Greece defaults, but let’s call it 'Margaret', or 'Mary-Ann'
When you examine the ‘aid’ package agreed last night to bail out bankrupt Greece (again) and keep the euro afloat, it amounts to a default. When you borrow cash on agreed terms and repayments cease because your bank account is empty, you’re not suffering a temporary cash-flow problem: you’re bankrupt. So if the lender should be stupid enough to lend you even more cash simply to enable you to go on paying him, it doesn’t take a dumbed-down GCSE in maths to work out that this money merry-go-round is a fiscal illusion. But this has been hailed as another great triumph of EU solidarity, and so Presidents Barosso, Van Rompuy and Papandreou drank champagne into the early hours of the morning, in awe of their economic flair and wonder at their political skill.
But while they call it ‘aid’, ‘restructuring’ and a ‘comprehensive agreement’, it amounts to default.
President Sarkozy said: "If the rating agencies are using the word you just used (default), it is not part of my vocabulary. Greece will pay its debt," he told assembled journalists and reporters.
Not in his vocabulary?
It reminds His Grace of a decade ago, when, much to the concern of British Euro-sceptics, a European Army was formed under the guise of a collaborative peacekeeping force. The then President of the European Commission, Romano Prodi, dismissively responded: “If you don't want to call it a European army, don't call it a European army. You can call it 'Margaret', you can call it 'Mary-Ann', you can find any name, but it is a joint effort for peacekeeping missions - the first time you have a joint, not bilateral, effort at European level."
You see, in the EU, not only can a word can mean whatever you want it to mean; if a word causes difficulty or inconvenience, a myriad of alternatives are available to make the concept palatable. Don’t like ‘European Army’? Call it ‘Margaret’ or ‘Mary-Ann’. Don’t like ‘European Constitution’? Call it ‘The Lisbon Treaty’. Don’t like ‘EU Taxation’? Call it ‘Value Added’, etc., etc.
Greece has defaulted, and that's beyond dispute. But, if it makes you feel better, we’ll call it ‘restructuring’. It’s a nice, progressive, positive, optimistic word, implying forward momentum, denoting accord and agreement. Yes, private lenders will be forced to contribute a considerable chunk of the €109bn package, but let’s not focus on that. The important thing is that a clear signal is sent to the markets to show the EU’s determination to ‘stem the crisis and turn the tide in Greece, thereby securing the future of the savings, pensions and jobs of our citizens all over Europe’.
And so the Nikkei index rose 1.2%, while the Hang Seng was up 1.5%. US stocks are up 1.2%, and the share prices of vulnerable EU banks rose by more than 5%, led by our very own Barclays, which ended 7.8% higher. As news of the agreement broke, the euro reached a two-week high against the dollar.
And everybody is happy.
Can these fools not see that this is all a farce? What on earth happens when this latest bailout runs out? Where will the next €100bn package come from? Will the Greeks mortgage the Acropolis? Sell Crete? Auction off Patmos, Lesbos and Corfu?
Short-termism is, of course, a natural consequence of the democratic cycle: since politicians are held directly accountable to their electorates only every four years or so, there is little incentive for them to implement unpopular policies today when they can be shunted off for their heirs and successors to grapple with tomorrow.
So we get sticking-plaster politics and antiseptic economics, when what is needed is immediate, remedial surgery and amputation.
But sufficient unto the day is the evil thereof. So let’s deal with balms, lozenges, tonics and panaceas to restore the stability of the eurozone.
Sadly, none will cure the cancer.