Greece versus Germany, the unplayable game

By Jonathan Power

The Greek clash with the EU continues. Jean-Claude Junker, the European Union Commission’s president, has publically taken umbrage at the Greek prime minister’s attack on him. In parliament at the end of last week Alexis Tsipras said Junker’s latest proposals were “absurd” and “irrational, blackmailing demands”.

Junker likes to think that he is a moderating voice in the confrontation between Greece, the EU and the IMF. But there is no middle way as long as Germany insists the EU be as hard as nails.

The blunt truth is that Germany has neither the facts nor history on its side.

Joseph Stiglitz, a Nobel laureate in economics and one of the key policy makers in the Clinton Administration’s “Goldilock’s economy”, pointed out this weekend that “Greece has met its creditors’ demands more than half way. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a program that has proven to be a failure, and that few economists ever thought could, would, or should be implemented.”

He continues: “The fact is (under the reforms of the last government) the swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented…….The demand that the country achieve a primary surplus of 4.5% of GDP is unconscionable.”

The European Central Bank, prodded by Germany, has cut off the Greek banks’ access to the unlimited cheap liquidity that other Eurozone banks enjoy Read More »