Just who's taking who for a ride?

Celebrating?  I’d hold off a while before I know what there is to celebrate.  The deal that Greeks voted on was withdrawn last week by the EU negotiators.  A Yes vote would have meant an immediate General Election and the financial insecurity of nobody to negotiate on behalf of Greece with the EU.  A No vote means that there is no money in the banks tomorrow nor the day after that and the black economy is taking off like a rocket.  Neither eventuality will bring in the money needed by the Greek government to run the country.  Simply the question is about the unsustainable nature of Greeks historic debt. 

Soon a No vote may likely also mean that the Greek Government will meet bills as they arise by issuing IOUs which will eventually become tradable and may form the basis of a new currency, possibly a revised drachma.

But here’s where the big problem may start.  Currencies are tradable against one another.  Greece is very different to Ireland as Greece has a sizeable internal economy with less international trade as a percentage of GDP.  It earns a lot of foreign revenue from tourism.  Any new currency will drop in value by the day.  This will drive inflation upwards and make the country uncompetitive.  Sunseekers can get their tan elsewhere if prices rise. Greece’s enormous debt to its EU partners can’t hop on board and high tail it out of town.  It’s attached to a creditor nations set of accounts and it must be accounted for as it affects the interest rate paid for government bonds to fund short term loans.

In other words if it is written off or down, who is going to compensate a creditor nation and how can that possibly be done?  And here’s the rub, while we’re in for about €500M all told, other nations are up to their necks in it.   

I’d be very nervous of what may happen to Greece.  Let’s be honest about it, would you live their life?  What we suffered during the slump was in the half penny place compared to Greece.  In the last few days the cute nod was been given to the Greeks by the IMF and Wolfgang Schlaube that made it easy to vote no.  Already the country can hardly afford medicine nor to allow more than €50 to be deducted daily from a bank, that’s if you can find a bank ATM that works. 

Perhaps the Germans have calculated that Greece may be let go from the Euro but kept in NATO and the EU?   Moreover the right wing nationalist party supporting Syriza backed the wrong horse on this referendum.  So Syriza may be left relying on Golden Dawn as they did in this week’s referendum to continue in office.

The Irish backdrop to this is the forthcoming General Election and the arrival of Syriza’s BFF Pearse Doherty and Paul Murphy into town to get in on the PR.  Try tell Pearse that Larkin, once talking about nationalism, said that you cannot eat a flag.

Sinn Fein and AAA’s logic is simple.  The Troika should go and take their money with them.  The magic money tree will provide.  But in Greece Syriza are happy to charge for water and tax those who own property and don’t plan to change that.  They also accept that wealthy people will simply shift cash by the click of a mouse to another jurisdiction so aren’t breaking their neck to tax the rich.   Some aren’t too keen to have this pointed out.  Slogans are easy and simple to understand, so too are celebrations.  How likely is it that the majority of Greeks got to read and understand even the executive summary of both documents that were before the people today?  But that’s democracy.

But reality is more complex.  The referendum was not about changing the figures, it was about getting the nation behind its strategy.  The Greeks now will table their new proposals and including them this time on the right attachment. We’re no nearer the light switch. Let’s keep the celebrations until we’re all out of the dark.