The Upcoming Showdown at the EU Corral

For the last few years I’ve wondered what will be the trip wire that brings down the world’s foremost experiment in transnational elitism, better known as the European Union. The shoveling of additional debt on top of previous debt, coupled with the pie-in-the-sky hope that it will somehow work itself out in the long run has just been dealt a severe blow. Led by Alexis Tsipras, Greek’s radical-leftist Syriza party assumed control of the Greek Parliament after its own electoral success was coupled with a coalition deal with the Independent Greeks party. The parties have nothing in common other than a similar contempt for the austerity measures imposed on Greece as a condition for the billions of dollars in bailouts it has received from the EU. The coalition now controls 162 seats in Greece’s 300 seat Parliament. In short, all hell’s about to break loose.

“Greek people have written history. The Greek people have sent a strong indisputable mandate for the country to leave behind it austerity,” Tsipras told thousands of supporters. “The new government will negotiate with creditors a fair viable solution – a solution for Greece to end its vicious cycle.”

That remains to be seen. Greece has amassed a debt of $270 billion since 2010, and the “troika” consisting of the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Commission (EC) that ponied up the funds isn’t exactly sanguine about taking a write down. This puts Germany, which has the EU’s strongest economy and has essentially functioned as paymaster for this undertaking, in a bind. They want the debt repaid in full with German Chancellor Angela Merkel’s chief spokesman Steffen Seibert insisting the need for Greece to uphold its commitments “is no different than before the election,” even as he noted Germany, “is offering to work with the new government. We have an interest in a very good, friendly Greek-German relationship.”

Germany’s central-bank chief, Jens Weidmann, put it in less friendly terms. “It is clear that Greece will remain dependent on support and it’s also clear that this aid will be provided only when it is in an aid program,” he said during an interview on TV’s ARD.

That’s not what Tsipras and his fellow travelers want to hear. The country has endured six years of deep recession, and even though the austerity they have undertaken has brought the nation back to a primary budget surplus projected to reach 2.9 percent in 2015 (minus the debt), such technicalities mean little to a nation where 25 percent remain unemployed and one-in-four Greek households hover near the poverty line. Syriza is determined to change that equation, promising immediate relief for the poor and a rollback of unpopular taxes, in addition to the aforementioned debt write down. And in keeping with their flight of fancy, they intend to do so while remaining in the EU and maintaining the Euro as their currency.

Greeks have bought into that message in a big way. As a consequence, they have reverted to their tax-dodging attitudes, which played a big hand in creating the crisis in the first place. The bulk of the shortfall, pegged at as much as 40 percent of projected revenues for January comes from the hated annual property tax known as Enfia – which Syriza has promised to abolish. Greeks have also stopped paying income tax and value-added taxes as well.

Moreover, they have withdrawn massive amounts of funds from banks, perhaps in anticipation of another Cyprus-like “bail in” during which depositors in Cyprus’s largest bank lost 47.5 percent of their deposits exceeding 100,00 Euros, after that nation agreed to a $30.5 billion rescue package. Apparently Greeks haven’t been waiting around to see if the same thing happens to them.

Polyxeni Konstantinou, a 56-year-old public-sector worker who voted in central Athens, illuminated what is undoubtedly a prevailing attitude among Syriza’s supporters. “Europe is self-destructing,” he contended. “I voted for Syriza because I hope that it will help change the tragic circumstances that now govern Europe. Will Syriza be able to achieve everything it says? Probably not. But whatever it does achieve, then that will be good for Europe.”

Whatever it achieves will occur in relatively short order. The ECB holds $7.85 billion in bonds that mature in July and August and Greece doesn’t have the money to pay them back. Hence a renegotiation of the debt, or a Greek exit from the eurozone is in the offing.

The showdown will be fascinating – in a frightening way. On one side, we have Tsipras and company, convinced they have leverage due to German fears of “contagion” that could spread to the far larger economies of other EU basket cases, more familiarly known as Spain and Italy. On the other side, we have Germany and a contingent of other EU nations opposed to debt relief because they aren’t as well off as Greece, or because they too remain in crisis in order to pay off their own bailout obligations.

As the Wall Street Journal explains, there are risks either way. “Policy makers are privately in little doubt that failure to agree on a deal with Greece would catastrophically destabilize the eurozone, playing into the hands of anti-EU fringe parties,” the paper states. “But a deal that delivers Mr. Tsipras a big dividend for his years of opposition to reform and fiscal discipline in Greece risks sowing the seeds for future instability by undermining support for pro-reform governments.”

Future instability? Last week the ECB announced their latest foray into Quantitative Easing (QE), promising to the flood the EU with newly-created cash to the tune of $1.16 trillion, sopping up $69 billion per month in assets that include government bonds, debt securities issued by European institutions, and private-sector bonds. Once again the transnationalist Keynesian debt-mongers, who still believe six years of underperforming or stagnant economies in Europe, and America, as well as two decades of stagnation in Japan, can only be cured by amassing even higher levels of already monstrous debt, have held sway.

What is really happening here, despite all protests to the contrary, is quite simple to understand: rather than come to grips with the massive amount of fiscal irresponsibility they have engendered in the quest for a socialist utopia, these elitists have completely mortgaged the future to pay for the present. Even more insidiously, they are doing so to stoke inflation because while inflation clobbers the little people they profess to care so much about, they can pay back the money they owe at cheaper currency valuations. In short, they are every bit as irresponsible – if not more so – than the Greeks and all the other EU nations who have recently discovered socialism’s “free lunch” siren song is an utter lie.

Remember that when you can’t get a decent return on your money anywhere but the stock market because the Zero Interest Rate Policy (ZIRP) embraced by our very own Federal Reserve in addition to QE is nothing more than a de facto tax on the middle class – even as these phonies, including our president, decry the increasing wealth gap they themselves engendered.

Whatever the future holds for Greece, the EU and even the United States, one thing is clear: rampant socialism produces no winners and no good guys. On one end of the spectrum are those who believe they are entitled to something for nothing using terms like “wealth redistribution” and “social justice” as their hammers. On the other end, are those who can look at the historical wreckage wrought by a socialist/communist ideology at fundamental odds with human nature – wherein ambition talent and desire must be enslaved to accommodate sloth and stupidity – and conclude the “wrong people were in charge.”

And so we continue the headlong rush towards the abyss, despite a highway replete with more warning signs than ever before in the history of the world. And once again – or is that as always – Greece is the proverbial canary in the coal mine. Enjoy your moment in the sun, Mr. Tsipras. A “solar eclipse” is closer than you could ever imagine.

The Patriot Post® · The Upcoming Showdown at the EU Corral