Everything You Need To Know About The Greek ‘No’ Vote

Greece voted ‘No’ by a landslide in a referendum on the latest EU bailout deal. Here’s what it means:

1. You have just added a new word to your Greek vocabulary. Besides ‘retsina’, ‘souvlaki’, ‘moussaka’, and ‘kalamares’ you now know that the word for ‘no’ is:

‘Oxi’.

2. Good luck if you’re on holiday in Greece and you haven’t brought wodges of cash. (Preferably a hard currency like sterling or the dollar, rather than a soft currency like the Argentine peso, the late lamented Zimbabwean dollar or the euro)

Here’s Constantine Michalos, head of the Hellenic Chambers of Commerce:

“We are reliably informed that the cash reserves of the banks are down to €500m. Anybody who thinks they are going to open again on Tuesday is day-dreaming. The cash would not last an hour.”

3. Fiery visions will appear in the sky; horses will be seen in the fields with two heads and eight legs; men will say openly that Christ and his saints slept. Or, as Fraser Nelson in the Spectator more soberly expresses it:

Huge inflation, mass unemployment: Greece now faces its nightmare scenario. A recent poll showed 80pc of Greeks want to stay in the Euro, but by voting ‘no’ they may now be kicked out. There’s no formal way of doing this, but quite a few informal ways. Jean-Claude Juncker, EU president, has already said that a ‘no’ vote means ‘Greece is saying no to Europe’. The Greek Central Bank agrees. Here is its stark warning on what could now follow:

Failure to reach an agreement [with its creditors] would mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union. A manageable debt crisis… would snowball into an uncontrollable crisis. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU. From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.

4. Alternatively – perhaps more likely based on the last five years’ experience – it will all result in one big Meh.

But we’ve been there before, as I recall joining others in the clamour during 2009, when we were all so certain that we were going to see a collapse of the euro.

At the time, it was also fashionable to call in aid Friedrich Nietzsche, and his famous quote: “That which does not kill us, makes us stronger”. And, in the end, the crisis did not kill off the euro. It emerged from its trial of fire, and since it was not dead, one assumes it came out stronger.

Thus, I’m not buying “Grexit” and I’m not even putting money on the Greeks leaving the euro. The “colleagues” have proved resilient in the past, when in far greater peril, and I don’t see them buckling now.

One can never rule out either event, so I will readily concede the possibility – especially by accident. But, as it stands, I don’t think that either is likely. And if that puts me out of line with “mainstream” sentiment, it wouldn’t be the first time. But just at the moment, I don’t hear a fat lady singing.

5. However it does pan out, it’s all going to rumble on and on immensely tediously for ages. This commentator at Open Europe thinks that even in the short term  “Grimbo” – Greek limbo – seems less likely than a swift Grexit. I hope he’s right. But his view seems to me to be based on the flawed assumption that the EU and Syriza are capable of rational thinking, whereas they are both projects devised by fantasists whose economic model is based mainly on the idea that it is possible to have your cake and eat it.

Here, anyway, is what Grimbo might look like:

Theoretically, Greece could live in a limbo inside the euro with capital controls in place and some kind of parallel currency circulating. However we have always seen this as very unlikely. The question we have to ask is: why?

In the end, living in such limbo would be incredibly painful for the Greek economy. Furthermore, it would mean doing so without a clear end game in sight. Unless this situation is simply buying time for a new government to come into place and resume some kind of bailout with the creditors (this seems unlikely given the strong No) then there seems to be little benefit. It would also be of little benefit to the Eurozone as it would mean uncertainty hangs over it for even longer and hampers any future planning. There would have to be a clear path back for Greece in one way or another for this approach to be worthwhile. Given the No vote, this would mean the creditors changing their position. The main reason to consider this option a possibility is that the majority of Greeks still want to stay in the Euro, however, after experience the depression of a limbo situation with Grexit the only alternatively, that could change.

6. Everyone who isn’t a journalist, a politician, a financier, or an economist thinks Grexit is a fantastic idea and can’t wait for it to happen, the sooner the better. Look at the comments below almost any article on the subject and you will see this straight away.

This seems to me yet another reason to suspect that Grexit isn’t going to happen any time soon: the power elites always get their way, not the likes of us.

7. If Greece were a member of your family, it would be the crack-addicted, kleptomaniac, black sheep uncle who hurled abuse at the vicar during your daughter’s wedding and then rammed the groom and bride’s honeymoon getaway car, while drunk, into a tree. Yet still your bibulous and tyrannical patriarch – Jean Claude Juncker – has given strong indications that regardless of how appallingly he behaves, the black sheep uncle must remain a beloved member of the family, with a guaranteed invitation to all future weddings, christenings, bar mitzvahs, funerals, etc, and that no expense will be spared, no efforts considered excessive, in order to ensure that this remains the case.

So, given what desperate things the patriarch is prepared to do in order to keep the losers in the family, imagine how much more devious, bullying and cunning he will be when one of the family’s most productive members – aka the UK – makes its half-hearted bid to flee the nest.

You think from what we’ve seen so far that the UK stands a chance of leaving the EU?

Ain’t going to happen.

 


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