About 2500 years ago, Athens determined the original genetic code for our modern democracies. Even further, our entire modern civilization stands upon the shoulders of Greek giants, be they philosophers, mathematicians, scientists, or statesmen. Is it the same Greece that today threatens to unravel our entire economic system? Probably not. The Adriatic sea still has the same name and fills the same space on the globe, but the water is no longer the same. Pericles has been replaced by Papandreou, much to posterity’s dismay. Greece has, rather ironically, become the Achille’s heel of the Euro zone.
Almost 100 years ago, the nations of the world plunged into the largest-scale and most absurd carnage yet to have been known by mankind. A single diplomatic incident (not so far from Greece) triggered a chain reaction of nations declaring war upon each other for the sake of honoring their alliances. If ever there was a time to not keep a promise, that was the time. The sum result of all nations keeping their promises to each other was catastrophic.
Political alliances have since been eclipsed by debt covenants. Greek citizens will soon decide whether or not their country will respect its covenant. For an outside observer, it would seem that if they stick to the covenant things will be very hard for a long time, whereas if they opt for default, all hell will break loose with no clear view on what will be left when the dust settles. A referendum may lead to the second outcome, and Pericles would have difficulty understanding such an absurdity.
Pursuing the comparison of the current risk of systemic breakdown with the first world war, why would it be preferable for a nation to honor its covenant today whereas it would have been better in 1914 to nullify its alliances? Probably because the alliances of that period led invariably to the disorder of war, whereas the act of honoring a debt covenant in our period is what keeps the current economic system from collapse.
That, at least, is the simple answer, which may in fact be faulty if collapse appears as the most probable outcome anyway. Maybe we need to start thinking outside of the machine that operates us. Perhaps the entire debt structure of our modern civilization is just not sustainable. Perhaps, beyond a certain level of debt, the lender must share responsibility with the borrower for the consequences of excess.
That bit of wisdom even precedes ancient Greece. The book of Leviticus ordained debt forgiveness after 50 years, and such a solution was seriously advocated last July by Hannes Androsch, one of Austria’s previous ministers of finance. But if parties within a single nation can hardly agree on such policy, it is highly improbably that it could be negotiated internationally. A coordinated transition to a more stable economic system is the thing we need most, and the very thing that seems most unattainable.
The Greek prime minister’s disruptive call for referendum may someday have the same historical significance as the assassination of Archduke Franz Ferdinand in 1914. Whatever becomes of Greece (and the rest of us) in the wake of such a self-imposed disaster, the Parthenon will remain standing, as will the numerous neoclassical buildings that house so many of our financial institutions.
– by Carsten Sprotte, Oct. 31, 2011