Monday, July 20, 2015

Disgust first. Then frustration.

Good lord. 

This has been in progress for a couple of days, and much of it is old news by now.  But I’ll record my own take on it anyway. 

Last Friday I wrote out a little frustration with Greece, expressing the daydream that maybe we could get Donald Trump out of our hair for a while by sending him to Greece to teach Tsipras how to negotiate.  That used to be something Trump had a reputation for doing well, and Tsipras, apparently, has no clue about what it even means.   But I waited to post what I wrote on the count-to-ten-first principle.  Then Saturday I was out all day teaching a sailing class on the Potomac, and was thoroughly tired and hot when I got home.  So I waited until yesterday morning to look at it again.


I’ll get back to Greece in a minute, but I have to follow a distraction from yesterday morning’s news first.   I’ll say this up front: Mr. Tipras, I withdraw my threat to inflict Donald Trump on you to teach you the art of negotiation.  No matter how good at it he is, it would not be honorable any more to inflict him on anyone, for any purpose.

Donald Trump was back on the front page of the Washington Post yesterday, and has been on all kinds of news since.  I supposed it’s good for his campaign in the very short run.  This time he declared that Senator John McCain is “not a war hero” on the grounds that McCain “was captured”.   Apparently heroes, to Trump, are people who don’t get captured.  That’s what he says, anyway.

Seriously??   Wow.  This on top of the florid ignorance he excreted on the topic of Mexico and our southern border.   And the idiocy of the “birther” episode.  And, and, and.  Yesterday morning’s mental oddity from him is minor, really, compared to his past exhibitions.  But it was, I guess, that final straw for me.  I can’t understand why the Post published this about him, or why anyone anywhere publishes anything about him.  He no longer seems to me to have public prospects, or even public interest.

For the record, I don’t have any problem with Trump when he disagrees with Senator McCain on issues; I often disagree with Senator McCain on issues, and I’m sure that he and I were in very substantial disagreement on many issues in the sixties, when he was a POW in Vietnam.  But go read the Wikipedia entry on his treatment as a prisoner, and how he responded to it.  He suffered terribly as a POW, through long years, with broken limbs, a shoulder crushed by a rifle butt, years of solitary confinement and daily beatings, and he showed honor, commitment and courage that was nothing short of astonishing.  He still shows honor and courage, working for his beliefs every long day with deep injuries from that time that have never completely healed, and can’t ever completely heal.  He was a hero, and he is a hero.  He is wrong, in my opinion, about many things.  But he is still a hero.

As a presidential candidate Trump is a caricature of everything; he’s a caricature of himself, of the tea party, of the Republican Party, of some smarmy, ugly sliver of America.  He’s a Rorschach test, a blot of ink splashed across the political world.  A clown, of course, and I have to agree with the new Huffington Post policy of reporting his antics in their Entertainment section, instead of in their Politics section.  The Washington Post, and every other reputable news source, should follow their lead.  And actually, I think they should go farther: don’t report on him at all.  What could he say by now that would actually be either news or entertainment?  Nothing.

I think Trump might even have thought, for a time, that he was really running for President.  But any such fantasy on his part should now be over.  He expresses the emotional responses of a small group of voters who will be avid for him, for a while.   But he has offended so many, and so severely, that I can’t imagine any general election where he could win any office at all, much less the office of the President and Commander in Chief.

Now on to Greece, the future, the negotiations with Europe, and anything, however dismal, that does not include Donald Trump.

So here’s my question:

What on earth could Tsipras have been thinking when he went into the negotiations with Europe asserting that he had not been authorized by his voters to exit the Euro?  What, then, were the negotiations about?  What did he have to offer, or to threaten if it came to that?  He simply threw himself on their mercy, and when that was lacking he submitted all of Greece to a spanking.

Here are the basics, Alexis.  May I call you Alexis?  The fixation of the rest of Europe was this: how do we make Greece behave, how do we hold their feet to the fire, make them pay their debts and push their budget even further into primary surplus, how do we push Greece to fiscal virtue no matter what the short term cost to them?  That’s what Merkel and all the rest walked into that room determined to do.  That was their goal.  Your task, the first day, was to change the topic of the negotiations.  Your task was to make the whole discussion about this: how do we, Europe, get Greece out of this depression, this catastrophe worse than the Great Depression of the 1930s?  Because that’s the kernel of the problem, isn’t it?  If the Greek depression disappeared, then Greece would be far more able to make the the payments on its debt.  If Greece could reach its potential GDP, then the budget would be in substantial primary surplus and the debt to GDP ratio would not look nearly as scary as it does.

And to do that, to change the topic, you had to make them believe that no agreement that did not achieve at least a hope for foreseeable, predictable, reliable Greek recovery could possibly be accepted.

I need to stress at this point that Greece does have internal problems that have to be fixed, period:  corruption has to stop, cronyism has to stop, the Greek people have to pay the taxes they owe, and so on.  And there are many things that could be changed to make your economy work better.  But you know that.  You don’t need Europe, or me, to tell you any of that.  You could offer those things in the negotiations, since you will have to do them anyway.  But more austerity, more grinding poverty, more depression, more insistence on paying back loans that can’t be repaid, are not among the things that will help Greece---or Europe either, for that matter.

And those last things were the topic that the rest of Europe walked into the room to discuss. 

How could you change the topic?  You had to make them understand that you had a ready alternative to their help, and that you were prepared---reluctantly, but still prepared---to use it, unless the negotiations could find a better way.

I know, easy in hindsight, and I do understand that Grexit would have been very hard.   Just the logistics of changing to a new currency would have been a nightmare.  And I know that the probability that you would have to exercise your Grexit option would have been far above zero; some in the negotiations seemed---and still seem---to welcome that idea. 

