1 Jul 2015

Greece crisis: upper middle class vs rural pensioners

Last night’s ‘Yes’ campaign demo was big – I would say maybe a quarter bigger than the ‘No’ demo of Monday, and with a much more angry atmosphere.

A senior conservative politician said to me: “This is amazing – these are people who never protest”… and they were right.

I’d say, even to a greater extent than before, the social makeup of last night’s crowd was upper middle class. And though they have differrentially positive coverage on the Greek media, the worry for the ‘Yes’ campaign has to be that, as a movement, it is not breaking out to the wider sections of society.

A poll conducted by ProRata for the (Syriza friendly) “Efimerida ton Syntakton” newspaper shows the “No” vote ahead with 54 per cent and the “yes” vote at 33 per cent. The rest remain undecided.

The same poll conducted on Sunday had the ‘No’ vote ahead with 57 per cent, the ‘Yes’ vote getting 30 per cent.

I have no idea whether these polls are right, but bear in mind that when it comes to a plebiscite – Greece is not Athens. As with the Scottish referendum, what seems like the majority in the big cities – and in Athens it feels like there is momentum for ‘Yes’ – can look differently once the votes of millions of over-55s in small towns add up.

Deal ‘still possible’

Last night Greece failed to pay the IMF €1.5bn and is technically in arrears, though not default. The IMF is considering an emergency request for an extension.

As regards the rest of yesterday’s newsflow it is now irrelevant. The request for a €29bn two-year loan from the ESM, plus the request for an extension, were the Greek government frantically trying to stay in the old bailout programme, because they sensed a deal was becoming possible.

The most important developments at the official level are that Greece has asked for a third bailout –  a two-year plan of €30bn worth of funding and tough terms. The Greeks say they will come to the Eurogroup today with a list of measures the government promises to implement, based on creditors proposals.

The differences remain, according to Deputy Prime Minister Yanis Dragasakis, labour reform and pensions. And of course the debt restructure that has been the sticking point all along.

This means – despite the fact that Greece is technically out of its bailout and will need a new memorandum – a deal is still possible before Sunday’s referendum.

Single currency ‘fiction’

I’ve never believed the referendum was designed as an in-out choice over the euro, as the various euro politicians and officials have tried to portray it. It was Tsipras trying to strengthen his own hand – and to concentrate the minds of people on the streets and in his party who were revelling in the idea of a confrontation with lenders.

If the new deal is accepted – and for Syriza the main thing will be to defend wages and pensions – I think there’s a possibility the Greek government will then recommend a ‘Yes’ vote.

However for at least 30 per cent of Greek society the past few weeks have hardened the conviction that they should leave the Euro. Paradoxically, a ‘Yes’ vote recommended by Tsipras would simultaneously close off the Grexit route and obviate the need to create a pro-Euro coalition with the centrist parties.

If Eurogroup ministers reach a decision that Greece can implement the programme and is eligible for it, the third bailout will have to be ratified in parliaments across the Eurozone. Once this happens, a second round of negotiations on specific details will take place and then the detailed memorandum needs to be ratified by parliaments of the zone a second time.

And that will be an interesting moment – because in all other bailouts since 2010 democratic vetoes have either been limited or not used. If Greece accepts a tough third bailout and then it fails in the other parliaments, then the fiction of the single currency will be dead. It will be revealed as a negotiable currency union between 19 parliaments.

Meanwhile the damaging effects of the bank run and the bank controls are being felt. There is reportedly a total freeze in tax receipts. Also many companies have told their employees they won’t be getting paid. Others placed workers on temporary leave. It is not clear to me how much of this is an employers’ strike against the government by the right-supporting business fraternity and how much of it is economic necessity – since multinationals have been advised, and are attempting, to go on trading normally.

The biggest worry is the banking system. Everything depends on the ECB meeting in Frankfurt today: a decision to devalue Greek bank collateral would turn the bank liquidity crisis into a true issue of solvency. While Cyprus responded to such a moment by confiscating some deposits above €100,000 this would not work in Greece, because there’s been five years of deposit outflow.

The banks would have to be nationalised, wiping out the shareholders – and if there’s one kind of government that would do so with gusto it’s one where the finance ministers are Marxists.

We’ll be bringing you updates throughout the day – and a video blog – so stay tuned.

