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The tragedy is, that the preceding Greek government had set the course for an economic
recovery of Greece which was just about beginning at the end of last year. But then the new
radical Greek government set an end to the reforms and we are now in a phase, where many
have no confidence any more in a recovery of Greece, and were investments in Greece by
local investors and international investors are stalling.
And the latest numbers tell the brutal truth: in the fourth quarter 2014 Greece had negative
growth, and also in the first quarter of 2015. This, by definition, is recession.
So, what to expect as a solution:
What is different from 2011 and from 2012, is that there is a pretty high consensus, that with a
Greece leaving the Euro, there would not be a contagion, or a domino effect, which would
result in other southern European countries to having to leave the Euro as well. So, a Grexit,
to many, is not any more a nightmare. And it would not have to be the end of the Euro.
Secondly, many do not think, that even a complete end of the Euro, to mention the worst case,
would be the total failure of Europe and the European Union, as Merkel keeps saying and
warning.
Thirdly, there is open mention now, that the Euroland countries, and of course also the
corporations of the real economy, have a plan B, what to do in case of a Grexit. Before,
nobody dared to mention, that there is a plan B.
But inspite of all this, there is great pressure from inside the governments of the donating
Euroland countries to keep Greece in the Euro and to do everything, to keep Greece away
from bankruptcy. Why?
The moneys cumulatively credited to Greece are so huge, that the governments of the
crediting Euroland countries do not want to stand up before their voters and having to say,
that all loans made to Greece are lost, at the expense of their taxpayers, and that the losses
would have been a lot smaller, had all the bailout loans of the past four years not been made,
and had a Grexit been made four years ago, when it had already been recognisable, that
Greece had overextended itself.
Having to admit this, is the worst nightmare of the European politicians.
And this is the negotiating power of the present Greek government.
And this makes the outcome of the present situation unpredictable.
But how long can this dealing and wheeling continue? Is muddling through really the good
strategy?
Is it imaginable, that the Greek government continues to make promises to its voters, for
which the taxpayers of the other European companies have to pay, and that Greece at the
same time does not accept the imposed conditions for reforms in Greece, imposed by the
European creditor countries?
IAFEI Quarterly | Issue 29 | 16