Monday, 21 September 2015

My thoughts on and analysis of the second Greek legislative election of 2015

Picture this, readers of my blog. A seemingly fair election, with proportional representation, where parties clearly differentiate themselves, in which you are supposedly compelled to cast a vote....but where there is still no real choice, where the outcome looks so bleak for you, your family and friends whatever the result, due to external forces beyond your control and accountability....imagine.

That was the second Greek legislative election that happened yesterday, and SYRIZA won it again, losing only 4 of their 149 seats from January., and on a turnout of only 55%, the lowest in Greek history. Their Popular Unity (LAE) splinter group, led by ex-SYRIZA MPs, just failed to enter the Hellenic Parliament polling only 2.86% of the vote (they only passed the 3% threshold in some constituencies) despite predictions it would pass the threshold. The Independent Greeks (ANEL) who Alexis Tsipras will likely again seek as coalition partners only lost 3 seats, meanwhile, still giving them enough to ally with SYRIZA (a new SYRIZA-ANEL coalition would have 155 seats, a decrease of just 7 from the last election and enough to govern with, given that SYRIZA's more notable rebel MPs were defeated when they split). The only other realistically possible coalition is between SYRIZA and To Potami (since SYRIZA's MPs will definitely refuse to allow coalitions between SYRIZA and New Democracy or SYRIZA and PASOK).

Despite anger over the U-turn by Alexis Tsipras on left-wing promises he made, and also over the bailout, the radical left ANTARSYA failed to even get close to gaining any seats and only increased its vote share to 0.85%. The only new party to enter was the Union of Centrists, who aim to represent the centrist legacy and values of Eftherios Venizelos, a notable republican nationalist of the early 20th century who was Prime Minister of Greece 100 years ago, and received 9 seats in the Hellenic Parliament. The other parties already represented saw little movement-To Potami lost 6 of its 17 seats, probably due to the Union of Centrists passing the 3% threshold, the far-right Golden Dawn worryingly came third but still only increased its seat total by one to 18, the Greek Communists' vote stayed almost exactly the same as January 2015, and PASOK's alliance with DIMAR, who had been voted out of the last Parliament, only received 4 more seats than in January.

What is clear in any case is that the debt repayment demanded by Wolfgang Schaeuble and the ECB will never be realistically completed for the Greeks and that in my opinion, Greece should just leave the Eurozone, reinstate the drachma, and reassert financial sovereignity which the European Central Bank took from them. Despite the unpredictability and financial chaos that could result, it will be better in the long term.


1 comment:

  1. One problem is that the ECB, despite its name is not a central bank; it is little more than an independent currency board that advises the European Commission. It does not have the power, for instance, to support the Greek economy, or any other European economy with a short term T-bond issue.

    I'm not sure merely leaving the Euro would work. It would also need the part of the debt, most of it, that was originally consisted of 25% Greek T-bonds denomiated in Drachma but is now demominated in Euro to be re-denominated in Drachma. In the abscence of this, assuming it couldn't get financial support from somewhere else, it would either have to default on most of the debt or deliberately hyperinflate while buying Euros with the rapidly devaluing Drachma. Incidentally this is what the Weimar Republic did to get rid of its war debt, and it worked, although I wouldn't recommend it!

    As far as I can see the Euro, as constituted under the Maastricht Treaty is unworkable and so-called austerity policies actually make the problems worse. Unfortunately we will probably have to wait for another banking crisis before anyone does anything serious about it.

    Even with a properly constituted central bank the Euro won't work because too much damage has been done. The amount of bad debt in the banking system is too much; for instance Credit Agricole has a footprint of about twice the French GDP, most of it in bad debt. After convergence the sector is not only "too big to fail", it is also "too big to bail" - at least with the Euro as currently constituted.

    The solution I would prefer would be for each country in the Euro zone to float its own currency in parallel with the Euro, at first pegged to the Euro, with the Euro as a reserve currency. Call them Euro-France, Euro-Greece etc. Another would be to set up a proper European Central Bank, have Gernany leave the Euro, with the option of re-joining at the new de-facto exchange rate after five years.