So, the EU finally got the 'yes' they wanted, only this time it was from Yanis Varoufakis, who resigned yesterday morning after posting the following on his blog (this is how politicians and central bankers communicate with the world these days - immediately - which is perhaps why many of their problems arise):
"Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
"I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.
"And I shall wear the creditors’ loathing with pride."
You could take that as a sign that a deal is likely going to be done in very short order. The Eurocrats needed SOMETHING to save face and Varoufakis' head was the prize.
However, the reality is that, with the 'Oxi' vote ringing across Europe, the balance of power has shifted enormously towards the Greeks (and not just them, but the Portuguese, the Spaniards and the Italians too). Meanwhile, in Brussels, the Eurocrats' overwhelming desire to punish the Greeks for their temerity in defying them is evident in the tightening of ELA provisions by the ECB overnight.
How dare the Greeks 'act up' like this!
Somewhat fittingly, this blind refusal to accept the shortcomings of the euro project will be its undoing and the foolhardiness of those who seek to protect it at all costs will be the architects of its demise.
In any ordinarily-functioning financial system, Greece's creditors would do the deal which made most sense financially - in this case, a debt restructuring and a BIG haircut on the amount owed to Greece's creditors - BUT, this is the EU.
Instead of being fiscally prudent and saving well over a hundred billion euros of taxpayer money, the Eurocrats are still looking to make an example of Greece (after all, money does grow on trees these days so a hundred billion here or there is no big deal). It makes no difference that the Eurocrats themselves lent Greece money they knew could never be paid back - the EU had to be saved regardless of the future cost.
Europe's leaders' own stupidity has led them into a prison cell of their own construction. Their blind insistence on preserving their precious idea of what 'Europe' was supposed to be was, in fact, nothing more than the protection of a series of legacies and the staunch refusal to consider the possibility that they may just have got a few things wrong when they put the EU together in the first place.
A monetary union without a fiscal union was always going to work until it didn't and the time when it didn't was always going to be the first 'crisis'.
There are a series of very good reasons why Italians, Spaniards and Greeks have historically been charged more to borrow money and a series of equally good reasons why German credit has always been worthy of a far lower risk premium. In these politically correct times, such words can be twisted into carrying all kinds of intention that didn't exist at the time they were said - such is the way of the world - but twisting the words doesn't alter the facts that they represent.
Greece got into the EU by cooking the books to ensure their entry. That is not speculation, but a fact confirmed by Greek officials. THAT was the time when action needed to be taken, but throwing hundreds of billions of euros at the problem instead of facing up to a stark reality which would have meant tough choices about EU membership was symptomatic of the 'extend and pretend' culture that pervades the 'leaders' of the world everywhere you look.
Now the Eurocrats face a stark choice of their own creation:
Make good on their implicit threats and kick Greece out of the euro which means waving auf wiedersehn/adieu/au revoir to a couple of hundred billion euros of taxpayer money OR, buckle, do a deal on something far closer to Greece's terms (and along the guidelines of the IMF's recent 'shock' recommendation - see this week's TTMYGH 'IMF'ed') which will involve huge debt relief but will cost a lot less, knowing full well that the leaders of Podemos in Spain and Five Star in Italy will be licking their lips at the prospect of speaking to their own austerity-ravaged electorates.
The man taking Variufakis' seat is Euclid Tsakalatos the Oxford-educated academic economist who has been described as '
the brains behind Milli Vanilli's talent' 'the brains behind Syria's economic policy'.
Prior to Sunday's referendum, he had this to say about Greece's plight:
"Even if they forgave all the debt and gave us €300bn we would still be in deep trouble"
One way or another, the Eurocrats are eventually going to get everything they deserve.