What is the Greater Good

As a firm believer in the idea of the European Union (EU) despite the many problems associated with it I am especially at a loss regarding the negotiations with the Greeks.

First, as a bit of background, I support the idea of a Federal Europe which goes far beyond the current construct.  A monetary union without a fiscal union, which by definition presumes a political union was always going to be a problem.  But sometimes the perfect is the enemy of the good.

Believers in Europe amongst the political elite felt that a trade and monetary union, even without a fiscal union was better than no union at all.

And until the Great Recession it was.  Prosperity was the coating which glossed over many of the problems inherent in the structure.

Even after the crisis and despite the harsh austerity budgets forced upon the Irish, the Portuguese, the Spanish, the Italians, the Balts, the Slovaks and even to a degree the French,  the monetary union held together.

Greece on the other hand, despite a loan of Euro 110 billion and a write-off of 50% of the outstanding debts owed to private investors has resisted the austerity measures forced upon it as part of the new loans it requires to stave of insolvency.  It has elected a government which happily accepted the poisoned chalice of a dual mandate  renegotiating the terms of the loan and keeping Greece in the Euro.

That's what populism gets you.

So I ask myself what is it about Greece that makes them unwilling to accept the austerity terms that the other nations begrudgingly accepted.

Greece has a difficult history.  It was part of the Ottoman Empire for over 400 years gaining independence in the 1830's.  Since then it has gone from a republic to a monarchy to a republic to German occupation to a civil war to a republic to a military dictatorship to a republic.

Greece joined the European Union in 1980 and joined the Euro in 2002.  As with many countries involved in the Euro there was a bit of statistical magic to get the Greeks to adhere to the Maastricht Treaty requirements.

Many observers are quick to point out that the Germans manipulated their statistics to reach the 3% of GDP debt level so why should one query Greece's accounting tricks.

That might be where the problem began.

Germany was in the midst of trying to incorporate the former East Germany which unsurprisingly was a very expensive undertaking for which the Germans are still paying through the solidarity surcharge.

But Germany has an economy.

Even before the Great Recession Greece was behind the rest of Europe.  In 2008 only one third of households had internet- less than anyone else in Europe including the Baltics and some south-east European nations.  Youth unemployment and government debt were among the continent's highest despite major funding through the EU's infrastructure development program.

Since then unemployment has tripled to 26% with over three quarters of the jobless being out of work for 12 months or more.  This has happened parallel to a serious decrease in the birthrate coupled with mass migration of youth seeking opportunity (youth unemployment is over 60%).  This has left Greece with an ageing population dependent upon state pensions.  Over one third of the population is on the cusp of the poverty line, more than any other euro-zone member.

And yet everything you hear from the Greeks is that it's someone else's problem.

Today,Greek premier Alexis Tsipras has accused the EU of intentionally trying to subvert the Greek democratic system, having pillaged the country for the last 5 years and now trying to institute regime change.

I have been against a Grexit.  I still would like to avoid it.  But as the adage goes, "as long as my neighbour wants to fight I will have no peace".

Mr Tsipras seems to think this is a game and that at the end of it everything will be fine.

He is totally wrong.  And his arrogance could certainly bring the Great Depression to Greece.  With that comes financial and political chaos.

This is about to get very ugly.