The Greek Elections Solved Nothing. The Country Is Still Headed for Economic Disaster.

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June 28 2012 5:29 PM

Crisis Postponed

The Greek elections solved nothing. The country is still headed for economic disaster.

Greece Protests.
Protestors scuffle with riot police during Greek Independence Day in Athens in March of this year.

Photograph by Angelos Tzortzinis/AFP/GettyImages.

Ten days ago, the apocalypse did not happen. The Greek elections took place, and the radicals did not win. Syriza—the neo-Marxist, anti-austerity party whose members call one another "comrade" and whose policies include the creation of 100,000 new government jobs—did not get the most votes. New Democracy, the establishment center-right party, emerged victorious, though just barely. It formed a shaky coalition, in partnership with two center-left parties, and promised to push through the budget cuts that the European Union has imposed as a quid pro quo for propping up Greece's economy. The financial world breathed a sigh of relief: Crisis averted.

That relief may have been premature. Ten days ago, the apocalypse did not happen, but since then, the apocalypse has continued to unfold in slow motion. The new government has pledged to maintain "austerity" even as crises of various kinds erupt all around it. The newly appointed Greek finance minister resigned after being hospitalized on the day he was supposed to be sworn in. The newly appointed Greek minister for the merchant marines resigned after being accused of conflicts of interest. The newly appointed Greek prime minister is recovering from an emergency eye operation and couldn't attend a crucial European Union summit this week. Early Wednesday morning, three armed men drove a bus containing gasoline canisters through the entrance to Microsoft's Athens headquarters and then set it alight. The building didn't blow up, but the ground floor was heavily damaged.

Meanwhile, the excruciating squeeze on the oversize Greek budget continues, producing strikes, angry speeches and dramatic headlines. Greece's recession deepens and tax revenue continues to fall. The new government has to cut 150,000 jobs by 2015 and, even sooner, reduce government spending by billions if it wants to stay solvent. This would be asking a lot of any government, even one with a real mandate. For a government disliked and distrusted by much of the population—and apparently plagued with dramatic health and personal finance problems—it may prove impossible.

In truth, a good solution to Greece's problems can't be found in left, right, conservative, liberal, or any other kind of politics, because Greece's problems don't have to do with partisan politics, strictly speaking. They are rooted in math: The Greek government is bankrupt. If the Greek government wants to spend more, it needs to borrow money. Nobody wants to lend Greece money, however, because Greece seems unlikely to pay it back. Whether Greece is in or out of the euro, and whether the rest of Europe does or doesn't offer to help, Greece will face this problem for a very long time.

Although there aren't any other good options, Syriza continues to speak for those who think that there are. Syriza continues to promise an alternative: no austerity, more spending, more government jobs. Reject the conditions that Europe demands in exchange for sending good money after bad. Reject what many Greeks perceive as a foreign, German-led attempt to undermine their nation. Wave a magic wand, and let money pour into the economy. Never mind that it can't be done: If Greece breaks its budgetary promises then Europe will stop lending, Greek banks will fail, and the country will be forced into a rapid exit from the euro. In the long term, this outcome might well be better for Greece. In the short term, there would be massive chaos.

Syriza doesn't put it quite like this, of course, because the party doesn't have to. Its politicians are still out of government and do not have to choose between the hardships of austerity and the chaos of exiting the euro. But until they are forced to confront that challenge—until Greeks are persuaded that there are no good alternatives, no magic wands—Greek politics will be chronically unstable. Expect more emergencies, more resignations, maybe even more attacks on corporate headquarters. Until the Greeks are convinced that austerity is the right policy—or until they are determined to take the consequences of leaving the euro—he crisis has not been averted but merely postponed.

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