Irrational Greeks?

Lorenzo Bini Smaghi is fond of the word “irrational”. It appears several times in the article that Philip linked to yesterday. In particular, it seems that LBS thinks that Greek voters are irrational. Given that Greece is the birthplace not only of democracy, but of Euclid and the rest of them, it seems worthwhile querying the notion that Greek voters are irrational.

One evidence of their irrationality that is sometimes advanced is that while they have overwhelmingly rejected the current austerity measures in a democratic election, polls also show that they would like to remain in the euro.

What is irrational about this?

I guess the first best solution for Greeks is for Greece to stay in the euro, but for the current programme, based on multilateral austerity and internal devaluation, which has failed and indeed has no chance of succeeding, to be replaced with a programme which involves more debt forgiveness and more fiscal transfers from the centre. What is irrational from a Greek perspective about wanting this? That it probably isn’t going to happen is of course an important fact, but there is nothing irrational about wanting what is best for you.

Then there is the question of whether it is irrational to vote for Syriza. Let us assume that if Syriza forms a government with like-minded parties, and refuses to implement the current austerity programme, Greece is somehow ejected from the Eurozone. Knowing that this is a likely outcome, is it irrational for Greeks to vote for Syriza?

I’m not so sure.

If they vote for the two parties that have brought Greece to this sorry state of affairs — and why on earth would they? — then what is the likely outcome? The programme continues, and what Greece has lived through for the past few years continues for the next few years. This would offer zero hope for ordinary Greeks; no prospect of anything changing in the foreseeable future which might improve their lives. And in the end the strategy will probably fail, anyway.

If they vote for Syriza, perhaps Greece will leave the Eurozone. In that case, what happens? There is the certainty of a major economic crisis in the short run, but then what? Some commentators argue that the result will be hyperinflation. Given that the Greek primary deficit is very small, I am puzzled by the certainty with which this prediction is sometimes made. I suppose there is a certain probability of a very bad outcome like this occurring, but the probability is surely much less than one. On the other hand, there is also the possibility of default and devaluation leading to a recovery in two or three years. Again, the probability of this scenario occurring is less than one, but it is surely rather greater than zero.

And then there is the possibility that the Europeans will blink, and that the Greeks will get something like their preferred solution. I think this probability is vanishingly small myself, but perhaps I am wrong.

So, Greek voters can do what Europe’s elites are now urging them to do, and vote for the two establishment parties. In this case, they know with certainty that nothing will get better, and indeed that things will continue to get worse. Or, they can roll the dice. I don’t think it’s irrational for them to roll the dice. And thankfully, they seem to be gambling on Syriza, not Golden Dawn.

Of course, with a certain probability, which may be less than one, but is certainly much bigger than zero, a Greek Eurozone exit will lead to financial chaos elsewhere, and possibly even the collapse of the single currency. But that will primarily be our problem, not a problem for Greek voters.

So I am unconvinced by the argument that Greek voters are irrational, even if one only considers the economics of the situation they find themselves in. And this argument is strengthened when you consider non-economic factors. Everywhere in Europe you hear ordinary people saying that they feel powerless, that voting changes nothing, that they feel disenfranchised. In Greece, voters may be about to really change things, regaining some control over an agenda which has up till now been dictated by people like Lorenzo Bini Smaghi. I guess that many voters will derive utility from this.

Knowing all of this, leaders in other European countries should surely be trying to offer Greek voters something that the status quo excludes: hope. Instead, they are offering warnings about dire consequences, and statements to the effect that the rest of us can handle a Greek exit. You do have to ask: who is it that is being irrational here?

105 thoughts on “Irrational Greeks?”

  1. It’s not about rationale. It’s clear that everything at the EU level is being engineered towards more and greater ‘federation’. A united states of Europe – a global power as they see it – is within their grasp a la let’s take advantage of a good crisis (or ‘shock doctrine’ as some call it) – but some are not required in that body as it ‘moves forward’ so it may be a good time to get rid of them.

    The Schroeders and the Trichets (and their ilk) of this world have not gone away. They are still pulling the strings behind the puppets we currently see there.

    Ireland could be one of the countries being set up for ejection too.

  2. They’ll focus on realising their first class tickets on the EMU Titanic are to be exchanged for 3rd class tickets in the hold. Their Pozo and Lucky relationship with ECB will be changing anyway and won’t be for the better. Maybe democracy and Ryanair can help relieve Germans of some of their spending money. They are probably a lot more self sufficient than they realise.

  3. The IT gives Greece another kick while it’s down

    http://www.irishtimes.com/newspaper/opinion/2012/0517/1224316238692.html

    “Europe’s patience with the country has practically disappeared”

    I don’t know about the rest of Europe but I think the Greeks are being shafted for the sake of economic nihilism. How much would it cost to offer the Greeks some respite instead of losing 400bn in the even of a sure return to the drachma ?

    And if Greece is ejected Ireland will be well exposed. Ni neart go cur le cheile.

  4. One comment on Lorenzo B-S is sufficent for me these days!

    http://www.irisheconomy.ie/index.php/2012/05/16/greek-exit-part-4-ft-editorial-lbs/#comment-283281

    Greek voters are rational on a more realist view of rationality
    i Instrumental – let me suffer less
    ii Strategic – make my views stridently known to establishement
    iii Intersubjective – we agree that we wish to suffer less and see some way out of despair
    iv Subjective – f*ck this for a lark …. why should I hang myself? Stand up and Fight the gougers both internal and external.

    And Europe will Blink – when an Earthling has nothing to lose blackmail does not work. Europe could have sorted Greece and Portugal [fiscal runaways] and [Ireland, maybe Spain – capital flow bubblers] (I can’t quite figure out Italy) much more cheaply a few years ago. The cost keeps rising but the ideological fools setting the agenda keep digging …

  5. Perhaps Goldman Sachs are still advising the Greeks. The squeaky wheel gets the oil.

  6. A majority of Greeks wants to stay in the Euro – perfectly rational and sensible, but they also want to be forgiven their sins – again perfectly rational and sensible. The EU’s Grand Panjandrums are trying to hold the line that the ‘forgiveness’ they’ve received already (and the continuing ‘support package’) is the maximum that is and will be available. It, quite simply, isn’t enough; and that’s what a majority of Greeks seem to be saying. And it seems likely they will say it more loudly – and in greater numbers – next month.

    But what a majority of Greeks seems incapable of establishing is a sufficiently robust national common bond to secure a reasonably well-governed polity. Given this, they would be far better off out of the Euro where they would have time and space to establish such a polity.

    As this crisis unfolds it is revealing different degrees of deep-seated dysfunction in democratic governance in various member-states; the manner in which they have been affected by this crisis is simply a symptom of this dysfunction; and the extent mirrors the extent of the underlying dysfunction in governance. Politicians, policy-makers and macroeconomists looking for ‘magic bullets’ to cure the symptoms are wasting their – and everyone else’s – time. First tackle the malaise and then the symptoms will be more easily treated.

  7. @Kevin O’Rourke: “And then there is the possibility that the Europeans will blink, and that the Greeks will get something like their preferred solution. I think this probability is vanishingly small myself, but perhaps I am wrong.”