But now, now, with this “solution” in place, I feel the likelihood of eventual Grexit has done nothing but rise.  This “solution” is not a solution.  Not really.   It’s a thin patch on a blown tire, and an enduring grievance, and it is an engine driving Europe apart.

I understand, Alexis, what you meant to do.  You went to Europe with every faith in their good will.  You did depend on the goodness of Europe, which was wonderful of you, but naïve, perhaps, since everyone in the room was an elected politician who had to report back to the voters in their own countries.  They would loved to be good, but their first obligation was to their own constituents, not to you.  You let the conversation devolve to such a dismal state that the primary question seemed to be whether Europe could “trust” Greece.  Trust Greece to do what, for God’s sake?? Bend over and grab its ankles?  The right answer should have been: yes, you can trust Greece to do everything, everything, that is necessary for Greek recovery, and you can trust Greece to hope that is possible within the Euro: because we do hope for that.  In our deepest hearts we want that.  But we must emerge from economic cataclysm.  You, the rest of Europe, can choose to help, or can choose to stand aside.  The right answer should have been: please, help us, we would welcome that, we want that, and to survive as a common currency zone Europe must find a way to do that not just with Greece but with any member country that is in deep depression.  But if your minds or values or whatever is binding you can’t find a way to help us then it will not be left to you to decide whether you will stand aside.  Let’s find a path together, please; that is the path we want.  But if we can’t achieve that, if we in this room can’t find a way to work together, then Greece will take the only path remaining to it toward a credible, sustainable, growing future.

Here’s what you had to do---HAD to do, with no real alternative as a negotiation position:

You had to walk into the room, the first day, with Greek exit from the Euro all lined up, all prepared, planned in detail and ready to go.  You had to tell everyone in the room that Grexit was not desired, but it was prepared, that you could start printing Drachmas at a moment’s notice.  You had to tell them that you desperately wanted to be a part of the Euro zone, that you never, never wanted to start Greek exit, but that your number one priority was that depression in Greece had to be stopped one way or another.  That, you should have told them, was the only real topic of negotiation.   Then the negotiations would not be about how to make Greece behave, or even how to preserve the Euro, it would be about how to make Greece grow again, preserving the Euro whole if those two goals could be jointly achieved.  But in the order of importance, Greek recovery was first.

You had tell them this:  I know you, Europe, don’t want to delay the repayment of your loans, but you have no choice in this.  We, Greece, can’t repay those loans while we are in a deep depression: either you find a new loan structure that is viable, and that will help Greece, or Greece on its own will design that new loan structure and Greece will choose how to delay the payments.  Whether or not the loans will be delayed is not something that either Greece or her creditors have the power to decide.  History and years of austerity have taken this decision from all of our hands.  All we are talking about here is whether there is some way, some European way, to help a member state get out of depression and still remain in the Eurozone.  Any other topic is a useless waste of time: tell me now whether we can keep to the true topic, or let me leave and get started on the terrible task of exiting the Euro.

Yes, you should have said, under the current regime the European Central Bank can starve the banks in Greece.  But the moment these talks fall through, the moment it becomes clear that the ECB really does intend to starve the Greek banks, I can start printing Drachmas and Greece can provide our own banks with the liquidity they need. 

Yes, Greece has debts, and (you should have assured them) we intend to repay them.  But recovery is a prerequisite.  You can try to insist on the current loan schedule, if you like, and within the Euro that would drive Greece to the ground, and your insistence would turn to ashes; the loans as they stand are not sustainable.  You know that.  The IMF says so, in well-reasoned erudite papers.  We in Greece feel that truth every day.   The loans will be repaid when we can manage that.  We want Europe to have a way to help us, to find a way to help us get to recovery, so these loans can be repaid in full.  But if you can’t do that, if we in this room can’t find a European path, then Greece can finance its own recovery both with reasonable domestic spending and by depreciating the New Drachma against the Euro and the Dollar and everything else, to stimulate exports and provide new demand for our products. 

With that background, with the plan B in place, the plan and all the preparations in place, to leave the Euro, you might have been able to change the topic of negotiation from “how do we get those blasted Greeks to behave” to “how do we help Greece to recover, so that Greece can finally grow, prosper, and fulfill all its commitments within the Euro”.   You could have changed the topic because you could have told Merkel, Scheuble, and all the others in the room that they were not in charge of the negotiation.  No one is in charge of the residue of history.  The loans would be delayed and restructured because history had left no other option on the table.  Greece had a path to hope, had a path to growth, prosperity, and fulfillment of its commitments---a bit tardy, perhaps, but fulfillment still, by exiting the Euro.  Their job in the negotiating, given that, was to find a second path, a path within the Euro, to Greek prosperity.

You needed to walk into the room with that all in your back pocket, truly prepared, with the new Drachma all designed (possibly with the word OXI stamped all over it), the right counterfeit-defying paper on the rolls, the printing presses ready to go, and with the preparation in your heart to flip the switch and turn them all on.  You needed to do that because you wanted, and the Greek people want, to avoid flipping that switch, and changing the negotiating topic was your only real long run hope of doing that. 

But without agreement on a valid plan out of here, this crisis will happen again, and again, and again, as long as Greece and Europe keep reeling down this long divisive road.  And at every crisis, Grexit will rear its head.

I hope I’m wrong about that.  Of course I do.  Maybe it all will look better tomorrow, or the day after.  Maybe Europe, now that they have brought Greece to heel, will suddenly become her benefactor, with some kind of Marshal Plan for Greece.  But for now, I don’t see that.  For now, the current agreement seems unlikely to work, and has only made the situation worse.  I hope I’m wrong.  But for now, that’s the way it looks to me.

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