Bill Carmichael: Greek tragedy for Eurocrats

THE general consensus among economists – both on the left and right – is that Greece is financially doomed. The country is simply unable to pay its way – it has zero growth, a bloated public sector and debts that are so catastrophically large that, even if the economy recovered, they may never be paid off.

So serious are the country’s problems that the only solution – sharp austerity measures – are actually making the situation worse, by sucking demand out of the economy and depressing economic activity even further.

So Greece can’t go on borrowing and spending at the current rate, but reducing spending – as demanded by European leaders – reduces the chance of any recovery through growth.

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It is a classic lose-lose situation. So much is generally agreed – the differences emerge in what should be done about it.

For the Eurocrats in Brussels, Greece must be saved from national bankruptcy whatever the cost to European taxpayers.

They raise the fear of “contagion” – that if Greece is allowed to fail, the crisis will spread to Portugal, Spain and Ireland, triggering a general banking collapse on a scale not seen in modern times.

In reality, their real worry is the collapse of the euro will end the dream of ever closer political and monetary integration. They are driven by political, not economic, considerations. So they are pressing this week at an EU summit for a second bail-out in the region of 120 billion euros – following hard on the heels of the first 110 billion-euro rescue fund agreed only last year – to keep the Greek economy afloat for another few months.

And what then? In all likelihood, further eurozone bail-outs will be required regularly until the crack of doom, or until German taxpayers finally decide they have had enough.

The alternative is for Greece to default on its debts by informing its creditors that it can only pay a proportion – say 50 per cent – of what it owes. The country then leaves the euro, allowing its currency to devalue, thereby boosting exports and economic growth. This at least gives the Greek people a chance of a future through an export-led recovery. This of course would spell the end of the dream of a political and economic United States of Europe – and that is why the Euro-fanatics will fight tooth and nail to stop it from happening.

Match point

There’s been a hotly-contested match at Wimbledon – between officials at the All England Club and the Health and Safety Executive.

First, the club served a topspin slice by shutting down the giant screens on Murray Mount on health and safety grounds. People might slip and hurt themselves on the wet grass, they said. This drew a stinging backhand return from HSE chief executive Judith Hackitt, who ridiculed the ban, saying: “People have been walking up and down wet grassy slopes for years without catastrophic consequences.”

And then Ian Ritchie, All England Club chief executive, replied with a thumping overhead smash: “I am flabbergasted that somebody who is looking after health and safety thinks this isn’t a problem.”

This is huge fun – more entertaining than the tennis so far – but there is a serious point. After many years of ceaseless nannying, HSE executives have belatedly realised that they are widely seen as killjoys.

So they are attempting to rebrand themselves as dealers in plain common sense. Their hackles rise whenever anything is banned for “health and safety” reasons because they feel they are unfairly blamed, and I suppose they have a case. But who is responsible for this ridiculously risk-averse culture in the first place?