    Daniel Davies, who generally knows what he is talking about, reckons that this is a highly likely outcome. I don’t pretend to have an informed view myself. I know no more of the Greek alphabet than I need to cope with moderately wonkish scholarly papers. But it does seem to me that, in a game of chicken, the guy with nothing to lose is less likely to swerve.

  8. @ PH

    I think the problem the Greeks have is that they are stuck in a mathematical formula and they know it. None of the ‘bailouts’ changed the formula enough for it to balance.
    The current crisis is just maths working out over time.

    Over on another thread BEB says that everyone knows they have to reduce their standard of living by 25%. The problem is that it has already been cut by 20% but the iterations will bring it way beyond 25%.

  9. @ Kevin O’Rourke
    Your conclusion is apt. When will the EU mandarins learn that threatening a nation is very likely to lead to increased resistance. It seems that in addition to the threats the ECB is being used as the military arm to force the Greeks into submission….the withdrawal of bank funding reported yesterday could be viewed as an act of aggression.

  10. @Seafoid,

    I agree. The primary, essential criterion for participation in the EMU was good governance. The project was developed on a naive expectation of good governance by all. Because of this, serious misgovernance in any member, however small, had the potential to scupper the entire project. And that is what we’re seeing in more than one member.

    A common problem with democracy is that voters often tend to work backwards, not forwards. If there is a mess, they will tend to punish the bums who made the mess without giving too much thought to the credentials of the bums who will be elected almost by default.

    We saw this in Ireland last year. A majority of people were resolved, quite understandably, to give FF and the Greens a kicking to within an inch of their political lives. FG and Labour were elected into government with an overwhelming majority almost by default. Now people are beginning to realise that they have simply replaced one shower of inept, complacent and arrogant bums with another.

    The Greeks gave New Democracy and PASOK the kicking they deserved, but the underlying dysfunction in the polity prevented them electing a coherent alternative – even if by default. And, similar to many electorates, it appears they were unable to look backwards and forwards at the same time. The upcoming election gives them an opportunity to look forwards.

    Unfortunately, when it comes to Greece, many voters, particularly in the creditor nations, are still looking backwards – to the misgovernance that got the Greeks in to this mess in the first place. Even if the governing politicians and policy-makers in these countries wished to show more forbearance to the Greeks, they will find it very difficult to persuade their voters to demonstrate the required magnanimity.

    As a result, I think the Greeks should be given the time and space to establish a better-governed polity.

  11. @KD

    I think your analysis is bang on. Irelands misfortunate is that we are not quite far enough down the road that one could argue we have nothing to lose (apart from the 440k unemployed). We can trundle alone for several years of greater austerity with the majority or at least a large minority as well off as they ever were – but far from Pareto optimal outcome. FG’s objective is to protect that class – Labours objective is to protect the Croke Park agreement. In the long term our children will suffer however as we are too selfish and too conforming a race to hit the rebooth button – we must cling to this ridiculous single currency construct at all costs notwithstanding how much harm it has done to this country (that is not to suggest we are not the architects of much of our own downfall btw). Our balance of trade actually deteriorated under the Euro and only has recovered since the recession began – the same goes for Spain and Portugal ….Germany’s by comparison has had a BOT on an upward tajectory ever since the Euro found its way into all our pockets.

    The visual on the charts you can look at here is so simple, so striking and central to the problem that Germany’s don’t understand – central to what Keynes warned everyone about in relation to the treaty of Versailles. He was ignored to everyones cost. PH refers to the “free rider” concept and while there is some merit in it, it can not be ignored that Germany too cannot ‘freeride’ the enormous benefits it has enjoyed from the Euro without some redistrubtion of those gains.

    http://www.tradingeconomics.com/germany/balance-of-trade

    ps…you have to adjust chart dates yourself.

  12. Romans to the rescue of the Greeks

    Eurozone crisis
    Listen to the cry of Athens

    17 May 2012 La Repubblica Rome

    Instead of treating Greek officials as outcasts and their constituents like the plague, European leaders, and particularly Germans, would be better off listening. Because, in attempting to prioritise the needs of the economy over those of democracy, they are undermining the Union’s foundations.

    This distance between Union and democracy, between Us and Them, will have painful consequences. With their death, a little of us would die too, but the decline lacks the self-knowledge that Athens has taught us. It is not the Greek death that Ajax the Great spoke of in the Iliad* : “A black fog envelops us all, men and horses. Father Zeus, deliver us from this darkness, the sons of the Achaea: clear the heavens so that our eyes can see and if, in your rage, you want us to lose so be it, but at least give us light so that we can see! ”

    *Iliade (XVII 645- 647)
    http://www.presseurop.eu/en/content/article/1997681-listen-cry-athens

    +1

  13. @Paul Hunt
    On forward and backward looking, I’m not sure which way the new Greek guy is looking. He is quoted today as saying…”we are heading straight for hell”

  14. @Seafóid: “The current crisis is just maths working out over time.”

    Ah, yes!. The irrational ones are those who believe (or profess so) that increasing and extending credit will not decrease your future income, but will increase it.

    When your knicker elastic snaps; you have to hold them up yourself.

    “REDUCE spending NOW!”
    “How?”
    “Cut government spending, raise taxes”
    “Good ideas. Which spending? Which taxes”
    “We need to grow. There must be no reduction in government incentives to pivate industry. Corporation taxes must be reduced to increase competitivness. We need a reduction in labour costs.”
    “Eh? Those ideas are irrational”
    “What are you moaning on about?”
    “Eh. You want to reduce government income and at the same time increase government spending?
    “Yes. We need growth.”
    “But, we are in this economic s**thole ’cause our government spent more that it earned.”
    “Correct”
    “So, we get out of this s**thole by doing the same things that got us in here in the first place?”.”
    “Correct!”
    “That’s X%$&*!? irrational”

  15. …and lest we forget, the European project was not supposed to be about profiteering. It was supposed to be about political and social stability in a continent that tore itself apart twice in the last century….when people talk about wealth redistribution, free riding, austerity, bondholder bailouts etc….it is rarely considered against this overarching backdrop of political and social stability – only economic stability in the sense that each holds what it has….these facets of stability however are usually diametrically opposed.

  16. Let nobody forget that Syriaza is the far right party that came second.

    I know this cause I watched Prime Time last night. Is it a wonder served by such an incompetent media that we are where we are.

    Regarding the Greeks irrationality well what to say. Lorenzo and his lot have stuck to a failed plan for years.

  17. Difficult to see Germany /France /Eurozone let Greece exit in an uncontrolled way. In advance of any controlled exit, it’s also difficult to envisage the creditors will not have a real go at defending their money-at-risk in Greece, just as they have been defending their creditor interests elsewhere. That’s only rational.

    Rational too that our N European brethren have socialised all those at risk debts (their ‘assets’) to their Eurozone ‘partners’….The allocation of losses (for Ireland potentially 1% of Greece’s E400bn I believe…but that’s only Greek govt debt) will be another area of acute interest. Also, if the contingent liabilities underpinning the Euro rescue funds are triggered, how exactly will they be funded? Via target 2 /ECB, with country funding /loss allocations being matched by ECB printed cash? However, ECB funding would require collateral…no? Those tests will certainly test the rationality of the Euro.

