Zee Germans have decided that Greece not only must give in to eurozone demands, but that they must do so in the most ridiculous and demeaning way possible. Yes, Greek PM Alexis Tsipras badly miscalculated the EU position on Greece with his referendum. But German Chancellor Angela Merkel and European Parliament President Martin Schulz are basically asking all but asking for Greece to be drawn and quartered for creditors and made and example of. Paul Krugman explains:
Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.
Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.
Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germany’s good intentions after this?
In a way, the economics have almost become secondary. But still, let’s be clear: what we’ve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line. This has no bearing at all on the underlying economics of austerity. It’s as true as ever that imposing harsh austerity without debt relief is a doomed policy no matter how willing the country is to accept suffering. And this in turn means that even a complete Greek capitulation would be a dead end.
Can Greece pull off a successful exit? Will Germany try to block a recovery? (Sorry, but that’s the kind of thing we must now ask.)
The solution to Greece's bad austerity is now crippling austerity that will lead to open revolt. And at this point, you have to assume that this is what Germany wants.
European leaders gave Greek Prime Minister Alexis Tsipras a straightforward choice on Sunday: disown his principles or quit the euro.
Euro-area leaders presented Tsipras with a laundry list of unfinished business from previous bailouts he’d pilloried in opposition and during six turbulent months in office. They gave him three days to enact their main demands into Greek law in exchange for the third bailout in five years.
No, Germany wants this to blow up so they can toss Greece out and scare Italy, Portugal and Ireland into accepting even more austerity. Because of course Merkel wants to keep her job, you see. The pitchforks come for her next unless Greece is staked out for the slaughter.
With friends like these, I don't think the European currency is long for this world.