€urosclerosis: A Greek is revolting

From


Greek Leftist Leader Throws Down Gauntlet on Debt


By JAMES ANGELOS And ALKMAN GRANITSAS

ATHENS—The head of Greece’s radical left party says there is little chance Europe will cut off funding to the country and if it does, Greece will repudiate its debts, throwing down a gauntlet that could increase tensions between Greece’s recalcitrant politicians and frustrated European creditors.

A financial collapse in Greece would drag down the rest of the euro zone, says Alexis Tsipras, the 37-year-old head of the Coalition of the Radical Left, known as Syriza, and potentially the country’s next prime minister. Instead, he says, Europe must consider a more growth-oriented policy to arrest Greece’s spiraling recession and address what he calls a growing “humanitarian crisis” facing the country.

“Our first choice is to convince our European partners that, in their own interest, financing must not be stopped,” Mr. Tsipras said in an interview with The Wall Street Journal. “If we can’t convince them—because we don’t have the intention to take unilateral action—but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors.”

According to recent opinion polls, Mr. Tsipras’ party is poised to win the most votes in repeat elections next month, bettering its surprise second-place finish in an inconclusive May 6 vote that left no party or coalition with enough seats in Parliament to form a government. With Mr. Tsipras poised to win pole position in the coming vote, it raises the risk that Greece will soon face a showdown with its European creditors over the contentious austerity program that Athens must implement in order to receive fresh aid.

The cynic in me says, “Let ‘em! After all, it’s going to happen sooner or later anyway.”

Mr Tsipras believes that he has the rest of Europe over a barrel, and to some, he probably does, but if the next installment of foreign aid, €173 billion, does not come through, the Greek government “won’t have enough money to pay for basic services like schools and hospitals.”

Of course, Greece could always just start printing drachmas — assuming it withdraws from the euro — to make payments, but that has never really worked anywhere before. Inflation runs rampant at the same time that the local currency devalues against foreign monies. If Greece could stick to a strict policy of not importing foreign goods, it could be made to work, but that would be difficult considering that Greece has no domestic petroleum production, and must rely completely on imports for all its oil. Without petroleum fuels, Greece grinds to a halt, and a rapidly devaluing drachma would mean that oil prices would skyrocket, since oil producers would demand either dollars or euros.

However, Greek voters might very well like Mr Tsipras’ message, and give him their votes. They are a free people, and have every right to commit economic suicide.

Hey, maybe my darling bride and I can take that summer vacation on Santorini! If Mr Tsipras does as he has threatened to do, we can probably get a nice whitewashed villa for $2.14 a week.

One Comment

  1. Actually, we could probably retire to Santorini! Social Security alone, at what the exchange rates between dollars and drachmas would be, could let us live like royalty.

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