Dollarizing Greece

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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All is fair in love and war, but it will only look better if the moral high ground is not lost in the battle for either love or war. Dignity of the self and the other is the compromise that must never be made. Yet, this is the compromise that is being made in the case of Greece, with the European pantheon crumbling around the ruins of Grecian antiquity, unable to agree on what to do, wallowing at once in both pride and self-pity, marking the birth of post-modern tragedy.

Europe does not want the International Monetary Fund (IMF) to come to the aid of one of its own because it knows that it must do so before the IMF if it is to retain its stature as a geopolitical counter-weight to the United States. Yet, it is afraid that the Greek crisis could spread to the others and is ambivalent about whether to aid Greece or cut it loose. And even though coming to the aid of Greece is the first step before any future reforms at the European Commission (EC) in Brussels for the eurozone countries, the stalemate with Goldman Sachs, the suspicion of the United States and the gridlock in the European Parliament are paralyzing any action anywhere in all time horizons.

The overarching political and social schizophrenia is about the future of the euro itself, given the extant differences over its continued survival or extinction. Elementally, it is a simmering conflict over identity in Europe: comfort in the social and political status quo and fear and anxiety about transcendence. This identity crisis is only made worse by the opportunistic possibilities of geopolitics: the rise of the major emerging markets suddenly makes the independent existence of the British Pound, the German Mark, the Italian Lira, French Franc and the post-Cold War Russian ruble very attractive in a common European Economic Community (EEC) to compete with the United States and Japan more flexibly abroad. Sweden, Denmark and Switzerland are still not in the eurozone, but did well by themselves.

The major G8 European countries are keeping their options open, lest the cost of getting tied up in a common currency marriage outweigh the benefits from the divorce. After all, the euro may not be good for Europe, though the idea could serve better elsewhere in the world. Other countries do need some form of economic regionalism, whether that is a common market or a common currency or both.

If the United States, as the largest single contributing member country of the IMF, is being perceived as gaining undue geopolitical advantage by working through the Fund in Europe, the very private markets relationship between Goldman Sachs and Greece that had created the problem, in the absence of any rules to the contrary, can also be used to save it. Greece appears to be needing only about $150 billion in all, staggered over time, which is a paltry sum relative to what has been supplied by the G7 central banks since the onset of the current crisis in 2007.

All of the funds that Greece needs can perhaps be supplied through Wall Street to give the Europeans sufficient time to figure out the future of the eurozone by restructuring Greece’s debt over 30 years in exchange for mutually agreeable conditions. After all, the future of financial globalization is the supervision of private capital flows through multilateral institutions whether that be for macroeconomic stabilization or economic development, not last resort lending by multilateral institutions.

The IMF can impose the necessary conditionality and the capital can come from Wall Street or other European financial markets, with little or no direct U.S government involvement, given the perceived glut of dollars and euros which the central banks are eager to retrieve and burn lest it cause inflation. This could possibly also result in addressing the European sensitivities about the IMF if the EC comes forward to supervise private capital flows into Greece instead of the IMF.

In the financial world where art has value, Greece is invaluable.


About Chandrashekar (Chandra) Tamirisa
This entry was posted in Economics, Foreign Policy, National Security and Defense, Politics, Sociology, Theology, Transformations LLC and tagged , , , . Bookmark the permalink.

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