    @ KO’R Your comments above are very clear. Nothing irrational about the Greeks voting more far left (end austerity) and yet staying in the euro…..In that game of poker, let’s see if Germany /a Germany-instructed ECB has the historical nerve to pull the plug on Greece, with Germany again (rightly or wrongly) written in history as the chaos-creater and destroyer of Europe. No, there’ll be plenty of twists and turns (blinks) yet before they will allow that to happen.

  18. Firstly if you have not read that LBS comment piece in the Financial Times do so immediately. It might give you an idea of just why opposing the Fiscal Compact is so important.. These are dangerous markets fundamentalists and they need to be stopped.

    Secondly this is not about the Greek voter’s having poor reasoning skills, that is an asinine thing to say – though this is a former senior figure in the ECB speaking and the urge to say foolish and threatening things may be a qualification.

    The Greeks know that utter capitulation to Germany/the ECB effectively means national impoverishment and powerlessness for the masses and also that the Greek establishment parties are in cahoots with the wider European establishment (just as Ireand’s are) and that they seek mainly to protect their own influence in that arena (just as Ireland’s do). Greece would not be in the situation it is now if the mainstream political parties were not a major part of the problem.

    Given the conflicted interests that ruling parties have in all peripheral nations between protecting national interests and preserving their place in the European political hierarchy it seems entirely rational to vote for Syriza, or at least not for any of the neoliberal/EU position parties.

    LBS incidentally is an entirely rational ass and thug. He knows his class and career interests are furthered by the increasing the input that the ECB and the financial sector have into national economic and fiscal policy. The European component of the global financial crisis is all about people with excellent reasoning skills, badly mistaken beliefs and conflicted allegiances.

  19. So, Greek voters can do what Europe’s elites are now urging them to do, and vote for the two establishment parties. In this case, they know with certainty that nothing will get better, and indeed that things will continue to get worse. Or, they can roll the dice

    Kevin,

    a few days ago, the ex German Federal President Roman Herzog demanded for the German election hurdle of 5% of votes to be increased for any political party to gain access to the Halls of Power.

    I would comment here, that it seems as if the established elite, and in Europe that is overwhelmingly the EPP, starts to displays quasi totalitarian tendencies.

    Exclusion of opinion and reason is becoming more of a tactical tool, but nothing new really, when it comes to the public discourse. Listening to Minister Noonan’s remarks from yesterday about feta cheese, gives me a creepy feeling. Living in Ireland now a considerable time, I am still struck by the blatant ways this public discourse is being mislead and manipulated, be it the past Lisbon treaty phenomenon, or the “Bank Debt Treaty” of today and somehow the late Minister Lenhian’s often quoted, favorite statement comes to my mind, “There is no other way.”

    The other big party block in Europe, in Ireland represented by Gilmore and his friends, in France now by Hollande, I expect nothing less than to be served the next big betrayal from them, as it was prepared by Draghi, and quickly picked up by their fractions, and it is what I call “The Growth Lie” to mislead the public into submission.

    Growth will not miraculously happen by some quick and dirty investments that are designed to catch votes while they well know that the engineered systemic design flaws are prohibitive for any sustainable and responsible economic future concepts.

    Such new concepts are not being discussed or only at the very fringes.

    I am afraid I see no future for the single currency, and the signs on the wall point back to the dark ages for some time to come.

    Best
    Georg

  20. @ Kevin O’R

    It all comes down to what your priorities are. If your priority is to remain in the EZ, then its probably irrational to vote for Syriza. Its probably irrational to expect the EZ to keep transferring money to the periphery without some form of conditionality. Putting these two together, its probably irrational to think you can remain in the Euro and keep retention of transfers from the core if you vote for a party like Syriza. Its perhaps irrational at this point to think that dumping the Troika program and remaining within the EZ can be attained at the same time.

  21. “IRRATIONAL” —no way Jose!. “TOO SMART BY HALF” a much better handle for Greeks. Never ones to get hands dirty if someone else will do the work and very quick at spotting any opportunities for “freebies” How true the saying of never to trust “Greeks bearing Gifts”. !

  22. According to Bloomberg today 3 Trillion has been wiped out on worldwide equity markets in the last month
    and according to another report the potential cost of a Greek exit would be about 1 Trillion.

    Wouldn’t it be rational for the powers that be to put together an effective package for once and for all to solve the crisis.

    I wonder how many more Trillions will be wiped out if this is allowed to continue? Maybe they don’t do rational!

  23. @Ceteris
    re ” I wonder how many more Trillions will be wiped out if this is allowed to continue? Maybe they don’t do rational!”

    Quite right. They do moral hazard very well though. Their morals. Somebody’s else’ hazard.

  24. Off thread: An edit function here would be good.

    It causes me severe mental pain me to read my own typos – a misplaced apostrophe is a sin against God.

  25. @ BEB Too simplistic….sees rationality here only in economic /money terms. Totally ignores the social and historical context of economics.

    @ KO’R A similar rationale appears to be emerging in Ireland, as demonstrated by the large number of undecided FC voters (combined with N voters). The status quo is not attractive to many, many people….represents lack of hope for them and their families. The undecided and N voting blocks represents an increasingly willingness of the Irish to consider a ‘gamble’ on an alternative, potentially better future. While the ‘me feiners’ are pre-occupied with self-interest and protecting what they have gained in this crisis, they have lost touch with a large section of Irish society that is ‘losing’, and is losing or has lost hope for their future under the status quo system. The FC may /may not therefore be a catalyst for change….but Official Ireland is ignoring the causes for the emergence of the undecided and N blocks.

  26. In May 2002 the Thomond Archaeological Society organized a two week trip to Greece. It was the trip of a lifetime. The society had the privilege of having Prof Patrick Cronin of UCC as the historical tour guide and it was his knowledge, enthusiasm, respect and teaching expertise that made the trip so special.
    We visited several historical places in Athens, Olympus, Sparta, Mycenae, Corinth, Delphi and some other places that I now cannot recall. I recall Prof Cronin at Mycenae (I think) pointing to where Agamemnon took his last bath before being murdered. “How do I know that” he said. “Because Homer said so”. In the Athens underground metro, the preservation of the antiquities was spectacular.
    Not entirely because of that trip but certainly influenced by it, I find the treatment of Greece by the European powers to be that of the worst kind of charlatans.

    @David O’Donnell
    re: La Republica
    +1
    Well done, Italians.
    Our MOF can only manage to insult the Greeks.

  27. @Ceterisparibus

    “Wouldn’t it be rational for the powers that be to put together an effective package for once and for all to solve the crisis.”

    Already strong rumours of a co-ordinated G8 announcement this weekend/action early next week. Markets will no doubt bounce on the news but I can’t guarantee it will be an action that will actually solve the crisis, just a sticking plaster/another can kicking to calm things down/restore some confidence. I’m not sure what that action will be but I wouldn’t be surprised if it involved some printing.

    I was talking to the Chief Risk Officer of a ‘household name’ this morning. I quote: “Nobody’s got a f***ing clue what to do.”

