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Winnipeg Free Press - PRINT EDITION
Greeks reach verdict
(DALE CUMMINGS)
Greek voters on the weekend reluctantly accepted the need to swallow the bitter economic medicine they were offered in order to preserve their currency union with Western Europe. Their decision brightened prospects that European bankers and governments will soon deal with the loss of confidence and contraction of credit that are now blocking the economic growth of Canada's European trading partners.
Stock and bond markets, which were already anticipating a satisfactory result in Greece, were little affected by the election result. Investors immediately turned their attention to the larger problem of insolvent Spanish banks. But the verdict in Greece showed the public there was shrewdly assessing the options and not merely lashing out at the governments and bankers who landed them in their current pickle.
The issue in the Greek election was whether the country would carry out the tax increases and brutal spending cuts an unelected interim government promised on their behalf last year in return for Europe-sponsored refinancing of the insolvent Greek government and banks.
The left-leaning Syriza party, runner-up in the inconclusive May elections, proposed to keep the euro as Greece's national currency with one hand but, with the other, reject the tax increases and spending cuts.
Syriza placed second once again on Sunday with 27 per cent of the vote while the conservative New Democracy party won 30 per cent of the vote with a plan to accept the austerity package. Voters recognized they could not both have their cake and eat it.
The Greek vote echoed the June 1 referendum result in Ireland, where voters approved a European fiscal treaty that imposes public spending discipline in return for European emergency funding. Both countries now suffer severe unemployment resulting from years of reckless borrowing and profligate spending.
The Greeks, like the Irish, know they must live within their restricted means. They have also concluded their economic future, in good times and in bad, lies in Europe and its common currency.
The European Union, which is an association of sovereign states, some of which share a common currency, has not yet figured out a good way of supervising the finances of its members and sharing the costs those that run into trouble incurred. The Greek government was lying about its economic strength and its government revenues for many years before its collapse was recognized, and even now its true condition is a matter of conjecture. The Greek election may mark a step toward greater transparency.
Republished from the Winnipeg Free Press print edition June 19, 2012 A6
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