The unbelievable became a logical reality and a reality, which even does not raise a lot of attention. Nobody cares. Then Europe will die.
This story is a succession of failures and of lost opportunities:
– 1999 the Euro is created without Greece, but a double failure is already there:
o 6 out of the 11 founders of the Euro do not comply with the Maastricht criteria, which means that the Euro creation is a political creation
o but no political structure (banking Union, tax and budget union, European democracy) is there to accompany this political start
– 2001 Greece is welcome in the Euroarea with a debt to GDP of 103% (instead of 60% required) and a 4,5% budget deficit (instead of 3% required), and since then Greece, like so many Euromembers, never complied with the Maastricht criteria.
– 2004 The Finance Minister of Greece admits that the Greek figures on public finance are false. This creates some emotion but has absolutely no consequence of the way Greece is managed by the Eurozone.
– 2001 till 2007, the markets believe Europe exists and therefore the interest rates of the various European countries are the same. This offers very cheap money to Greece which grows at a 4,2% rate against 2% in average in the EU. It is clear that this is an artificial growth fed by the low interest rates. No one cares in Europe, there is no pilot in the European plane.
– The sub-prime crisis in 2008 triggers a banking liquidity crisis, which becomes a violent banking crisis in some European crisis. These countries are left alone face to their crisis despite of the terrible social and economical consequences, the market finally understand that Europe does not exist, there is no European solidarity, then there is no reason to maintain the rate convergence, the rates explode. Greece is then poorly priced, high debt, no artificial growth anymore but very costly debt, Greece is in big trouble.
– Ireland, Spain and Portugal quickly react to their crisis, and face alone extremely tough situation, Greece is slow to react and does not want to face disturbing realities.
– 2010 Greece receives 110 bn € from the IMF and the EU. The EU (Germany) does not want to be alone face to Greece, instead of solving the problem inside the Eurozone Germany wants to benefit from the expertise of the IMF. A second package (164,6 bn) is designed in 2012, this makes of Greece the country having received the highest help compared to its GDP. The money from the emerging markets is used to try to solve the problems of a European country, which Europe does not want to solve.
– 2011 the Sachverständigungsrat, a council of German economists suggests to create a European Redemption Fund to manage all the governmental debts exceeding 60% of the GDP of the concerned countries. This would be have been a clever way to put a European end to the crisis and solve the issue. But here again nobody cares, the short and egoist views of the intergovernmental Europe prevail.
– December 2011 Germany gets the approval of France on the debt restructuring that Germany want to organise in Greece for the private debt. Germany does not want to understand that this default is seen in the world as a European default.
– January 2015 far left Syriza win the parliamentary vote in Greece, logical result of tough social realities imposed by the IMF-EU plans. 52,5% youth unemployment in Greece.
– Tsipras government unwrites some useful reforms made by his predecessors and is unfortunately unable to use the sympathy for debt restructuring that his victory created in Europe. The EU and IMF stick to their strict mathematical ideology.
– Last negotiations stupid failed on some details on pension and VAT reforms.
Instead of having a referendum in Greece to decide to take a bad European plan or to choose a worse adventure, we should have ideally a referendum in Europe to choose between the death of the European idea or the quick creation of a federation on the Eurozone, with the following agenda:
– 5 year moratorium on the Greek debt (capital and interest)
– creation of the of the European Redemption fund : all the governmental debts exceeding the 60% threshold defined by Maastricht should be transferred to a Redemption fund (see http://www.sachverstaendigenrat-wirtschaft.de/fileadmin/dateiablage/download/publikationen/working_paper_02_2012.pdf )
– progressive cancellation of a big part of the Greek debt through the Redemption Fund against structural reforms in Greece (and only if these structural reforms are indeed implemented)
– creation of a European Unemployment Fund
– Agenda 2020 turned into a true European Industrial policy
– Finalisation of the Single Market
– acceleration of the Banking Union, measures of the ECB to immediately put an end to the fragmentation of the European banking market
– federal governance of the Eurozone in order to create legitimacy, efficiency and fairness