  28. @Shay Begorrah

    “…a misplaced apostrophe is a sin against God.”

    It’s worse than that. It can get you kicked out of the Euro.

  29. And while we are on Rational…
    I see that the Gov have rejected a Bill sponsored by Shane Ross TD that would allow for a postponent of the referendum in exceptional circumstances. Seems like a very sensible piece of legislation.
    Is it irrational for the Gov to plough ahead in the face of rapidly changing circumstances and in view of the reiteration today by the new French Finance Minister that they will not ratify the FC in its present form?

  30. @Paul Hunt
    “As a result, I think the Greeks should be given the time and space to establish a better-governed polity.”
    Weimar gave birth to Hitler. The collapse of the Greek economy might bring chaos to the Greek society and give birth to a political nightmare .
    I do not know how Greece can be kept in the Euro ,or even if it is still feasible ,but I fear for the worse. The “cradle of democracy” has a recent history of fascist dictatorships and civil war The Balkans have a specialty of very unsavory characters of which the golden dawn party is a nice specimen.
    It is funny that you are so pessimistic about Ireland and optimistic about Greece whose situation cannot seriously be compared with the position of Ireland.

  31. The emphasis within the economics community on ‘rational behaviour’ or ‘optimal behaviour’ does not do that community many favours when it comes to predicting or modelling the behaviour of humans.

    Sometimes people just choose to do what they feel is the ‘right’ thing to do.

    Without wanting to be silly about it, and not for a moment suggesting any direct equivalence, a thought experiment that can be illuminating is to consider how and why various characters (like LBS perhaps) would have spoken, advised or voted at Downing St during and immediately after Dunkirk.

    With a trading empire still there, AH evidently less than enthusiastic to finish off the British Expeditionary Force & open to a deal that would allow him to get rid of a big distraction, a pathetically equipped army and a fighter force that had been demonstrably incapable of getting to altitude quickly enough and no prospect of US entry into the war – what would the optimal choice have been deemed to be?

  32. How do you persuade voters who’ve put in huge effort and taken economic pain to make their economy very successful that they should agree to allow the economy to become less successful so that others might, at least, survive – if not thrive? In so far as German voters might be aware of the benefits their economy has secured by virtue of the Euro, they see these as rewards they have earned through their efforts and sacrifice.

    This is the key stumbling block. Many complain about the democratic deficit in Europe. And yes it was a major contributor to this crisis in the way the EU’s Grand Panjandrums assembled this project without visible means of support or sufficient democratic consent.

    But democratic legitimacy – or, more accurately, the difficulty of securing democratic consent from previously misled and now cranky voters – has emerged as both the difficult-to-surmount barrier and the essential element required to resolve this crisis.

    Its emergence is gradually putting the policy wonks, the instant commentators with their whizz-bang solutions and the macroeconomists either looking for, or waving, their magic bullets back in to their boxes. It hasn’t silenced the deluded on the left, but voters tend to be able to differerentiate the less from the more deluded.

    This will be a long haul – and it’s likely there’ll be more casualties, but the penny will drop eventually that nothing successful or sustainable will be achieved without effective democratic governance.

  33. @ceteris

    Another interesting and ‘irrational’ characteristic of people is that when markets go up, even quite dramatically quickly, nobody says:

    “last month 2 trillion euros of wealth was summoned out of thin air and added to asset values”

    If we are going to continually talk about wealth being “wiped off” it would be honest to talk about it being “painted on” when prices go up. It might encourage a bit more rational analysis.

  34. Ah ,LBS likes stirring the pot – its the lack of a political executive response to his outpourings which is much more disturbing.

    In other news……
    Me thinks the Germans and to a lesser extent the UK (they are making valiant efforts with their 19th century rail investments / different monetary policey) have found the new Saudi Arabia and it lies withen the EU.

    “In April, 1,017,912 new passenger cars were registered in the EU, or 6.9% less than in the same month of 2011. Four months into the year, new registrations were 7.5% lower in the EU than a year earlier, adding up to 4,332,342 units. No calendar effect occurred as the month counted the same number of working days as in April 2011 throughout the region.

    In April, markets across the EU* performed diversely, leading to an overall 6.9% decline in new car registrations. The UK (+3.3%) and Germany (+2.9%) were the only major markets to post growth, while France contracted by 1.9%. Italy (-18.0%) and Spain (-21.7%) recorded double-digit downturns.
    From January to April, Germany (+1.8%) and the UK (+1.4%) sustained demand in the region while the rest of the major markets faced contractions ranging from -7.0% in Spain to -17.5% in France and -20.2% in Italy.”

    Dork again : Greece really stands out , surprise surprise
    New Car registrations
    Y2011 Jan / April : 35,459
    Y2012 Jan / April : 21,588…… a decline of -39.1% from a already very low 2011 base.
    Keep in mind Greece has more then twice the population of Ireland so it would be the equivalent I guess of them buying less then 10,000 cars when Ireland has bought 52,000 + in the first third of the year.
    (although they may have different seasonal buying patterns to the Irish)

    It seems Europe wishes to become private car free the hard way rather then in a intelligent manner.

  35. @Kevin O’R

    Bravo! It’s great to see a cogent riposte to LBS.

    Slightly off-topic, but I cannot understand why such refutations are not employed more widely by the Irish establishment (including a lot of your fellow economists, with the exception of CMcC). It is one thing to stick to the letter and spirit of the MoU, but it is quite another to agree with its rationale and the broader conventional wisdom in Germany.

    Why is Angela Merkel allowed to state again and again that a state is like a household with regards to spending and income, without the slightest challenge from the government?

    How is it that the EU/ECB are allowed to get away with saying, in effect, that member states needs to work to reduce their debt burden, when they have directly contributed to increasing Ireland’s debt burden by preventing the burning of senior unguaranteed bank bondholders?

    How is that Ollie Rehn is allowed to lecture Ireland about Pacta Sunt Servanda, without the slightest querying by the government of how Finland could have resolved its banking and property crisis in the 90s without resort to currency depreciation, inflation & bank resolution?

    Instead of repeatedly challenging the moralistic Germanic narrative of the crisis, the Irish establishment have abdicated responsibility for advancing our interests and have become passive implementors of the EU/ECB’s one-dimensional policies. In some cases, particularily in the current referendum campaign, the govt has even become a mouthpiece for the EU/ECB.

  36. @grumpy

    ‘If we are going to continually talk about wealth being “wiped off” it would be honest to talk about it being “painted on” when prices go up. It might encourage a bit more rational analysis.’

    +1

  37. @KO’R,
    Excellent article. Keep up the good work.

    With the small size of tits current primary deficit, I don’t see why Greece should have to leave the euro. Collecting taxes more effectively from ND and Pasok’s client base would sort out what remains of the primary deficit with extra to fund Syriza’s programme. By the time the election rolls around the ongoing bank run will have further slashed the exposure of Greek citizens and the Greek sovereign (via deposit insurance) to bank resolution.

    It will cost the ECB and the countries that have usurped power in the EU hundreds of billions in defaults or debts postponed indefinitely, but their appalling behavour makes that outcome unambiguously a GOOD THING. It isn’t just children who should be obliged to learn from the discipline of natural consequences.

