The BBC reports that there is a general strike in Greece over yet more austerity from their Europe Union partners. This stuff tends to be reported in the United States as though the Greek people are a bunch of ill behaved children who don’t want to take their necessary medicine. Most of that is correct—all except the word “necessary.” Greece has been through this many times before over the past two years. And what has it earned them? Nothing other than 25% unemployment.
Dean Baker comments that Greece has a lot more leverage than they have had in the past. He points to Argentina in 2002. They were in a huge amount of debt—more than Greece. So they defaulted. All the Serious People said this was terrible—it would be a catastrophe for Argentina. But it wasn’t. Instead, their economy quickly rebounded—unlike Greece that has taken what all the Serious People claim to be the correct path. So what if Greece defaulted and left the Euro?
Greece’s economy might finally be able to heal itself. And that would be a catastrophe—for the Euro Zone. If leaving the Euro was good for Greece, then Spain—which also has 25% unemployment—would certainly follow. And then perhaps Italy would leave. And Portugal. And Ireland! The whole damn thing could fall apart.
All the pressure on Greece and the other weak economies in the Euro Zone is coming from Germany. But just like the rich in the United States, they haven’t seen that more equity would make they position stronger. Nor have they seen that less equity could greatly harm them. But maybe—just maybe—they are starting to see the reality of their situation.