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10 reader comments

  1. Philip Edwards says:

    What a marvellous thought:

    “The banks would have to be nationalised, wiping out the shareholders – and if there’s one kind of government that would do so with gusto it’s one where the finance ministers are Marxists.”

    That would mean people like you would have to come out of your far right closet and go work for Rupert Murdoch. Which of course would be entirely appropriate…….and hilarious.

    1. Derek says:

      What an irrational comment. It’s something I hope commentators will come back to when and if the dust settles on all of this. At the outset, we all expected everyone in a leadership position to look at the facts and behave appropiately and, above all, rationally.
      In fact the opposite has happened. It was the same in Ireland. Watching the crisis unfold in Ireland during the banking collapse was astonishing. Everything we had been told was, in a moment turned, on its head, and the people – at the ECB’s insistence it turned out – were handed a bill for €100bn, (Ireland’s GDP is ~ €35bn) to pay back the German, French and British lending banks. And then this week our PM Enda Kenny goes on international TV and tells the Greek people that there were no tax rises or cuts in Ireland to pay the bill.
      It’s not only irrational, it’s insane. The IMF research dept shows IMF policy was as culpable as any of the protagonists in detroying the Greek economy and then IMF chief Lagarde doubles down on that policy and demands “adults” come to talk to her.
      The madness of policy makers today reminds me of the Britsh government policy in Ireland during the Great Famine of 1840-1847. Not just counter-intuitive and counter-productive, but hugely destructive of the Irish rural labouring class and the Anglo Irish aristocracy and it created a legacy of bitterness, enmity and violence that persists today. Yet even at the time it was plainly a bad policy which was demonstrably failing even on its own terms.

      And today I see that Greece’s next door neighbour Turkey is planning to invade Syria. Does anyone in Germany read modern European history? I wonder if they think nothing happened after Waterloo.

  2. Tawse57 says:

    If the leaked letter is true then it looks like the Greeks have just caved in to the EU demands.

    The Greeks just blinked.

  3. william says:

    Whilst following the Greek crisis, there was mention FDR’s inaugural address of 1933. So, I decided to read his speech, ; realised how prescient it is to the present! ( I would advise to people read it). He basically says, that the money men’s answer, was to borrow more; or create more credit! In effect. Print more money! FDR totally dismisses this solution. Its akin to “Fred the shred” telling Alistair Darling, that his bank’s problem was merely a liquidity problem; and would right itself, in a couple of days. Total denial! What FDR argued against; this era of politicians have done. We now have a housing bubble; a stock market bubble; an asset bubble for the wealthiest. This is unsustainable! And when the inevitable bust comes; guess what? All this “super inflation” will be “washed down”, to the masses. It has to go somewhere! Will the people swallow that one? I doubt it!

  4. Nick Laskaris says:

    Good job Mr Tsipiras can look out over Sytntagma from his office window – beats any other form of market research !

  5. Mitnaged says:

    “The banks would have to be nationalised, wiping out the shareholders – and if there’s one kind of government that would do so with gusto it’s one where the finance ministers are Marxists.”

    Well Iceland did similar move couple years ago. ;)

  6. Tim Salmon says:

    I can’t believe what I am reading. Mason knows nothing about Greece and appears only to be talking to Syriza supporters, whose view of the world he seems to share. Although too young to have experienced the events of the 1940s civil war themselves, they make endless allusions to it and see themselves as somehow reincarnating those disappointed revolutionary hopes and Mason falls for it, talking about EAM and ELAS and “massacres” as if he knew all about it.

    Those noble Communist partisans completely annihilated Col. Psarras (a liberal republican) and his wartime Resistance group and attempted to do the same to the much bigger EDES group, whom they saw as an obstacle to their planned seizure of power by force of arms at the end of WWII. The Right behaved like a bunch of thugs, there is no doubt about that, but ELAS executed mountain villagers as collaborators and class enemies after trials at so-called People’s Courts. I was told by fellow-villagers that the local ELAS executioner used to kill his victims by cutting their throats, just as shepherds still slaughter their sheep. He would sharpen his knife in front of them and when they shook with fear, he would say, “Why are you frightened? Can’t you see I am sharpening the knife so you won’t feel anything?” Shepherd friends of mine lost an uncle to the partisans in 1959. The civil war had ended in 1949 but a band of communist partisans left behind and making their way to communist Albania killed the uncle and two hired shepherds and took twenty-five sheep. Another man I know, aged 15, fought with ELAS against the Germans during the Occupation but joined the National army in the civil war to fight against his former communist comrades. Why? Because he was disgusted by their behaviour. When the Germans withdrew from Greece, they entered Yannina, Greece’s third city, with lists of names of people they were to arrest as class enemies; they were shopkeepers, people with small businesses – and, he said, the officers rode around on horseback, well-fed, while we ate what we could find and marched barefoot. “I did not fight for a world like that.” He emigrated to Sweden at the first opportunity. These are the people Tsipras and co look to as heroes and examples.