  38. Again, a bit off topic, but…

    I do not think that Greek voters are irrational, as stated by LBS, but I do think that their perceived irrationality, and the perceived irrationality of Syriza, is an advantage when it comes to negotiation.

    Perceived irrationality at the negotiating table is like a perverse form of credibility. It may be irrational to start a nuclear war, but if your negotiating partner believes you are crazy enough to do it, then they are likely to be forthcoming.

    One of the problems that Ireland has suffered from in negotiating with the troika is that the likes of Patrick Honohan, Michael Noonan and Brian Lenihan are/were seen as being “rational” and reasonable careerists. I will never vote for Sinn Fein, but I suggest that if Martin McGuinness was the Minister for Finance he would be able to extract a lot more concessions from the troika, because he would be perceived as being slightly irrational.

    In this regard, the risible “renegotiation” of the bailout interest rate and the bank bailout costs have shown that Patrick Honohan and Michael Noonan are not statesmen and are terrible negotiators.

    @BEB
    One would presume that the Greek’s priority is, first and foremost, to improve their lot.

  39. So Mr Bini is back with another one of those block rockin’ beats. It’s understandable that such an institutionalised man questions what is and isn’t rational.

  40. @Grumpy
    I agree with you…to a point.
    My point is that it would be cheaper to invest 1 trillion now than see around 10 trillion of worldwide wealth dissipate if the fertilizer hits the fan. The resultant loss of confidence would probably lead to the lost decade predicted by many commentators.
    Btw, the gains are only recovering lost wealth…look at the Nikkei at around 8800. I think it was around 20000 some 20 years ago.

  41. Etymology
    Recorded since 1632 (during the Thirty Years War, native British use since the Cromwellian Civil War), from High German Hutterisch plunderen (=modern Dutch) “to plunder,” originally “to take away household furniture,” from plunder “household goods, clothes” (“lumber, baggage,” 14c.); akin to Middle (=present) Dutch plunder “household goods”, Frisian and Dutch plunje “clothes”.

  42. @bazza

    They couldn’t negotiate at all, because the political and financial analysts advising the other side were aware of the weight of public expectation back in Ireland.

    The politicians were all playing the game of refusing to outline – and importantly, get provisional support for – what would happen if Ireland did not accept an official credit line because the terms were unacceptable.

    The political game was for no party to loose the public sector vote, so they all committed to ensuring there would be borrowed Euros available for Croke Park. This couldn’t be achieved without committing to borrow Euros to pay to bondholders of the banks.

    This was obvious to the other side, so Irish ‘negotiators’ in effect just turned up and found their position transparent.

    Had there been a perceived willingness among the Irish public to accept a “sub-optimal” option, those supposed useless negotiators might have been in a position to actually negotiate.

    In reality, SF’s position wasn’t much of an advance on that since they too joined in in ducking an honest discussion of the options.

  43. @Overseas Commentator,

    I wouldn’t say I’m excessively pessimistic about Ireland and equally excessively optimistic about Greece. Ireland’s problem was that its banking, property and associated fiscal fiasco were simply too big and too quickly exposed – before the totally unprepared and grindingly slowly moving EU could respond. Ironically, it has being doing sustained fiscal adjustment for longer than most – and probably has the best capitalised banks in the EZ.

    But without meaningful structural reforms – and reforms of democratic governance – it is a negative sum game and the domestic economy will continue to sink in to the mire. But Official Ireland will be fine. They’ll stay well above the mire. The hoi polloi can shift for themselves. That’s what annoys me.

    As for Greece, either enough of its citizens will come to realise what is required to establish and sustain a reasonably well-governed polity – or they won’t. I remain sanguine they’ll choose the former. But I recognise the risks you highlight.

  44. Dear Dr. O’Rourke,
    Although fair point one does need to see the general opinion polls that seem to argue that:
    a) Greek wanted a coalition government
    b) they want an end to austerity
    c) they want to remain within the Euro and the European system
    What Syriza is doing is to suggest that all three are feasible at the same time, while wanting none of the above. Having seem that a new election would bring new polls, he refused to negotiate, and argues that B) and C) are not mutally exclusive.

    The Irony is although austerity measures were very poorly thought out and implemented they have been effective: what Greece needs now is stability to reap the rewards of a partial correction of a very broken markets.

  45. Must be nice to have a catch-all answer for everything: structural reform, structural reform!

    To the extent that this phrase is meaningful (mostly it isn’t), it means: more of the market-friendly snake oil that got us into this mess, please. Of course, snake oil as we all know has very low viscosity and so does not gum up the wheels of industry in the way that viscous things like people’s livelihoods or desires or views of the good do.

  46. To give you a idea where Greece is at the moment…
    In the period Jan – April Y2008 it registered 107,307 new cars
    Jan -April Y2012 21,588 new cars.

    You see Lorenzo and his ilk and indeed his so called adversaries were happy to see credit hyperinflation such as the above happen throughout the eurozone.
    Now almost the entire built fabric of envoirments are products of credit hyperinflation making adjustments almost impossible.

    Contrary to popular belief there was a credit hyperinflation in Greece also , this idea it was goverment overspending alone ,whatever that means in this envoirment ( years ago goverments introduced interest free money so as to stabilise the debt system and prevent what we have seen in the Eurozone.)

    Credit hyperinflation or Ponzis must happen because of article 123 , not despite it.
    This is a manic creation of credit to service the interest on goverment debt , this creates the malinvestment and bubbles we see around us.
    (A goverments money need not pay interest.)

    What makes the ECB unique is that they now wish to subtract the money supply from peoples previous credit hyperinflated deposits so as to continue to service that stock of debt , creating very little medium of exchange to sustain even basic commerce.

    These various councils etc withen Europe are represenative of a dark money power who wish to crush innocent people & entire nations to sustain their unsustainable but effective from their point of view debt money control / Market state system.

  47. Irrationality is usually easy to find in politics. Tea partiers who want smaller government but selected cuts should be for their neighbours not them, and so on.

    It’s interesting to observe the outrage in Ireland these times when contrasted with what dissent had to contend with during the bubble from the forces of conventional wisdom, across the public and private sectors, the universities, the media and at a personal level from the many who had a self-interest in seeing that the bubble was fuelled.

    Voters of course do not generally accept responsibility for bad choices.

    As for Greece, AP reports that “a major European Jewish organization is urging European governments to quickly adopt measures to tackle anti-Semitism and far-right extremism, including possibly banning a hardline Greek party that did unusually well in recent elections.”

    I’m not suggesting that Syriza is in the same boat as Golden Dawn but the latter could well build a support base over time.

    The Greeks should vote for parties that are committed to democratic principles. That should be the main desire of outsiders.

    Things may well have to get very bad before there is recovery in a system where doctors strike for the right to gouge consumers.

    Apart from what transpires from EU discussions on growth measures, until there is a government in place in Athens, the EU can’t make promises such as reversing public service staff cuts etc.

