French Socialists (and Obama?) Vow to Save Greece

Note to reader: Obama makes his appearance further down. Please read through the entire article. Thank you!

The welfare state is a man-made black hole. No matter how much money you pour down into it, you will never ever fill it. There is no better example of this than Greece.

Let’s recap the main events in Greece this year.

All of this has happened because the EU, the ECB and the IMF have been trying to force Greece to achieve three mutually incompatible goals:

  1. To stay in the euro;
  2. To balance its budget by means of austerity; and
  3. To save its welfare state, the root cause of the country’s fiscal crisis.

Some Eurocrats are beginning to realize that these goals are indeed incompatible. However, their solution is not to abandon the third goal, which would allow Greece to abandon the second goal. No, their goal is instead to do away with the second goal in order to achieve the third. In other words: allow Greece to return to its historic path of reckless spending, lavish entitlements and a deteriorating private sector.

From the EU Observer:

France is in favour of giving Greece more time to meet bailout conditions, provided it is “sincere” on implementing reforms, French Prime Minister Jean-Marc Ayrault has said. “We can already give it more time to pull through,” he said in an interview with the Mediapart website on Sunday (23 September).

As if the Greek weren’t sincere before… They have subjected their population to fiscal torture for three years now, and all that has come out of this is an economy in macroeconomic free-fall and so much support for authoritarian parties that Greece could be the first EU country to go from parliamentary democracy to dictatorship.

What this means, though, is that the EU-ECB-IMF will eventually concede that they cannot austerity-whip Greece into shape. But since this new tone vs. Greece is initiated by a new leftist government in France, a country religiously committed to the welfare state, we can safely conclude that the goal here is not to restore the Greek economy – but to have other EU countries make open-ended commitments to fund the Greek welfare state.

As British Member of the European Parliament, Mr. Nigel Farage would put it, the EU will fight “to the last German taxpayer” to keep Greece in the euro zone. Apparently, the French are also willing to fight to the last German taxpayer to restore the Greek welfare state to its perceived historic spendoholic glory.

The EU Observer again:

He added that a Greek exit from the eurozone “cannot be the solution.” But he also said Athens should be “sincere in implementing reforms, including fiscal ones.” The Greek coalition government, led by centre-right leader Antonis Samaras, has still not managed to agree the €11.5 billion worth of spending cuts that were due at the end of June, with the junior coalition partners resisting further pension and wage cuts.

The French socialists are taking the opportunity to score political points here, not realizing that their strategy to keep the welfare state by continuing to spend other people’s money on it is what brought about the crisis in the first place.

Interestingly, there is a U.S. twist to this. The EU Observer speculates that the French government’s attempts to keep Greece afloat could be part of an attempt to keep things calm on the international financial markets for another six weeks or so:

The so-called troika of international lenders (European Commission, European Central Bank and International Monetary Fund) … suspended its mission [on Friday and] … gave reassurances that the “brief pause” did not signal any trouble and that discussions since early September had been “productive.” The delay could be politically motivated to allow the US presidential elections on 6 November to take place without bad news from Greece that could send shockwaves through international markets.

This raises the question: has Obama promised to throw American taxpayers’ money after Greece if he is re-elected?

Regardless of what the United States would or would not do, this shift in policies toward Greece will do absolutely nothing to solve any of the country’s problems. Neither austerity nor more spending can save the welfare state. The only way out of this crisis for Greece is to terminate its welfare state, implement widespread free-market reforms, minimize its government – and preferably even leave the euro.