No Grexit – for now


As I was sitting down to dinner, watching B.B.C. World News news started to come in of a deal having been struck between Greece and the European Union. The deal ended 17 hour long talks that were all that was left between Greece and a Grexit (Greek exit from the Euro currency). The deal will settle markets for the time being but it is a long road back to some sense of normalcy for Greece.

Whilst I am pleased to see that for the time the very probably messy process of an exit to the Drachma has been avoided, I wonder what cost it will come at. Assets such as electricity infrastructure, the railways might have be partially sold to fund the payments now owed. It is possible that state funds that had been set aside for pensions and other state funded welfare and economic programmes might have to be dipped into.

German Chancellor Angela Merkel appeared to be almost grudging in her acknowledgement of the deal. Whereas most diplomats involved would have been simply relieved that something all sides could agree to was struck, Mrs Merkel appeared dour and her body language at the press conference suggested she is someone who still highly frustrated.

So although Greece is allowed out of financial hospital for now, it is still a very sick patient. At some point in the future it is possible that the nation that gave the world so many of the concepts used in modern politics will have a relapse and that that relapse might be one bridge too far for the E.U. At that point we would have to confront the likelihood that Greece will exit the Euro currency.

Greece has an almost insurmountable socio-political divide to conquer. There is only so far one can push a democratic country in any particular direction before it starts pushing back, and it is obvious there is a lot of support for fringe parties such as the governing Syriza Party and their polar opposites, the hardline Golden Dawn. The rise of these parties indicates there are issues that the mainstream have not got the political know how and/or will power to address. It is a bit like National and Labour having a meltdown here and the Greens and A.C.T. rising in their place – except hopefully A.C.T. would be lacking the anti-immigrant hatred of Golden Dawn.

For now hopefully Greece will settle. New Zealand travellers in Euro can stop worrying briefly about whether the Euro will unravel. And we can go back to worrying about the Chinese market and how long it can stay together.

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