Friday, June 15, 2012

Greece’s Creditors Matter as Much as Its Voters

June 15, 2012

Spare a thought on Sunday for the ordinary Greek voter. These are the people who paid their taxes, weren’t corrupt, didn’t get early retirement as hair stylists, and whose sons and daughters are rioting or emigrating because they’ve no prospect of employment for a decade to come.

There are many such Greeks. They’re the object of a cacophony of warnings that if they support the wrong party on Sunday, they will trigger Europe’s economic implosion, their own, or both. With Spanish and Italian bond yields soaring Thursday, in Spain’s case to an unsustainable 6.95 percent, that isn’t hype. Europe is unprepared for Greece to leave the euro.

In the past few days, Greeks have heard from German Finance Minister Wolfgang Schaeuble that they can expect no relief from austerity. His U.K. counterpart, George Osborne, said Germany may even want Greece to leave the euro, because that would help persuade German taxpayers to rescue more important economies. An interactive online game to create Greek scenarios includes a maze of 57 possible steps that all end badly, if in different ways.

This is bewildering stuff, so it’s more than possible that the outcome of Sunday’s election will spell yet more trouble for Greeks themselves and for the wider European economy. The reason to focus on ordinary Greeks -- neither less virtuous than ordinary Germans and Frenchmen, nor more responsible for the euro’s imbalances -- is to prevent a haze of blame from clouding decisions that the country’s international creditors will have to make after the vote to minimize the fallout. Given the dismal choices on the ballot, how Greece’s creditors behave will matter at least as much as how its citizens vote.


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