    With the strong anti-EU sentiment, it’s easy to ignore that EU money has helped to build the best infrastructure in the region,

    @ Ceterisparibus

    Wouldn’t it be rational for the powers that be to put together an effective package for once and for all to solve the crisis.

    As I’ve said before, the growth crisis is not new.

    Daniel Gros says:

    But the real question is: what can Europe do to create growth? The honest answer is: rather little.

    The key elements of a growth strategy discussed among Europe’s leaders these days are actually the same as in 1996-1997: labor-market reforms, strengthening of the internal market, more funding for the European Investment Bank (EIB) for lending to small and medium-size enterprises (SMEs), and more resources for infrastructure investment in poorer member states. The last two, in particular, attract a lot of attention because they involve more spending.

    As a result, most countries in the EU’s south probably have a sufficient stock of infrastructure today. In fact, more infrastructure investment would actually make most sense in Germany, where infrastructure spending has been anemic (only 1.6 % of GDP, or half the rate of Spain) for almost a decade. That is why Germany’s famous Autobahnen are notoriously congested nowadays.

    Just think how hard its has been to promote growth in Ireland over decades if you set aside the MNC sector and agriculture, massively supported over 40 years by both cash and price guarantees.

    @ All

    In Jan 2010, George Provopoulos, governor of the Bank of Greece, wrote in the FT:

    “During the 1980s, Greece had another twin-deficit problem (large and unsustainable fiscal and external imbalances) and its own national currency, the drachma. It waved the magic wand twice, with large devaluations of the drachma in 1983 and in 1985, but in the absence of long-lasting structural adjustment and sustained fiscal contraction. The devaluations were followed by higher wage growth and inflation, with no sustained improvement in competitiveness. Speculative attacks against the drachma were avoided only because of strict controls on capital flows, an option that is no longer feasible or desirable. The twin-deficit problem remained. So much for the magic wand of currency devaluation.”

    Between 1981 and 1988, the drachma devalued by 62.5% against the ECU (European Currency Unit).

  48. @Dork & all

    Who defines rationality? Is there, invariably, far greater depths of understanding of situations needed in order to assess supposedly true statements? The Greeks may have a reputation for profligacy and irrationality and the French may have a reputation for sound judgement in the area of energy policy with their nuclear programme, but reading the link below might make you wonder about distilling things into soundbites.

    http://www.psr.org/nuclear-bailout/resources/nuclear-power-in-france.pdf

  49. @Ernie Ball

    To the extent that this phrase is meaningful (mostly it isn’t), it means: more of the market-friendly snake oil that got us into this mess, please.

    World problem: Huge market failure damages world economy, it is only halted by massive state intervention.

    EU Solution: More market, less state. No, seriously.

    We are dealing with fanatics here, as well as malefactors of great wealth and their hangers on.

    Our neoliberals with ECB characteristics are like the enthusiasts for Soviet farm collectivization in their inability to acknowledge the damage their “principles” are inflicting on the people.

    Of course the Soviet’s worked it out in the end, farm productivity metrics do not lie. The dominant ideological force in the EU may be less amenable to reason.

  50. My apostrophe catastrophe continues.

    Of course the Soviets worked it out in the end, farm productivity metrics do not lie. The dominant ideological force in the EU may be less amenable to reason.

  51. @ PR guy

    DMcWilliams got some stick last week for penning an aritcle suggesting the germans are trying to do with banks now what they failed to do with tanks in the last century…this suggests he was on the track.

  52. Hi, Ernie,

    Any progress on figuring out why ‘Ireland is such an expensive place to live’?

    Anyway, you probably have no real need to worry yourself too much about these ‘structural reforms’. The Government, almost totally captured by the various sectional economic interests, has already decided on its pitiful little programme. It has been decided to continue hosing citizens and consumers as much as they have been for years – and probably even more.

    If I were you, the only thing I’d worry about is ‘events’ that might unfold which would reveal how much citizens and consumers are being hosed – and the Government might be forced to do something. Another slightly worrying angle is that those who are funding the current fiscal deficit might start taking this issue more seriously in an EU context – and wake up to the fact that the Government has been pulling the wool over their eyes.

    So, perhaps, you shouldn’t get too comfortable.

  53. @Steve

    All it needs are 6 MS not to pass it.

    The central committee of the Irish Labour party must be feeling pretty smart now. Garlanded by the financial sector and German conservatives, alternatively ignored and threatened by the ultra-monetarists in the ECB and now revealed as not only out of touch with their own voters and their sister parties in Europe but working against their interests.

    Eamon Gilmore can not be sleeping well. This might be the current crop of Labour grandees last shot at ministerial office and they need to grit their teeth and admit they were wrong about the Fiscal Compact.

  54. @Paul Hunt

    You ask “Any progress on figuring out why ‘Ireland is such an expensive place to live’?”

    Why, yes, I have. It’s the absence of “structural reforms”!

  55. Ah, Ernie, sure that’s grand. I was pretty sure you’d be fully in favour of having the cost of living far higher than it need be. I’m not sure you’d be so sanguine if you were on the minimum wage. But then again, you’d probably say it should be at 10 times its current level.

  56. @ Ernie

    It’s both! The lack of structural reforms in the bloated public service.

  57. The Euro last crossed the USD from below in late 2002….what odds it happens again from above before the end of 2012?

  58. @ Shay
    +1
    Labour have been poor. As you say no linking up with sister parties and loss of connection at home.
    They became blinded with local anti FF and anti Shinner politics that they lost sight of everything.
    They’ve had a strange outlook. They’re like a football team that won one match in the early 90’s (whenever they were last in power) and then when faced with another match in 2011 thought all they had to do was to play exactly the same way. Not good

  59. Wow. “There is no alternative” is the only spot left uncovered on my bingo card, so I’ve got my fingers crossed.

    It’s an open question whether Paul Hunt could pass a Turing test.

  60. @V Barrett

    “DMcWilliams got some stick last week for penning an aritcle suggesting the germans are trying to do with banks now what they failed to do with tanks in the last century…this suggests he was on the track.”

    Get your banks off of my lawn doesn’t seem to have the same ring to it 🙂

    I’m now waiting to see who’s going to come up with the call for a global currency. I wouldn’t put anything past the G8 (and their masters).

  61. @ Bazza

    thats everyone’s number one priority. You need a policy to go alongside it. Thats where this thread comes in. As the visiting Greek poster above notes, the set of options they are hoping to attain do not seem to fit together in a rational manner.

    @ MH

    so devaluation and default are regular release valves for them it seems. If they exit the EZ, i don’t forsee a situation where they will ever be asked back into some form of economic association or community again.

  62. @ Bazza

    ‘I will never vote for Sinn Fein, but I suggest that if Martin McGuinness was the Minister for Finance he would be able to extract a lot more concessions from the troika, because he would be perceived as being slightly irrational. ‘

    Why would he be percieved as being ‘slightly irrational’ and not you for thinking him slightly irrational?

    Is that not the point of this thread?

    It is that kind of thinking that has the place in the state it is in.

    @ PR GUY

    Head of Risk – well that kind of says it all.