    Mason quite simply has not done his homework and does not know what he is talking about. Upper middle class vs rural pensioners, indeed! He is living on a different planet. For one thing the crisis has affected rural areas far less than Athens. I have been in and out of Greece for sixty years. I had not noticed that the “upper middle class” had swelled to such proportions. If you want to check for yourselves, they are apparently identifiable by the cashmere they wear. Not sure where Mason thinks the sartorial habits of the Syriza minister of finance fit in; a Greek psychotherapist has just said that going by his preference for cool designer clothes and a big motorbike he fits the bill for the perfect narcissist – plus he was educated at an expensive private school, right next to the one I taught at for several years.
    One of the Mason blog fans was castigating Christine Lagarde for saying she needed adults to negotiate with; the German finance minister said talking to Syriza was like dealing with a bunch of student activists. And this is indeed exactly what a lot of them are: read Mark Mazower in the July 1st New York Times.

    And wise up, you Mason fans who keep congratulating him on the extraordinary perfection of his analysis! This crisis has little to do with the EU or anybody’s bankers. It is the inevitable consequence of failing to correct the woeful inadequacies of a corrupt, dysfunctional, inward-looking, xenophobic, clientelist state, because too many people, rich and poor alike, have benefited from it in some way or other for many generations. You can get away with it, muddling along on your own, but if you join up with an association of more modern, functioning states who play by and large by the rules you are going to get into trouble. I remember how shocked EU bureaucrats were in the 1980s when the first contingents of Greek bureaucrats starting arriving, bringing their “corrupt” habits with them.

    Greece’s history has kept it outside the European mainstream: no Renaissance, no Enlightenment. It acquired its habits of government under the despotic and arbitrary rule of the Ottoman Turks, like much of the Balkans and the Middle East.

  7. cliff and vivien slaughter says:

    anti-austerity march in London, against Tory Government’s ‘austerity’ measures. Syriza negotiatiing to relieve austerity measures against the Greek people. What happened to internationalism and international solidarity? The crisis is a European one, part of the capital system’s worldwide structural crisis. The austerity being imposed is class war being imposed on working people by finance capital and those who act on its behalf. It can be fought only by class struggle against it. In the era of capitalism where finance capital dominates, this is what class war looks like. Forget those sociologists who told us that class struggle is out of date. Forget any idea that the so-called left, if elected, can fight the battle on our behalf. Build from the base must be our watchword – in Greece, in Britain and everywhere else..

  8. John Smith says:

    It is proving that the power hungry unelected unaccountable euro carats are set to destroy Greece to show them as example to anyone who dares stand up to them even though in their clamor for ever bigger expansion they choose overlook Greece’s financial position!
    it just proves given what has happened to other economies on the promise of unfettered money and Eu corruption those economies were swayed into believing that they would have access to millions of pounds with little thought for repaying it all back we have an urgent need to get out before it all collapses dragging us down with it.

  9. IdPnSD says:

    The only solution is to get rid of money. Create a money-less economy (MLE). You can run the exact same economy in the exact same way without any kind of money. This is how it will work:

    Go to your grocery store, and take anything you need for free. They are free because there is no money in the economy. Go to your factory, where you are employed, work for 40 hours in a week for free, and produce the product your company manufactures. You will then be able to have free food and free shelter.

    You can have anything you want for free if you work every week for free. You will have full democracy and any life style you want. You can live in a palace or in a cottage, as you desire. This is a very robust economy with full employment and no poverty. For more details take a look at the MLE chapter in the blog site https://theoryofsouls.wordpress.com/

    You should know that money is not an object of nature. Therefore money is false, free, and abundant for ECB. If you can run an economy with false money, then you can run the same economy without any kind of money.

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