Greece Economic Crisis

Greek Tragedy Das (2015) discusses the Greek economic crisis, and the hold it has over the public via the media, in the same terms that one would use to describe a classic of Greek theater. He outlines that the Greek financial crisis bears many similarities with the classic tragedies. Among these similarities are the morality element. Greek tragedy always contains a morality element, he argues, and so there are many moral elements to the economic crisis as well.

First, the two players (the EU/Germany, and the Greeks) both contain elements of moral ambiguity so essential to good theatre. Whichever you choose as protagonist and whichever as antagonist, there are moral costs to their actions. The European side sees the Greeks as needing punishment for moral transgressions such as profligate spending and rampant tax evasion; the Greeks point to the hardships caused by the austerity policies imposed upon it by the EU (FIDH.org, 2014).

Das then outlines how his conflict leads to overture, following the narrative of classic tragedy. There has been an extension on the existing bailout of Greece, but the Greek government is starting to grow weary of austerity, and has little to no tolerance for new measures that the EU wants to impose upon the country. The author notes that the current wrangling over Greece's austerity and debt are more theater than anything else.

He points out that Greece's debt is a lower percentage of GDP than some other EU nations, and that it pays a very low interest rate on its debt. Indeed, 45% of its debt comes from the European Financial Stability Fund, and carries a rate of 1.5% (Das, 2015). The issues that Das identifies as critical are capital flight, which is compromising the solvency of Greek banks, which in turn risks deepening the financial crisis.

The capital flight, of course, is the result of the austerity measures that are crushing the Greek economy, and the fear that Greece will ultimately be turfed out of the Euro. Capital flight might also be a response to the deal that was made in Cyprus a few years ago that resulted in a net worth haircut for all Cypriot depositors. Greeks rightfully are squirreling their money in safer places.

The tragedy as described by Das is that none of this needs to happen, but the prevailing conditions in Greece are such that there is little way out, either for the Greek government or for the EU. Greece is uncompetitive, in part because of the euro, which offers little hope for the sort of FDI that will allow Greece to recover. The options on the table at present involve some combination of default, bank insolvency and exiting the Euro.

The cost to the EU of holding firm on Greece is that if Greece defaults and exits the Euro, this will doubtless trigger capital flight from other peripheral economies -- exactly the sort of thing the monetary union was supposed to defend against. Policymakers have to this point delayed action for several years and ultimately may choose that option again, but Das rightly notes that there are no good options on the horizon to end this problem. Das makes it clear that the Europe bears significant blame for this situation.

Their intransigence, and lack of willingness to accept the reality of the situation, only means that the tragedy gets dragged out longer. There remains the risk of significant economic and political fallout, with an increasingly volatile Euro and perhaps even a rise of anti-European far right political parties, which has occurred to varying degrees already in the past few years of this crisis. At the root of all great tragedies is the hubris of the actor.

In this case, Europe cannot admit that there were structural problems not just with the Euro itself and the core ideas attached to it, but with the way that it has handled the Greek situation. This hubris has blinded Europe to reality, and led both.