05.17.2012 9

Greece sets June 17 for new elections

Athens, Parthenon, Greece

Photo Credit: Arian Zwegers/Flickr

By Bill Wilson — Greece has set June 17 for new elections after a non-decision on May 6 left the Hellenic nation without a government.

Now all eyes are on Alexis Tsipras, who’s Coalition of the Radical Left party appears poised to overtake not only the once-ruling Socialists — which they already did on May 6 — but also the conservative New Democracy party, which had come in first place.

Combined, New Democracy and the Socialists — the traditional status quo parties that usually win — only got 32 percent of the vote, while more radical third parties garnered a combined 68 percent of the vote on an anti-bailout message.

Now, the most recent poll suggests that Tsipras’ party is leading, with his party garnering 25.5 percent to New Democracy’s 21.7 percent.

That is 9 points better than the Radical Left did in May, and is owed likely to Tsipras’ refusal to form a government that would accept the terms of the bailout agreement.

The deal cracked between the Socialists and New Democracy with the European Financial Stability Facility (EFSF), the International Monetary Fund (IMF), and the European Central Bank (ECB) was exceedingly unpopular with the Greek people.

Which is no wonder. Those terms were essentially imposed on Greece by Europe’s greater powers.

When Greek Prime Minister George Papandreou called for a national referendum on whether or not the Greek people even wanted to participate in the arrangement, he was promptly deposed in November by Brussels and replaced with a technocrat that would execute the deal.

Because of that, voters on the left have abandoned the Socialists in droves, and appear poised to put Tsipras into the driver’s seat.

That is the real key. Voters in Greece are not necessarily rejecting austerity per se. Spending was only cut by €6.3 billion from 2010 levels, or 5.5 percent. And the country still ran a €19.7 billion deficit, 9.2 percent of GDP, well in excess of the 3 percent provided for under the Maastricht criteria.

So the small cuts made in 2011 could have perhaps been tolerated. It is the loss of sovereignty by Athens that was unacceptable to the people.

After all, how would U.S. citizens react if China, Japan, and other foreign creditors suddenly started demanding that Congress raise taxes to pay back the gargantuan $15.6 trillion national debt? Citizens on the left and the right would reject the imposition by foreign countries on our fiscal sovereignty.

And any politician that went along with such a scheme would likely be deposed electorally.

So the ire of the Greek people against New Democracy and the Socialists is quite understandable. They were little more than quislings assisting an invading force.

Now the question is what Tsipras would do about it if he is elected to be prime minister.

For now, the Radical Left appears to be pretending that it is somehow possible to remain in the Euro without caving into the demands of the rest of Europe.

“We believe that if we have a negotiation we will win some things, because it’s very difficult for them to throw us out of the Eurozone,” said Gabriel Sakellaridis, the Radical Left’s economic coordinator.

Perhaps that is so. There certainly is no provision in European law for removing a country from the common currency. So, the radicals in Greece think they can impose terms on Germany and the other powers in Europe.

Maybe they will even argue Greece’s exit from the Eurozone poses such a systemic risk to banks across the continent, that Greece is too big to fail. And that Angela Merkel and the Bundesbank will have no other choice than to print all the money the Greeks demand to perpetually refinance their debts.

That may be an unreasonable proposition, but then again, they are radicals.

In the end, there will likely be one of two outcomes. None of the countries in Europe are following nor do they ever intend to follow the budget rules under which the Eurozone was founded in the first place.  And the ECB lacks the capacity to monetize debts.

So either the Lisbon Treaty will be amended to allow the ECB to do so, and richer nations will be forced to monetize the debts of poorer nations, or the Eurozone will be broken up piece by piece.

The alternative would be for every country to sacrifice their fiscal sovereignty to Brussels, and to follow the budget rules they all signed up for. But that’s not going to happen. That ship has already sailed.

Similarly, it is hard to imagine a scenario where Merkel will ever accept the terms of the Greeks, importing their inflation brought on by being forced to print the money to refinance the gargantuan debts of Greece, Portugal, Ireland, Spain, and Italy. After all, that would be an affront to German sovereignty, too.

Which leaves a breakup of the Eurozone. Should Tsipras win and then negotiations with Berlin fail, Greece will be unable to make payments on its debt in Euros. The nation’s only recourse will then be to revert to the drachma — even if it sets off a chain reaction wrecking the Eurozone.

In fact, that may be the only solution that preserves the sovereignty of the Greek people — and of every other person in Europe. For the sake of freedom, it may be the only way. Liberty is always a greater priority than any temporary recession that might occur.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

  • Rheath00


    America is still paying it’s debts when they come due (last time I checked), so your contrast between Greece and the USA is of little value. The Greek people, who enjoyed years of indulgent government largess, are unwilling to pay the bill now that the feasting is over. And worse yet, they are poised to play chicken on the brink of a brewing financial catastrophe. Hard to empathize with this group of clueless ingrates, but you found a way.

  • rivahmitch

    The rest of Europe should harden their borders and let Greece sink. Damage outside Greece will be less now than if they continue to delay and add others of the PIGS to the mix. A permanent scheme of perpetually “loaning” money which will never be paid back makes on more sense in Europe that here.

  • pduffy

    Repaying with what? Freshly printed Federal Reserve Notes coming out of the U.S. Treasury? What a joke. The debt is being ‘monotized’ by the billions each day, that’s an effective ‘default’, Greece just doesn’t have the printing press, the EU does, and that’s the only real difference.

  • pduffy

    Well, China and our other creditors won’t be demanding tax increases. But they may go to war, as an ancient prophesy says,

    “And to him who loads himself with many pledges’? Will not your creditors rise up suddenly?Will they not awaken who oppress you? And you will become their booty. Because you have plundered many nations, All the remnant of the people shall plunder you, Because of men’s blood And the violence of the land and the city, And of all who dwell in it.” (Hab2, New King James version).

    Unpaid debt is fuel for war. Learn this lesson and learn it well. Never go into debt to your enemies, and never loan government money, expecting a return. It’s a lie.

  • Rheath00

    Still the coin of the realm pduffy, despite the debt being “monitized”. The USA is on a bad road, but the Greeks have reached the end of thiers. As long as there are buyers of US treasuy notes, and our currecy is still accepted: we are not in default. And just in case you really think the US currency you have has no vaule, I’ll certainly take it off your hands.

  • Jack

    As Greece was occupied during the Crimean and Cold wars, we must displace the current residents with Albanian Pelasgian aborigines (Kosovar Style) to keep them from giving the soviets access to the straits and propogate their Heresy of Photius.

  • pduffy

    The “bad road” you referred to always has the same end. I already dumped all my ‘paper’ assets into gold/silver and real estate, so I don’t have any currency or any kind of paper assets to send you.  I suggest that you buy a wheel-barrow with some of that paper, as you will be needing it to buy that loaf of bread.

  • Rheath00

    What do you pay your interent service provider with??

    You and I are not so different. I just am not ready, as you seem to be, to throw in the towel on the American experiment. Doom and gloomers have been around for decades (oh, have I had an earful) and yet the USA persists as a vital, growing (albeit slowly), powerful force on this planet. Could things be better: without doubt. Could they be worse: again, without doubt. It is too easy to look at the present circunstances and see nothing but bad, and sit back and predict armageddon: but this is still the best place on earth, and there are still many opportunities for success, for those willing to face the challenges.

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