The Greek referendum seemed to have given some push towards a compromise. But the powers that rule the Euro did not agree. The European Central Bank continues to starve the Greek banks. In a few days they will be toast and a Greek exit from the Euro will be inevitable. That seems to be what the hardliners in Berlin around the psychopathic Finance Minister Schaeuble want to achieve.
The Greek Prime Minister Tzirpas managed to get the backing of the people and most other political parties for a compromise offer. But the promises he made before the referendum already fall apart. The banks did not reopen, a deal is not in sight and given the fast deterioration of the real economy the situation will soon be immensely more difficult.
He will have to answer questions. Why can’t he present a written proposal in Brussels today as he promised to do? Why hasn’t he anticipated the assault on the banks by the ECB and the powers behind it? Why hasn’t he prepared for an exit from the Euro? Why was there no scenario planning anticipating the current situation?
The German media and politicians have villainized the Greek so much, based on crude propaganda a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The public opinion in other northern and eastern European countries is very much the same. People do not want to “give more money to the Greek” even though hardly any money was given to them so far. What was given in taxpayer guarantees was given to German and French banks. The consequences of a Grexit seem to be beyond the realm of discussions.
Supporting some partial debt jubilee now, hardly noticeable when stretched over decades, and giving the Greek economy the ability to grow out of debt would be much cheaper for European taxpayers than a complete Greek default which will trigger the payment of hundreds of billions of guarantees. With an exit from the Euro such a default is very likely. Greece would then have no debt at all. It could again borrow from maybe Russia and other sources who would be happy to make some money lending to a then nearly debt free country.
On top of the catastrophic results of a five years austerity program the carnage in Greece from a hasty, unplanned bankruptcy and exit from the Euro would be huge. But the example of other cases of state bankruptcy show that the recovery is usually quite fast and the long term possibilities much more favorable than the slow death a continued austerity program would guarantee.
(I am still under an unusual workload but the end is in sight.)