Something in the Air

Hurrah! The masters of Bruxelles have finally agreed to send 135 billion euro winging its way to Athens. Greek's banker-PM, Papademos said
"We're very happy," and then added  "I'm convinced that the government after (an April general) election will also be committed to implement the program fully . . . because it is in the interests of the Greek people."

The genii has been put back in the bottle. The markets are ecstatic. News rushes across the globe that not only has Europe been saved but growth has been spotted in the US! And all this - despite the desperate tension for ten days that was created by German, Netherlands and Luxebourgian apparent refusal to allow a single extra euro to Greece. Phew.

But wait. Leave aside that you cannot find one, not one, well known independent economist who believes that Greece will do anything other that default - in the end. After a projected ten years of austerity Greece will be 'back' at debt levels it had  .. in 2007! (120% of GDP.)

Leave aside that the 135 billion will be held in a special account that will be 'set aside' to pay all international debts and their interest before a single cent is ever used on behalf of any Greek citizen.

Leave aside that banks across the west will all charge their most monstrous rates for for any further loans to Greece, given the devaluation of their previous bonds.

Leave aside that special IMF 'monitors' will sit in command posts at the heart of the Greek economy for years.

Leave aside that Greek's main parties have had their policy for the April election decided by international big business.

We are still right to ask, despite the crucifixion of the Greek people by its leaders and their international friends under the terms of the EU's loan 'why did the euro bankers not go for Plan B (see last blogs.) Why did they not allow the default? It was, to quote one finance minister, surrounded by a firewall in respect of the the other, weaker EU economies. Why did they still go ahead with their loan?'

The main Greek Parties Pasok, New Democracy and Laos are already a minority in the polls. But without the euro loans the coming April election would have become a complete bonfire of their future. The left would have risen to the leadership of the Greek parliament. Austerity would be challenged and the Greek people would have started nothing less than a revolution.  And this was the whiff in the air that finally penetrated even the banker's nasal passages - normally tuned only to profit - who had congregated in Brussels to 'deal' with Greece.

The April elections might still produce such a result. But the cold blooded calculation of the Greek billionaires and their european counterparts was that a powerful, international, ruling class bloc was needed, urgently, for political reasons of survival; more urgently than applying Adam Smith's rules of capitalist competition. At least for the time being.