The economic news of this weekend was dominated by Greece and it’s ongoing negotiations to alter the path of the depression it is in.
Poor Greece is in much more than the tough situation that appears on the surface. Sure, the economy has tanked and debt levels are so high that even Dubai skyscrapers look small in comparison.
Whatever happens, there are huge changes coming to the Greek economy – even bigger than those that have already been experienced.
However, the real problem is everyone else in Europe. Within Brussels circles it has long been recognised that easing the treatment on one country in financial trouble provides a precedent for other countries to renegotiate. The EU does not suddenly want to have to try and renegotiate with Ireland or Spain, for example.
In the first two minutes of this interview with Boom Bust, the new Greek Finance Minister, Yanis Varoufakis explained the situation in January 2014. Greece needed to go through further pain so that Italy learns a lesson!
The current negotiations put Greece into a terrible jam. On the one hand, the EU cannot and will not give ground for the reason above. On the other hand, the Greek people have legitimately voted in a government on an anti-austerity ticket. The new Greek government cannot be seen to take backward steps no matter what situation it finds itself in.
The reality, of course, is that both sides need to edge towards each other and find a compromise. If one cannot be found then money will stop flowing and Greece will go broke in the summer.
If that happens, the likelyhood is high that the Greek coalition will collapse and the next government voted in will be even more hardline – and they will need to be if the people are to have any say in their futures.
Meanwhile, in the other 27 member states, politicians are desperately following the news relating to cats stuck in trees, divorce statistics and whatever else happens to be dominating their own news cycle. Are they listening carefully enough to the message being given to Greece? Or are the Greek people being taught for nothing?