    Oh, I will be in Twickers myself Saturday, make sure there is plenty in your wallet to down the inevitable …………! 😉

  63. It seems to me that the Greeks are doing an Iceland. They have been driven to the cliff and been told jump or we push and they seem to have decided, “no, you push. We refuse to do your dirty work for you” At least this way all the pain will be your own decision not something forced upon you.
    It really makes no difference, or indeed sense but it can be of incredible psychological value to the populations, us against the world etc.

  64. @ MH That quotation from George Provopoulos is worthy of some serious thought…..Thanks for sharing it. Disturbing. @ Alexander Apostolides: Any comment?

    Beyond that,
    AA “Irony is although austerity measures were very poorly thought out and implemented they have been effective”. Doesn’t look very effective from here! How do you define “effective”?

    “what Greece needs now is stability to reap the rewards of a partial correction of a very broken markets.” Amen, but “partial correction”…..?

    (@ MH: I humbly suggest it is time for you to drop the “Voters of course do not generally accept responsibility for bad choices.” line….Comes across as a repetitive (irritating) whine /bleat, distorting the good points you make. Time to move on don’t you think….).

  65. @Eureka

    They became blinded with local anti FF and anti Shinner politics that they lost sight of everything.

    When faced with a choice between nationalism and imperialism the Irish Labour leadership plumps for imperialism almost every time. Their attitude to the current crisis is thus nothing new and it is born of the same distinctly parochial analysis.

  66. @Tim
    I find it difficult to read Green stuff but I tried in this case.

    Look, if the world produces lets say 80 MBD of oil then the world will consume 80MBD.
    Its not really a sign of success that you reduce your consumption when you are poorer as others will get the new surplus.
    (This is what is happening in Europe now as we are non sovergin and therefore the slave boss men are in a position to redistribute the global ration cards.)
    If France somehow held 100% of the worlds riches it would consume all 80MBD.

    Also predictably they use final energy supply to calculate energy use (16% Nuclear)
    They don’t quanify the input volumes of lets say valuable Nat Gas and the loss of this high value product that could be used for better uses.

    if you want to see what happens to a country that abandons new Nuclear look towards the UK and its infamous Dash for Gas post 1990ish
    http://www.iea.org/stats/pdf_graphs/GBELEC.pdf

    Nuclear cannot replace hydrocarbons energy , what it can do is free the stuff up for better uses.
    We use something like 2 thirds of our Nat Gas imports for electricity use which compromises our balance of payments.
    Y2011 Prov energy balance nat gas
    Total imports : 3,926 KToe
    TPES : 4,212 KToe
    Power station inputs : 2,330 Ktoe
    Combined heat & Power : 244 Ktoe

    You save liquid (oil) energy simply by dumping the private car , and oil central heating.
    After that it gets real painful.

  67. PORTUGAL which receives insufficient attention on this blog …

    El Dorado in Angola

    Portuguese Find Oasis from Crisis in Former Colony
    Headhunters in Lisbon are currently lining up highly skilled Portuguese workers for good paying jobs in Angola, an African country currently experiencing enviable growth. There is no economic crisis in the former Portuguese colony and it offers something that is currently scarce in Portugal: jobs.

    What does a Portuguese father of four school-age children do when he makes only €900 ($1,141) a month?

    He decides to emigrate.

    That’s why António Sàágua, 45, a soon-to-be economic migrant, is sitting in the stark gray office of Ema Partners International on a sunny spring afternoon. The employment agency, located on a quiet side street off of Lisbon’s grand Avenida da Libertade, places skilled personnel and managerial staff. Sàágua is dressed as if he were going for a job interview, in a suit, a starched shirt, gold cufflinks and polished shoes.

    The applicant has a lot to show for himself, including a degree in ergonomics and a doctorate in marketing management. He teaches at a leading business school in the Portuguese capital. He also has 20 years of experience as a team leader in the healthcare industry. “I was a pioneer in organizing work processes for my clients in ways that made more sense while saving costs at the same time,” he says with a thin smile. But despite his qualifications, he is earning less than €1,000 a month in his current job, which involves reorganizing a hospital near Lisbon. It means that he can no longer afford to send his children to a private school and keep the family’s centrally located apartment, which has a view looking out over blossoming trees.

    http://www.spiegel.de/international/europe/tens-of-thousands-of-portuguese-emigrate-to-fast-growing-angola-a-833360.html

    Rational? I hear that a former taoiseach is also heading for Angola!

  68. @Ordinary Man

    I’m just taking Martin McGuinness as a (maybe facile) example because he was involved in lengthy negotiations with the British government as part of the peace process.

    The point is that it is the likes of McGuinness or Tsipras who are usually perceived as unreasonable and slightly irrational. It is often difficult to negotiate with such parties because the usual political incentives may not apply and can often back-fire.

    On the other hand the likes of Honohan and Noonan are perceived as reasonable and malleable. That is why the EU was able to get away with saying in the bailout negotiations “we will continue to support your banks but you cannot burn bondholders” – the infamous “quid pro quo”.

    While threats to destroy the Irish banking system worked well in negotiations with Honohan, the threat to kick Greece out of the Euro might not be as successful with Tsipras.

  69. @Dork

    “Green stuff” – well, full marks for irrelevant pigeonholing.

    Better to sip on the Black stuff and ignore the question as to why France didn’t build 30 nuclear power plants instead of 58. How does this tie in with the oft repeated observation by Finfacts that France has run a deficit for the last 40 years?

  70. @ Bazza “On the other hand the likes of Honohan and Noonan are perceived as reasonable and malleable.”

    http://www.independent.ie/business/irish/crisis-spreads-to-ireland-and-spain-3110772.html

    It was them what did it! says Noonan. The lie that Ireland could return to the markets in 2013 already going under the carpet……Very predictable….what an embarassment MN is….

    It’ll be more interesting (? if that’s the word) when the likes of JMcH & co. begin to ‘evolve’ their rationales as this tsunami breaks over Ireland’s shoes…..

    (@MH – 🙂 to optimism once in awhile!)

  71. @ Paul Hunt

    As of today the French President and the Prime Minister are earning €180 000 ,Mr Kenny € 200 000.You must be doing much better than us.

  72. @Tim
    France has run a long term high defecit , like almost all countries because its chooses not to be truely sovergin. i.e. to recycle its interest rates between its CB & treasuary or simply produce debt free money treasuary money that can be subsequently taxed.
    http://www.youtube.com/watch?v=P8fDLyXXUxM

    You cannot service a exponential debt curve forever , they have created credit hyperinflations like elsewhere to sustain the unsustainable but eventually you will find these endevours have a negative return.
    The new “sovergin” debt of countries can only be sustained by extraction… such as North Sea gas depletion running faster then new Nuclear build.

    The Nuclear programme increased in tempo during the 1970s when the debt was still very low although the full scale privatisation of money had begun by then.
    Nuclear like all infrastructure is best financed with state money.
    Nuclear is not a practical option at high interest rates…..so therefore article 123 is not compatiable with New Nuclear.
    The Mitterand Goverment was at the very heart of EMU so you would expect to see consumer demand falling during that time.
    As I have said before the core of Europe entered a wage deflation during that time …. this meant new Nuclear became unprofitable as there was no demand.
    The core banks exported new credit to Ireland and the other Pigs ….there was a massive spike in our oil / gas consumption etc etc.
    And financed Chinese coal plants etc etc.
    For every wage deflation there is a opposite credit inflation…..etc etc.
    Our rise in gas consumption would not have been possible if the core burned that gas rather then splitting atoms.

