Greece: It's nearly sorted (possibly)…

 
Protesters march in Athens (28 June 2011) Tens of thousands of people are expected to stop work and take to the streets

Here is my take from Exarchia in downtown Athens this morning, as I join what looks to be a huge demo of public sector workers across the city.

It is crunch time for the opponents of the austerity plan. It looks like it will go through parliament narrowly - possibly with the privatisation element ring-fenced into a separate law, so that the deputies do not vote directly on the privatisation of energy and water.

With remarkable aplomb, no fewer than 156 Greek MPs have registered to speak in the debate. So it will drag on for 48 hours.

Prime Minister George Papandreou's Pasok party's essential argument right now is this: the culpability and chaos at the heart of the eurozone have turned an agenda that should be about urgent, long-term structural reform into one of urgent insolvency.

Therefore they need to throw what has to be thrown at the solvency problem without forgetting the key is to remedy decades of post-war corruption, inefficiency and institutional weakness in Greece.

This was put to me eloquently by Elena Panaritis, one of the party's "nationally nominated" MPs (see her interview with me on Newsnight at 2230 on BBC Two tonight).

'Contemplating the abyss'

I put it to her that the party and the government is engaged in a kind of psychological transference - choosing to focus on the long-term structural issues because the short term solvency issue is so painful.

Athens 28 06 2011 On the streets of Athens today

But the Greek political elite is demonstrating remarkable coolness under fire in this regard. Pasok is determined to govern alone and to get through this. It is not widely understood but the small business class, which is going to get hammered by tax rises, largely votes Pasok - so it is hard to see them coming out of the next election unscathed.

However, everyone here is now contemplating the abyss: it is becoming clearer to the proponents of default that it would mean, an instant "the ATM ate my card" situation for the whole population.

This, actually, is the strongest card Ms Panaritis and co can play with the Europeans: this is a crisis of the euro, not of Greece - a crisis of shoddy decision making, charisma-free leadership and general drift in Brussels, Frankfurt, Paris and Berlin.

So despite the formalities the subtext is becoming clear, I think.

The Greeks pass the austerity; they do some of it but not all of it. But by then the majority of the bad debt is on the books of the north European taxpayer - through the IMF, ECB and country governments.

Meanwhile, the 27% owned by banks is buried deep in a "Brady Bond" solution - for 30 years.

If your debt problems are solved on a scale of 30 years (private) to forever (the European states), then any problems in meeting the austerity timetable are not going to shake the earth. The Greek politicians and the Eurocrats will protest otherwise but I think this is the real situation that is emerging.

I will be tweeting from the demos.

 
Paul Mason Article written by Paul Mason Paul Mason Former economics editor, Newsnight

End of an era

After 12 years on Newsnight, Economics editor Paul Mason has moved on to pastures new and this blog is now closed.

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  • rate this
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    Comment number 24.

    The low yields on UK, and US Bonds are due to the fact that everyone with a brain, which clearly doesn't include Government Economics spokespeople, knows that unlike Greece, neither the UK nor US are going to go bust, so there is no question of not getting their money back. What happens to UK yields as inflation continues to rip ahead, whilst austerity measures tank growth?

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    Comment number 23.

    #6 David Lilley. The Greek economy is only a fraction the size of the UK. Greek debt to GDP is 150% going to 200%. In UK its 70%. UK has huge overseas assets. UK has control of its currency. The US debt is much larger than UK, but T-Bills are below 3%. UK 10 Yr Gilt was at the current level & falling at beginning of 2010. It rose from 3.2 to 3.8% after June Budget!

  • rate this
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    Comment number 22.

    A Greek fudge cannot resolve the bigger issue of the bankruptcy of the world banking system.
    They have to keep postponing the crisis even though it makes the inevitable crash bigger because capitalism may not survive it.
    They are running on breaking ice (& have been for the last 3 years plus).

  • rate this
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    Comment number 21.

    Thank you, Paul Mason, at last some sense from a BBC correspondent. YOU have always been reliable, long may it continue. Simple Keynes, in the long run we are all dead. AND, that doesn't mention inflation. In 1933, Barbara Hutton inherited $42million, now equivalent to $2000 million. In 30 years, who knows the currency we will all be using. Kick it far enough down the road, and we are free.

