Trojan Hearse: Greek Elections and the Euro Leper Colony

Europe is stunned, and bankers aghast, that polls show the new party of the Left, Syriza, will win Greece's parliamentary elections to be held this coming Sunday, January 25.

Syriza promises that, if elected, it will cure Greece of leprosy.
Oddly, Syriza also promises that it will remain in the leper colony. That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the euro zone.

The problem is, austerity run wild is merely a symptom of an illness. The underlying disease is the euro itself.

For the last five years, Greeks have been told that, if you cure your disease--that is, if you dump the euro--the sky will fall. I guess you haven't noticed, the sky has fallen already. With unemployment at 25%, with Greek doctors and teachers eating out of garbage cans, there is no further to fall.

In 2010, when unemployment was a terrible 10%, a year into the crisis, the "Troika" (the European Central Bank, European Commission and the International Monetary Fund) told the Greeks that brutal austerity measures would restore Greece's economy by 2012.

Ask yourself, Was the Troika right?

There is a saying in America: Fool me once, shame on you. Fool me twice, shame on me.

Can Greece survive without the euro? Greece is already dead, but the Germans won't even bother to bury the corpse. Greeks are told that if they leave the euro and renounce its debts, the nation will not be able to access world capital markets. The reality is, Greece can't access world markets now: no one lends to a corpse.

There's a way back across the River Styx. But it's not by paddling on a euro.

There's Life after Euro
Many nations do quite well without the euro. Sweden, Denmark and India do just fine without the euro--and so does Turkey, which had the luck to be excluded from the euro-zone. As long as Turks stick to the lira, even Turkey's brain-damaged Islamo-fascist President Tayyip ErdoÄŸan cannot destroy their economy.

Can Greece just dump the euro? They have happy precedents to follow. Argentina was once pegged to the US dollar much as Greece is tied to the euro today. In 2000, Argentines, hungry and angry, revolted. Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors, and defaulted on its dollar bonds. Free at last! In the decade since, the Argentine economy soared. Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so temptingly wealthy.

I was in Brazil when its President Luiz Inà ¡cio Lula da Silva told the IMF to go to hell--and rejected privatization of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense. Instead, Lula created the bolsa familia, a massive pay-out to the nation's poor. The result: Brazil not only survived but thrived during the 2008-10 world financial crisis. Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering. That's the fault entirely of Lula's successor, President Dilma Rousseff, who is beginning to dance the austerity samba.)

Austerity: Religion, Not Economics
The euro is simply the deutschmark with little stars on it. Greece cannot adopt Germany's currency without adopting Germany's finance minister, Wolfgang Schà ¤uble, as its own.

And Schà ¤uble has determined that Greece must be punished. As my homey Paul Krugman points out, there is no credible economic theory that says that austerity--that is, cutting government spending, cutting wages, cutting consumer demand--can in any way help a nation in recession, in deflation. That's why, in 2009, Obama ordered up stimulus, not a sleeping pill.