Greece, Saved or Sacrificed?

The ink is not yet dry on the Greek rescue deal and the gloom has already returned. How can it be that after months of arduous, often acrimonious brinkmanship no one thinks this latest accord is good enough? In fact, the consensus seems to be that everyone loses: private investors lose some 70 percent on their Greek bond holdings, European taxpayers lose tens of billions of dollars, the Greek people lose yet more jobs and protections.

It doesn’t add up. Or maybe it does. Maybe the truth is that the only real loser, in the long run, is Greece. As Sweden’s Finance Minister, Anders Borg, said yesterday, as quoted by Reuters:

“What’s been done is a meaningful step forward. Of course, the Greeks remain stuck in their tragedy; this is a new act in a long drama. I don’t think we should consider that they are cleared of any problems, but I do think we’ve reduced the Greek problem to just a Greek problem.”

Borg’s words seem to belie the rhetoric of unity that European leaders have used to justify Greece’s second bailout, and suggest a more cynical motive for keeping Greece afloat: to give the rest of the eurozone members time to lessen their exposure to an inevitable Greek default. The ship is going down, but by sealing off a few hatches, other nations have bought time to lower the lifeboats and paddle away.

I’m not an economist and I don’t wander the halls of power in Brussels, but common sense tells me that the cynics are on to something. First, that this bailout does not actually bail Greece out. Actually, not only the cynics are saying this. Everyone is. Because the rescue has been built on the assumption – the necessity – that Greece will return to growth, and soon. But the opposite is happening. Greece is free-falling quickly into one of the worst economic depressions in modern European history. Austerity – forcing the Greeks to spend less on just about everything – has snuffed its economy out.

Taking the cynical view again, maybe this dire scenario is palatable, even desirable, for some other countries. Greece, the nation, is set to quickly become a yard-sale of cheap assets. To some degree it’s already happening.

Just look at Greece’s ports. The Chinese now control them. When the Greek government finally gets around to the mass privatizations demanded by its creditors, you can be sure that foreign firms from around the globe will swoop in to snatch up the deals.

The best result in this scenario: Greece might somehow remain in the euro club, but will be largely owned and controlled by others.

That’s if Greece doesn’t default. But most analysts believe Greece will eventually default. And that would mean an exit from the euro club. Athens would print up “new drachmas,” and from there, months or years of a different sort of chaos would begin.

Economists argue about which scenario is worse: Greece run aground inside the euro club or out. It seems that either way the Greek people will suffer a lot, and for a long time to come.