Greece Runs Away During the Olympics
May 10th, 2012
When will Greece scurry out of the Eurozone? Greece is bankrupt and can’t print its own money, Only the European Central Bank can, and so far the ECB is not held hostage by Greek protestors. With the jobless rate hurdling beyond 20%, amid shuttered doors and smashed storefront windows, there’s simply no way for a new coalition government to raise more tax revenue, despite the Eurozone dangling a $170 billion bailout reward.
My best guess: Greece shuffles away on a busy weekend night. Say, on a Saturday during the middle of a summer Olympics event that attracts record-breaking viewership. As the gun sounds on some nail-biting relay race, the government would announce that any Euros withdrawn from Greek banks would be now be stamped or perforated to signify “neo-euros,” or “neo-drachmas.”
Greek leaders may have power over the army, the navy and price subsidies for feta cheese and olives. But the government has no tools to stop a retail run on the banks. So far, perhaps 30% of deposits have been withdrawn, mostly by higher income people who’ve figured out, by wire transfer or speed boat, how to shuttle their savings to Switzerland, Germany, or even Turkey. But the average Greek has trusted in the euro. When the bank runs begin, I’m afraid the fable is over. If the announcement takes place on an Olympic night, it would be an ironic nod to Greece’s role in history.
I’ve been a euro skeptic since 1999 when my book Market Shock argued that countries such as Ireland and Italy do not belong in the same monetary zone. I don’t even think they belong in the same musical performance. Irish tenors don’t sound good singing Verdi, and Italian tenors make a mess of Danny Boy. The moans of the savaged Greek middle class will sound even more sad, cacophonous, and harder to bare.