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Unsurprisingly, the politicians involved in creating the package were optimistic. Greek prime minister Lucas Papademos, called it a “historic day” for the country. Greek Finance Minister Evangelos Venizelos claimed “a nightmare scenario was avoided,” and that the deal is “maybe the most important in Greece’s post-war history.” Jose Manuel Barroso, President of the European Commission, contends the deal “closes the door to an uncontrolled default that would be chaos for Greece and Greek people.” British Chancellor George Osborne characterized the deal “as good for Britain, because resolving the eurozone crisis would be the biggest boost that Britain could get for its economy this year,” while Jean-Claude Juncker called it “a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing and hence for safeguarding financial stability in Greece and in the euro area as a whole.” IMF head Christine Lagarde said she “personally welcomed the agreement,” even as it remained unclear exactly how much funding the IMF would contribute to the package.
Their optimism was more than offset by others. “The austerity measures [Greece] will have to implement and increased monitoring by the troika (the European Commission, ECB and IMF) amidst public outrage will make things harder and drive it deeper into recession,” said Jennifer McKeown, senior European economist at Capital Economics. “There is a risk of a euro zone exit later this year.” Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt agreed. “Greece will find it difficult to shoulder even the reduced debt in the long-run if it does not implement far-reaching reforms,” he said. “The probability will rise in the second half of the year that a frustrated EU stops payments to Greece,” he added. “Does this alleviate the risk of imminent default?” posed Callum Henderson, global head of foreign-exchange research at Standard Chartered PLC in Singapore. “Yes, but not further out. Further out, the concerns of a default will keep coming back.”
Adding weight to the belief that Greece’s problems are far from over, a nine-page confidential report prepared by experts from the EU, ECB and IMF said that Greece would likely need “extra relief” given the worsening state of the economy, noting that even with the bailout, the “Greek program may thus remain accident-prone, with questions about sustainability hanging over it.”
Yet there was also a leaked document from Germany that reveals exactly where this saga is really headed. Clause 2, under the section titled “Proposal for the improvement of compliance,” spells out that Greece “has to accept shifting budgetary sovereignty to the European level for a certain period of time.” Furthermore, a budget commissioner “will have broad surveillance competences over public expenditure and a veto right against budget decisions not in line with the set budgetary targets and the rule giving priority to debt service.”
In other words, whether or not Greece remains in the EU, there can be no dispute that national sovereignty hangs in the balance. Furthermore, this ongoing debacle once again reveals that socialism produces no heroes. On one side, we have the Greeks themselves, brought literally kicking and screaming to the reality that they have indeed run out of other people’s money to spend. On the other side, we have the trans-nationalist financiers and supra-national EU bureaucrats, concerned that Greek “contagion” may spread to other EU nations, most notably Spain and Italy, as well as banks in Germany and France. Yet that so-called concern for the plight of the Greeks themselves is disingenuous: there is little question that if contagion were not an integral part of the current equation, Greece would be (and may still be) left to its own devices.
Thus we have an epic tragedy that continues to unfold, even as it reveals the ultimate bankruptcy of socialism: the complete misunderstanding of human nature that engenders the unrealistic expectations of utopian overseers, and the ungrateful wards of their “beneficence.”
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