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    Comment number 20.

    Disappointed in your appearance last night Paul. Austerity versus default. It's a false dichotomy.

  • rate this
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    Comment number 19.

    to the moderator of this page: you are not showing the latest comments first....

  • rate this
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    Comment number 18.

    Imagine what a civilised country Greece would be if the region of Athens with all its corrupt civil servants were thrown out of the euro and the European Union. Could M. Sarkozy please arrange that? That would really be a liberation for Greece. The French helped us get rid of Ottoman autocracy in 1821, could they now help us get rid of Athenian ochlocracy (the rule of the urban peasant mob)?

  • rate this
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    Comment number 17.

    The German people's wealth is in their common public property, hospitals, schools, roads, etc.while the Greek people's wealth is all personal, flats, holiday homes, land, cars, boats with very little tax contributions. The wealth creators in Greece are too busy to go to Syntagma Square. Leave Athens and ask some villagers who depend on tourism as far away from Athens as possible how they feel!

  • rate this
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    Comment number 16.

    Dear Paul Mason, very brave of you to be there BUT you are not asking the right questions: When you interview the "unemployed tax collectors" why don't you ask them how many flats and how much land their parents own and how much of it is already transferred in their children's names in order to avoid paying tax? How much property does the average Greek own compared to what the average German owns?

  • rate this
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    Comment number 15.

    At some point in the process of humiliating a people, a politican will emerge who expresses the public anger and resentment. It seems likely that their rhetoric will play on national pride and a victim culture. It will be anti-establishment. Candidates from the left could even call themselves national socialists.

  • rate this
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    Comment number 14.

    Ah what a relief then. What was all the fuss about, job done tick box! I get it as long as the Greeks pass the austerity programme but not actually implement it everything will be forgotten. Excuse me but is there a long term plan to cut the growing deficit and will there be a fire sale of the country's public assets so that lucky football teams can be sponsored by a new breed of Greek oligarchs.

  • rate this
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    Comment number 13.

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    Comment number 12.

    If dealing with the debt is delayed for Greece, this will roll on to Ireland and then Portugal. The inevitability is that the problems will continue to move around as the markets bet on the next default. Greece needs growth and devaluation - but will not get it with austerity for a decade. The end of the Euro as we know it is nigh http://bit.ly/jizYlq

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    Comment number 11.

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    Comment number 10.

    As the airline pilot announced out of the blue (skies). Good morning ladies and gentlemen there is absolutely no reason to be concerned.

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    Comment number 9.

    The UK has a marginally larger deficit than Greece but we can borrow at 4% whilst they are currently paying 19% when they can get it. A factor of five and all for want of something entirely free "a credible deficit reduction plan".

    We rejected the "plan to half the deficit in four years" as that meant doubling the national debt in five years.

    They need statesmanship.

  • rate this
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    Comment number 8.

    #6 You also have to know that Papandreou is the the current president of the Socialist International (SI) a well known Trotskyits, far right, Libertarian, anarchistic, free market pushing enterprise. He is, in short, a closet capitalist....just like New Labour were/are.

    http://en.wikipedia.org/wiki/George_Papandreou

  • rate this
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    Comment number 7.

    Yet more putrifying trash buried under an illusory carpet of integrity in high office. They probably tell themselves that they are doing it all for us 'poor lambs' not intelligent enough to grasp the system so we need 'looking after' without our knowledge but only with our best interests at heart.

    The required changes to the system will manifest themsleves at some point the longer it is avoide

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    Comment number 6.

    Ah right,Paul, got it - a liability transfer by stealth with lipservice paid to the fine print. I was amused the other day to discover that Mr Papandreou was awarded the German Quadriga Award in 2010 for services to enlightenment and honest transparency in public service...you couldnt make it up..

  • rate this
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    Comment number 5.

    Hi Paul, yes it looks like the plan to roll this out and transfer over to other EU states over time is well underway, but sure the concept of euro-bonds is a far better way to proceed, you can read some of the content we have published including from a protester in Athens here:

    http://www.unitescotland.org/tag/greece/

 

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