Raúl Ilargi Meijer — Inciting Bank Runs as a Negotiating Tactic

Waking up to transnational neoliberalism.

The troika of Greek creditors has gone into full-frontal morals-be-damned attack mode, handpicking arms from a weapons arsenal we haven’t seen used before, and that we never should have seen in an environment that insists – and prides – on presenting itself as a union, both in name and in spirit. Now that they are being used, there no longer is such a union other than in name, in empty words.

This has turned into the kind of economic warfare one would expect to see between sworn and lethal enemies, that the US would gladly use against Russia for instance, but not between partners in a union founded on principles based entirely and exclusively on being mutually beneficial to everyone involved.

Those principles, and everything that has been based on them, the common currency, the surrender of ever more sovereignty on the part of the nations involved, the relinquishing of national powers to the various supra-national bodies in Brussels, has for everyone involved been based on trust. Nobody would ever have signed up to any of it without that trust. But just look where we are now.

When spokespeople at the troika side of the table stated on Thursday that they don’t know if Greek banks will be open on Monday, they crossed a line that should never even have been contemplated. This is so far beyond the pale, it should by all accounts, if everyone involved manages to keep a somewhat clear head, blow up the union once and for all. If a party to a negotiation that can’t get its way stoops to these kinds of tactics, there is very little room left for talk.

And all EU nations should understand by now that this is not about Greece anymore, it’s about all of them. Any member nations that does not fall into -goose- step with Brussels must from here on in be prepared to deal with attempts to crush it economically and politically.

Who benefits from this? Those arguing for the necessity for multipolarism, respect of national sovereignty, and alternatives to the politically dominated international institutions.

Another revealing point.

Politicians and media in countries like Germany and Holland have engaged in so much rhetoric about Greeks living lavishly off other nations’ taxpayers’ money that they fear for their political careers if they were to offer an overt restructuring and tell the truth about wat actually happened in the bailouts....

The problem is that Germany, France and Holland used the money that Greece now supposedly owes, to bail out their own banks. And never presented it domestically this way. But that is not Greece’s fault, or its responsibility.

It's difficult walking back demonization. It's painting oneself in a corner.

The worst through is that this is a manufactured crisis aimed at neoliberalizing Greece.

To add to the vicious irony of the situation, as Paul De Grauwe noted, Greece is illiquid -it has no access to capital markets-, but it’s not insolvent.... 

If the ECB would simply include Greece in its €60 billion a month QE bond-buying scheme, and buy Greek bonds as well as allow Athens to access international capital markets through one of Mario Draghi‘s whatever-it-takes statements, the crisis would be lifted in very substantial ways, in a heartbeat.

The result?

The powers that be are so full of hubris and of themselves that they ignore the fact that their actions today sow the seeds for the demise of all three of their constituencies, IMF, ECB and EU.

None of these institutions has any raison d’être or any claim to fame unless there is explicit trust in what they represent. That trust is now gone, and it’s hard to see how it can ever be recovered.

Whatever happens to Greece going forward, that is perhaps the biggest gain its dramatic crisis will gift to the rest of Europe, and indeed the world. Which therefore owe it a debt of gratitude, and of solidarity.

The Automatic Earth
Inciting Bank Runs as a Negotiating Tactic
Raúl Ilargi Meijer