The Greek vote

There's a line in one of the Greek tragedies, I think by Aeschylus, where the bad guy delivers a stern warning to the good guy, I think Prometheus, on the following lines:

ou mh frenwseis me, alla desmios fugwn swzh tode, h soi palin anastreyw dikhn*

That very roughly translates as "Don't defy me. You got away with it once, but if you do it again, I'll come after you". That seems to be the gist of what Frau Merkel and M. Hollande said to Greek PM Alex Tsipras, when he called them over the weekend to tell them he was going to hold a snap referendum. Tsipras ignored their pleas and is going ahead with the vote anyway. To what end?  

Of all the arguments that Tsipras et al have deployed in their negotiations with the Troika, by far the weakest is that the Greeks voted for him, so the creditors are denying democracy if they don't do what he wants. Presumably he'll be wheeling that argument out again if he wins the vote this coming Sunday, but it's unlikely to carry much weight in Berlin or Washington. If the Greek people vote, in effect, to stiff their creditors, they can hardly expect those creditors simply to accept the "will of the people" and pony up more cash.

Of course, it's very likely that the creditors are going to get stiffed either way. From the Troika's standpoint, the process now is as much about avoiding setting bad precedents as it is about solving the problem at hand. No developed country has ever missed a payment on an IMF loan, as Greece may well do within the next 24 hours: the Fund can't afford to create the impression that this is acceptable behaviour. Within Europe, all manner of countries, from Latvia to Portugal,  that have undergone painful restructurings of their own, will react very badly if Greece now gets rewarded for its intransigence. The Troika also needs to ensure, to put it bluntly, that Greece is now put through the wringer to a sufficient degree that no other heavily-indebted EU member is tempted to follow suit.

I wrote many months ago, when it first appeared that we were approaching the endgame with Greece, that both sides needed to prepare for a possible "Grexit".  There are plenty of signs that the EU has done so, but it's hard to be sure about the Greeks. The Finance Minister is adamant that Greece cannot be thrown out of the Eurozone, no matter how the vote goes. He may be right in a technical sense: years ago, EU bureaucrats I used to talk with were downright proud that there was no exit mechanism from the single currency. 

For sure, the Euro will still be circulating in Athens on Monday, but the amounts will steadily dwindle as those who can afford to do so remove their cash from circulation. If the implication of the Finance Minister's statement is that no plans have been made for the introduction of a new drachma, the damage to the economy, and to the lives of ordinary Greeks, could quickly become severe.     

There doesn't seem to be any good ending in sight. Years of mismanagement by politicians, enthusiastically voted for by the Greek people themselves, have left the country on its knees and almost friendless (unless you count Vladimir Putin, circling overhead like a buzzard).  The Greeks might have done well to heed the words of another great playwright, Shakespeare (Polonius, in Hamlet): "Neither a borrower nor a lender be, for loan oft loses both itself and friend".  Good advice, but then again, the Bard didn't live in a world of zero interest rates. 

* Yes, I know, I've left off the breathings and I can't seem to find the final sigma in my version of Word.