Since the 2008 financial crisis the word ‘billion’ has consolidated its place in everyday language use. The losses suffered by banks and states have been running into astronomical sums which make one’s mind spin. The Greek debt crisis that has recently flared again is a stark reminder that the global financial calamities are not yet over—indeed, they might be here to stay for still some time to come.
- The European Union’s denial back in 2008 of the scale of its own crisis and of the structural deficiencies of its financial framework have aggravated the problems now faced by Greece—as well as Ireland, Portugal, Belgium, and, alas, also Spain and Italy.
- The persistence, subsequently, to view the problem mainly through the spectacles of the monetary union (and the strength of the Euro) and in terms of the trade and political interests of Germany, the EU’s largest economy and biggest contributor to the EU budget, have swelled the crisis.
- The strict criteria imposed by the IMF on the loans granted to Greece have definitely contributed to the distress of the Greek economy, whilst
- the little tantrums staged by EU politicians, and especially Merkel and Sarkozy, have only been good for undermining an already half-hearted sense of European solidarity.
The EU’s management of the Greek debt crisis is a perfect example of how to feed the fire of an emerging vicious cycle. Besides using scapegoat tactics—something that is not only morally indefensible but also dangerous in that it transforms issues into intractable problems—the EU finance ministers are stuck with a treacherous tunnel vision: it is all about billions, defaults and default swaps, rating agencies, interest rates, and, ultimately, about when the German and French banks, which have borrowed money to the Greeks or have invested in the country, will get their money back.
In other words, the EU Member States are behaving just like any other ordinary shareholder on the stock market. Their concern is to get out with as little losses as possible; just like in earlier times their main concern was to get in and make quick and large profits. Hence, also, their alleged concern about a possible re-structuring of the debt.
At the end of the day and unless we wish to see more social unrest spreading in Europe during an explosive time in the rest of the world, the Greek debt crisis—and those anticipated for several other EU Member States—will only be contained through the sharing of risk and the strategic use of the factor time.