The news from Greece continues to get worse. As protests and demonstrations against the new austerity measures break out across the country, the euro was shaken yet again as investors worried about Greece.
This time, though, investors aren’t worried about the math; the Greek cabinet has agreed to the latest round of spending cuts and the IMF and the major European economies, including the foot-dragging Germans, are all committed to the multi-year, multi-billion euro bailout.
What worries investors now is whether the Greeks will stand for it. Will Greek society resist the imposition of savage cuts in salaries and public services, and will the government’s efforts to reform the public administration and improve tax collection (while raising taxes) actually work?
The answer at this point is that nobody knows. On the plus side, the current Greek government is led by the left-wing PASOK party. The trade unions and civil service unions not only support PASOK; in a very real way they are the party. Although the party’s leader George Papandreou is something of a Tony Blair style ‘third way’ politician who is more comfortable at Davos than in a union hall, the party itself is one of Europe’s more old fashioned left wing political groups, where chain-smoking dependency theorists debate the shifting fortunes of the international class war. The protesters are protesting decisions made by their own political leadership; this may help keep a lid on things. If a conservative government had proposed these cuts, Greece would be much nearer to some kind of explosion.
On the minus side, the cuts are genuinely harsh, with pay cuts for civil servants of about 15% and the total package of government spending cuts set at 10 percent of GDP. (In the United States, that would amount to federal and state budget cuts totaling more than $1.4 trillion, almost one quarter of the total spending of all state and local governments plus the federal government combined.) The impact on Greek lifestyles will be even more severe; spending cuts that severe will almost certainly deepen Greece’s recession. Many Greeks stand to lose their jobs and, as credit conditions tighten, may face losing their homes and businesses as well.
The Greeks are a highly cultured people; the most popular slogan at the rallies was “The Croesuses should pay.” Croesus was, of course, the extremely wealthy king of Lydia whose story appears in Herodotus. The point of the protesters is that the rich should pay the costs of the economic crisis not the ‘blameless’ ordinary people whose only sin is to have voted for generations of demagogic politicians who promised to give them the moon and pay for it with other people’s money.
They have a point, of course, but in Greece the global economy is a highly mythologized place. The vicious IMF is the arm of American imperialism; the EU’s failure to defend Greece from the monster is a strategic victory for American power. Greece is one of those countries like Argentina where conspiracy theories are widely seen as important intellectual breakthroughs. As in Egypt and Russia, in Greece only a fool believes anything that authorities say; it must all be deconstructed to reveal the plots within.
In all these cases, belief in hidden forces manipulating reality in the service of cleverly diabolical plots reflects the experience of history and, in some cases, the realities of contemporary life. (more…)