part. Other less productive parts will find it difficult to live with unsuitable monetary conditions. In the long run, they will, in effect, close down. This loss of economic activity will eventually depress the level of demand and activity in the economy as a whole.”

I had in mind exactly the situation the Greeks now find themselves in.  The Greeks’ own foolishness may have contributed to their plight, but they were urged on into a quite unsuitable set of obligations by senior – and wealthier – partners who assured them that all would be well.

Those senior politicians and bankers who insisted that the euro was a valuable and necessary step towards greater European unity (for which read the emergence of a European superstate, with a single Europe-wide government) must have known that bringing widely disparate parts of a wider European economy, with all their differing strengths and more particularly weaknesses and – most importantly – stages of development, under a single monetary policy would impose huge strains on the weaker members.

The reality has, however, turned out to be even more cruelly callous of Greek (and perhaps, in due course, of Portuguese and Irish, and even Spanish and Italian) interests than even we Jeremiahs had warned.

The euro has, in effect, betrayed the Greeks twice over.  First, they were duped into believing that monetary conditions which were generous enough to allow the Germans to develop and expand could be accommodated in Greece without creating a borrowing and asset bubble that would eventually burst.

And, secondly, they had been led to believe that, if the going got too tough, the quid pro quo for taking on the challenge of sticking with the euro and feeling the pain of that for a time, was that the richer partners would come to their aid, with loans and regional assistance packages to ease them back into a prosperous future within the eurozone.

Such an implicit guarantee was after all the only condition on which a weak and under-developed economy like Greece could possibly take the risk of footing it with an economic powerhouse like Germany.

Foolish Greeks!  They should have got it in writing.  When it came to the reckoning, a German Chancellor – answerable to German taxpayers – showed herself unwilling to honour the cheque.  The Greeks, having been lured into the trap, now find that their gaolers have walked away with the key.

The “remedies” so far applied to this desperate situation do no more than buy time while the politicians and bankers work out how much they can salvage.  The cure they prescribe for Greece is, of course, worse than the disease.  The time bought is merely a further period during which ordinary Greeks are required – in a futile attempted defiance of economic logic – to make the attempt to repay huge debt while decimating what they produce.

The authors of the catastrophe meanwhile will tolerate no questioning of their grand design.  People may suffer, austerity and penury may rule, countries may founder, but the sanctity of the euro project must not be questioned.  Nor must be the right of bankers – however irresponsible their lending – to reclaim what they’re owed, plus interest.

In these circumstances, what should the Greeks do?  Their government has no doubt that they must bite the bullet and condemn themselves to hard times for a generation or more.  The ordinary Greek, however, says that it is those who created the disaster who should bear the brunt.

I do not often agree with Boris Johnson.  But, on this occasion, he is right.  If I have to choose between the posturing of politicians and the greed of bankers on the one hand, and the decent lives of ordinary people on the other, there is no choice.  The Greeks must default, abandon the euro and make a fresh start.

Bryan Gould, is a member of the People’s Pledge Advisory Council and was Labour MP from 1974–79, and again from 1983–94. He was also a member of the Labour Party’s Shadow Cabinet from 1986–94.

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7 Comments on “Our latest guest blog from Advisory Council Member Bryan Gould – The Greek Crisis”

  1. 1 Ken Wyatt said at 11:31 am on June 29th, 2011:

    Isn`t rather late for people to be coming out of the woodwork `enlightening` people about something they aleady new was coming!!

  2. 2 Jack Rainbow said at 3:38 pm on June 29th, 2011:

    Lend us £20 to get some leaflets printed, guv. Please.

  3. 3 Mr John Bodkin said at 7:57 pm on June 30th, 2011:

    We ordinary mortals, could see all this coming,the one size fits all of the Socialist psychology, and doctrine, and of course, we ordinary mortals, have no knowledge of ministerial; affairs of state, so,we need educated people to govern and guide us. So, where the hell are they.
    The Labour party, licking its wounds, trying to find a way back, to the status quo, the Libdems, sulking as they did not get a strong enough position to hand us over lock stock and barrel to the EU dictators, and of course the Tory party,instigators of the scheme to ruin the countries of Europe,cutting back public sector pensions, with dire warnings if we dont accept it, yet, in the same breath, looking around the world to blow money on crackpot schemes, African Countries who are sick of handouts, and want practical help,and the biggest spend of all, the EU, where spending our money is no object, as long as we have a silly Sammy, to maintain the input.
    Yes, the Greeks should pull out,and stand on their own feet, but the EU will not let them, as they lose control. This is what its all about. This is why our leaders will not listen to us, as their heads are up in the clouds of promised presidency’s, they did not learn from Blair.

  4. 4 Brian Denny said at 12:57 pm on July 1st, 2011:

    To Mr John Bodkin, the entire euro project was promoted by the Tory Party form the beginning and continued by New Labour as I suspect you know, the one-size fits-all psychology is a corporate one, not a socialist one

  5. 5 Jack Rainbow said at 7:44 am on July 2nd, 2011:
    21 June 2011 Last updated at 17:42
    Greece crisis: Is there a solution?By Robert Plummer and Laurence Peter

    BBC News

    Plummer and Peter, a stand-up act under failing management. They do their rabbit rabbit thing, being very careful not to ACTUALLY CRITICIZE the EU. And then offer 5 possible outcomes. All complete shit. Item 4, though might be a real piece of feculent fantasy, that ‘Greece Quits Euro – for A While.’ Don’t laugh, I haven’t made it up, its right there on the link I’ve given, go and enjoy it yourself. Bryan, is it actually possible that having had the good fortune to quit the Euro, they would actually return for another beating?

  6. 6 dornye said at 4:29 pm on July 7th, 2011:

    I want to see the european union to collapse in on itself because they are nothing but a bunch of self serving 3rd rate comedians/comediens. Serves the b******s right. It’s a pity CAMERON did not heed the 3/4 of the population who want to come out of it? He will get his comeuppance at the next election.
    I intend to vote for a party who will listen to what we want NOT these idiots promoting their own agenda’s.

  7. 7 Mrs Jenny Carter said at 8:18 pm on July 13th, 2011:

    David Camron is weak not standing up to the EU and there rules, some how the goverment should have supported Derby based Bombardier to have the contract for the coaches, but now this company will have to lay of very experienced people.
    Chancellor George Osborne said we want the word Made in Britian, Created in Britian, Designed in Britian, Invented in Britian to drive our nation forward. They are weak and gutless.