Greece Considers Switching to Drachma, or Maybe Bitcoin, Who Knows?

AP Photo
AP Photo

The long-gestating Greek financial meltdown looks to be getting underway, as the socialist government makes a few final efforts to scare Europe into giving them more money and lays plans to nationalize the banks as they begin dropping out of the Eurozone.

Greek Reporter ran an excellent April Fools Day post in which Finance Minister Yanis Varoufakis supposedly told his aides he was thinking about withdrawing from the euro and running Greece on Bitcoin.  This wins my vote for the best April Fools fake news story of 2015, because in the finest tradition of such pranks, it sounds so darn plausible at first:

Sources very closed to Greece’s minister of finance told Greek Reporter that today Yanis Varoufakis held a top secret meeting with high-ranking finance ministry officials to prepare them in case negotiations at the upcoming Eurogroup fail. The anonymous source noted that everybody in the room was staring at each other when Varoufakis – also a prominent blogger – said “We ‘ll go to Bitcoin, we will be ahead of all the world economies and although it may be painful in the beginning, Greece’s economy will thrive in the long term.”

The Greek Finance Minister went on to explain what is the cryptocurrency and how it will be implemented into Greeks’ day to day life by using a special mini computerized card with a chip. All citizens will carry the card as an electronic wallet. The card will be distributed for free to all Greek citizens via the local tax offices but it will also be available for purchase at the country’s entry points for 45 euros, or 0,20 Bitcoin each. The sale of the card to tourists is expected to be another form of revenue for cash-strapped Greece.

“This is the smartest move to beat corruption and tax evasion, all transactions will be recorded to the Greek Ministry of Finance new secure and dedicated Bitcoin servers and we ‘ll be able to track transanctions at any given moment,” said Varoufakis defending his decision.

Many officials objected saying that Greece doesn’t have the knowhow to start such a global movement but the Greek Finance Minister said that he does what the Ancient Greeks would do in his position – and that is: be the future!

“As Greeks we are innovators, look at our history,” exclaimed Varoufakis who added “The first computer was used in Greece, the mechanism of Antikythira, nobody knew what we were starting then.”

“The future starts in Greece and we will be the first country to use the currency of the future, a currency that doesn’t allow third parties to tell us what to do or how to live, this is the Greek thing to do,” said the Greek minister.

Is that so much crazier than some of the tactics socialist Greece actually has tried in the crusade to weaponize its debt and shake more concessions from its skeptical creditors? Greek Reporter really nailed the tone of Syriza political rhetoric.

Back in the real world, the UK Telegraph reports that Greece is “drawing up drastic plans to nationalize the country’s banking system and introduce a parallel currency to pay bills unless the Eurozone takes steps to defuse the simmering crisis and soften its demands..”

Presumably this currency will be the Greek drachma, not Bitcoin, World of Warcraft gold pieces, or Star Trek credits, although the drachma might end up being less valuable than any of them.

Greece has reached the point where it has to admit it can’t make its debt payments to the International Monetary Fund, not with enough left over to pay government salaries and entitlements.  Pay close attention to this, my fellow Americans, because it’s your future, a decade or two down the line.  We’re already paying more in annual debt service than the price tag for most of the Big Government programs liberals claim people can’t live without, except for the monster entitlement programs, which are a whole different brain-melting conversation.  We will soon reach the point where entitlements and debt service consume every penny of our already-bloated federal budget. Greece is showing you what that looks like on a vastly smaller scale, complete with the wails of anguished citizens asking why nobody did anything to prevent it 20 or 30 years ago, when there were still options.

Besides the much smaller size of the Greek economy, another important difference in this flash-forward fiscal apocalypse is that Greece has a sugar daddy in Europe it can shake down for cash, whereas the entire rest of the planet is not capable of shouldering America’s debts, even if seized with some mad universal desire to do so. Greece has been banking on a last-minute European blink, in which its creditor nations decide that writing off billions in Greek debt and letting the Syriza party implement big socialist spending policies is preferable to standing firm on repayment and prompting Greece to walk right out of the Eurozone.

We’re now moving beyond rhetorical skirmishes into what the Telegraph describes as “a slide into pre-default arrears.” Syriza party sources quoted by the UK paper say the Europeans have to realize Greece is done with any form of “austerity” forever, and accuse repayment hardliners in Europe (especially a certain country noted for its wealth, industrial power, financial discipline, unfortunate early 20th Century history, and high-quality beer) of trying to humiliate Greece and drive the ruling party out of power by forcing them to renege on campaign promises.

On the other hand, letting Greece slide on its debt commitments is likely to cause a significant political contest in said creditor nations. Among the Greek policies its creditors object to are plans to “boost union powers in collective bargaining and boost pensions for lower income groups,” neither of which fills anyone’s head with visions of a lean, disciplined government managing a high-performance economy and paying off its debts. The former head of the European Commission noted that some of the countries loaning money to Greece are technically poorer than it is, making debt write-offs a tough sell.

There’s just no way to put off a reckoning any longer.  Greece is defaulting on the first of three big debt-service payments in April and May, making it the only advanced economy to default on IMF loans. On Friday afternoon, Reuters reported an eleventh-hour announcement from Greece that it would scrape together the money for the April loan payment after all, walking back previous statements that the government was flat broke.

Well, some Greek officials are walking that back. “Adding to the confusion, German magazine Der Spiegel quoted a finance ministry general secretary, Nikos Theocharakis, as saying Greece would probably not pay next week’s IMF tranche, prompting a further denial from the Greek finance ministry,” Reuters writes. While the Greeks get together for a fun weekend of denying each other’s pronouncements, their creditors can look forward to even more fun when the May payments come due.

“We are a Left-wing government. If we have to choose between a default to the IMF or default to our own people, it is a no-brainer,” said a senior Greek official, thereby making an excellent case for why loaning money to left-wing governments is a very bad idea.


Please let us know if you're having issues with commenting.