    The country has ageing plants because the country must service its debt first.
    Therefore it must run down its capital base to service this interest.

    Since EDF has become a Limited liability company nearly 10 years ago it has not finished a single plant either at home or abroad , indeed under some European law or something it had to return some state money.

    As for the use of Space heaters or indeed Trams today there is nothing wrong with using Nuclear electricity for this purpose as it cannot be used for much else.
    Imagine a Norway with merely its Hydro power and no oil / gas – it would be a Net importer of these fuels , it would be economic for it to use its electricity to cut its fossil fuel imports.
    Indeed during the second world war trolley buss es were very popular in Norway as there was no liquid fuel available and electricity was cheap.

    Please try to think beyond borders and a global banking perspective when you are dealing with such massive power outputs….. it effects other countries in some very weird ways sometimes.
    Sometimes these can be hard to gel together into one framework or model.

  73. I would go so far as to say that voters are never irrational. They are often poorly informed, deliberately misled, pandered to, lied to and distrusted by politicians, bankers, civil servants and the plutocracy. The Greeks are well equipped to ride out a withdrawal from the EZ. Off shore companies and bank accounts have been a staple of Greek life for generations. The Greek diaspora is spread all over the world and engaged in business to a greater extent than the natives of the countries in which they reside.

    The Irish emigrants confined themselves to the English speaking countries and tend to be wage earners. At home we have not experienced serious currency and economic disruptions to the extent that most Europeans have. We must thank the British Empire for that. This means we are ill equipped to handle economic and currency disruptions in the same way we were ill equipped to handle a property boom. We still haven’t handled the property bust so the jury is still out.

    I shudder to think what will happen after a no vote for we are the modern vestal virgins who will surely be buried alive.

  74. @KO’R
    Thanks for expressing contempt for the very dangerous LBS in such clear,yet clean, language.

    Thank you also for showing the fallacies of the over simplistic self serving interpretations of greek actions as posited by LBS & co

  75. A thoughtful piece. The EU/ECB might “blink” and concede a second-round debt forgiveness in the face of a Greek contangion-gun aimed at them. However I doubt that the IMF will “blink” in this way, which lowers the prospects for such an outcome. So the Greek voting populace choosing to drop out of the current IMF/EU/ECB program are also choosing to drop the Euro by default (no pun intended). But as Kevin O’Rourke explains, this dangerous path might be their best choice. At least a massive bank/sovereign failure and new currency will eventually give them a path toward a better future.

  76. @ Bazza

    I don’t wish to sound like a cheer leader for MMcG (hardly needs one) and I think you are right in that regard to the poor negotiating skills of ‘our team’.

    In life I tend to go with credibility and form – Should the Gov. ask the Shinners to ‘lend’ the Government MMcG for a few weeks and see how he gets on? 😉

    ‘ In Northern Ireland, both sides knew they could not win militarily, this was key.
    Leadership is very important. Adams and McGuiness were political leaders of strong calibre. They led their organisation, almost intact, into a peace agreement on terms it would never have accepted ten years earlier.’

    Jonathan Powell
    Chief of Staff to Tony Blair

    http://keeptonyblairforpm.wordpress.com/northern-ireland/jonathan-powell-on-ira-negotiations/

    Hardly irrational – would you agree?

  77. Seems like the “experts” aren’t considering both sides of the political calculus. Forgetting that they are likely self-defeating, while austerity measures may reduce the likeliness of default from a strictly budgetary standpoint, conversely austerity brings political instability which not only increases the risk of default, but even worse consequences that are ultimately economically destabilizing regionally.

    There’s only so much you can poke this animal before this animal bites back.

  78. Greetings from Greece,
    I am not unemployed, I gain a salary that supplies me with an decent way of life (whatever this means nowadays in Greece), I am considered to be a lucky one, I am one of those that has something to lose and I probably can handle some austerity measures for a few more years.
    And I vote for SYRIZA, and I will again. I suppose my middle name is irrationality. Is it?
    I am watching the two major political parties (PASOK and NEA DHMOKRATIA) that lead me to this hell now baptized as saviors.
    I am watching them deciding for my future, for my children’s future without even having the political legitimization of people’s vote .
    I am watching them doing nothing to correct our (their) mistakes as a society except cutting salaries and pensions.
    I am watching the European saviors finding more reliable PASOK and ND to cooperate with rather than with a new and at least for now immaculate party like SYRIZA.
    I am watching that Greece, with the lazy, incompetent population to be responsible for the word crisis (imagine what would happen if we were capable and hard workers) and not the structurally flaws of the economic system.
    I am watching my society, thus my life, drowning into desperation, into the anxiety of surviving, into endless hopeless fear and all these in just three years.
    I am watching more and more people searching in the garbage for food, people that had jobs, had a life a few months ago.
    I am watching 7% voting for fascists, legalizing violence in their daily life, with more and more people, that really do not have anything to lose, charmed from Golden Dawn.
    I am watching people seeing everywhere ‘enemies’, everyone who has a good car, a home, a salary is an enemy. And I cannot blame them!
    I am watching my society falling apart, and the “official solution” says that if you close your eyes and ears it will not happen.
    If all the above makes sense then maybe being irrational is the most rational thing to do. If this is the society I have to bare in order to keep my salary and my unsubstantial safety then they can have them.

  79. It seems everybody here is failing to see that Greeks are not in a single player game, they are in a two players game the other player being the Troika. It would be ridiculous to think that the Troika is making gifts and Greece has to choose between accepting them or not (this would be a very irrational behaviour by the Troika). The EU leaders must have a gain in taking the Greece alive (if they are rational) so why should we think that they wouldn’t accept any request from them? Rational people tries to reach the best agreement.
    The agreement they reached with the previous greek government was obviously unbalanced since it was made by disqualified and corrupt politicians, so there is no surprise that the greek people is willing to look for better agreements.

  80. @ Manos
    Great post.
    There is a need for all of us in this position to find a common voice.

  81. LBS and the plutocrats would rather prefer a RIGHT-WING dictatorship.
    For them, Greeks are irrationaly because they prefer to vote a left-wing party.

    History always repeat itself. Plutocrats back in the 30s preferred to see Hitler in power than a left-wing government.

    Fallacy of composition notwithstanding, for LBS, there is a better solution for Greece: starvation and migration will reduce unemployment.

  82. translate.google.ca/translate?hl=en&sl=it&tl=en&u=http%3A%2F%2Fwww.comedonchisciotte.org%2Fsite%2Fmodules.php%3Fname%3DNews%26file%3Dprint%26sid%3D10316

  83. Syriza is going to win, and this is the rational move for Greece. Voting for the “enslavement to the Troika” parties makes no sense whatsoever.

    We can indeed count ourselves lucky that Greeks aren’t being fooled by Golden Dawn, who are a more rational choice than the “enslavement by the Troika” parties, but far worse than Syriza.

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