What if the eurozone were a nightclub with a German DJ, and Greece was a dancer struggling to keep up?
Daniel Marans, Huffington Post
Since the start of the Greek debt crisis, commentators have struggled to find the right metaphor for Greece’s relationship to Europe. Is it a bad marriage in need of a “big, fat Greek divorce”? An “economic experiment” in “Europe’s laboratory”? Or is Greece a 21st century “debt colony,” which Europe is subjecting to a new incarnation of “gunboat diplomacy”?
But what if, instead of those high-minded analogies, the eurozone were a nightclub with a German DJ, and Greece a dancer struggling to keep up? That is what British comedian Marcus Brigstocke proposed in an August 2014 standup routine, and though the comparison is not perfect, it is insightful enough to be hilarious.
Brigstocke describes Greece as a country that got into the eurozone club under the bouncer’s nose by concealing the extent of its debts.
Goldman Sachs hid their sovereign debt, gave them a fake ID, changed their shoes, and snuck Greece in the back door of the club. The Greeks are in now and they are excited. … Brilliant! They are on the inside.
Once inside the eurozone “club” though, Greece finds that Germany is the DJ, and the German electro music is too fast to keep up with. Greece soon regrets going in:
And that’s when they realize the club has a German DJ. And that’s when shit started to get scary for Greece when they heard, “Ja das ist my euro house. Turn it up a little more! Dance faster little Greece!” By this stage, the Greeks were desperately trying to keep up. … The Greeks are slumped in the corner, “I should never have been in here.”
And yet, much like the eurozone itself, the eurozone club is virtually impossible to leave.
They can’t get out, because the Germans have locked the door. And the Germans dictate how fast the music goes and because they are German that is very fast indeed.
Brigstocke’s comic analysis tracks closely with the actual story of Greece’s admission into the eurozone and subsequent challenges in the currency union. Technically, Greece did not, as Brigstocke suggests, use Goldman Sachs and other Wall Street firms in order to get into the eurozone. But once Greece was a member, it relied on help from Goldman Sachs and other finance firms to conceal its debts, thereby continuing to meet eurozone requirements. And until the 2008 financial crisis, German and French banks were more than happy to play along, making loans to Greece that they knew were risky.
Then, just as Brigstocke describes, a short time after joining, Greece discovered that Germany, as Europe’s wealthiest nation, was calling the shots. In short, Germany is the eurozone’s proverbial DJ. And Germany’s agenda, or “music,” is often not in the interests of Greece and other weaker European countries.
This has been especially apparent in Germany’s response to the 2008 financial crisis and subsequent fallout. In 2010 and 2012, Germany led bailouts of Greece’s government that wereaimed at saving German and French banks, which held the bulk of Greece’s debt. As a condition of the needed bailout loans, Germany imposed austerity policies that served its political and ideological agenda, but have devastated the Greek economy, reducing the country’s GDP by nearly one-third and pushing unemployment over 25 percent. Now, the International Monetary Fund has said that Greece’s latest bailout package, which it needs to pay debts from the previous bailouts, is unworkable without major debt relief, but Germany refuses to budge.
While some in Greece want to leave the eurozone “club,” as Brigstocke notes, they are more likely to just want better terms from Germany. But even negotiating a better deal is very difficult, since the German-led eurozone has made the cost of bargaining very high. The European Central Bank, for example, has withheld emergency support for Greek banks at key points during negotiations, eventually forcing bank closures that brought Greece to its knees. Greece’s current left-populist government, elected to stand up to German-imposed austerity, ultimately preferred to accept Greece’s most onerous bailout terms yet rather than undergo the financial shock that might accompany a collapse of its banking system and departure from the euro.
And indeed, even if Greece wanted to plan a smooth departure from the eurozone as a contingency, Germany and other European leaders have “locked the door” to the eurozone club by making it very hard to leave. It came to light on Sunday that former Greek Finance Minister Yanis Varoufakis had led a group planning for a Greek exit. Since Greece’s creditors had access to Greek Finance Ministry software, Varoufakis had a friend hack into the software in order to copy people’s tax information for the creation of a parallel payment system. Varoufakis claims that leaving the eurozone was always a last resort, if Greece was forced out of the currency during negotiations. But even planning for this contingency was condemned by European leaders as a sign of how “unpredictable” Varoufakis was as a negotiating partner.
German Finance Minister Wolfgang Schaüble suffered no similar condemnation for openly threatening Greece with a forced exit from the euro.