Greeks bearing gifts

It generally takes something momentous to wake me from my mid-winter slumber, but such an event has just arrived in the shape of the very encouraging victory of the radical left party Syriza in the Greek general election.

The next couple of weeks will be interesting, as we wait to see who blinks first in the negotiations over reducing and/or rescheduling Greek debt. It seems likely that there will be some sort of deal, since I don’t think either side is willing to see the fallout that would result from a default. There isn’t much room for manoeuvre though; the Greek people desperately need some relief from years of crushing austerity, and failure to deliver this would precipitate a massive political crisis in Athens, while the ECB is wary of seeming too lenient on the debt question, lest it encourages similar popular uprisings in other parts of the Eurozone. My guess is that the eventual compromise will favour the Greeks, since things can’t get much worse for them, so they have less reason to back down. The Germans don’t seem to be in a forgiving mood though, so it could go either way.

The situation in the UK doesn’t really parallel that in Greece. We have had some austerity, but it’s been on nothing like the same scale; crucially the middle class, while squeezed, have not been completely impoverished. There is no left formation analogous to Syriza either, anti-austerity sentiment taking on more of a diffuse, localised form. That said, if things work out well for the Greeks it will give a boost to the left here, and perhaps inject some excitement into our own election campaign. Whatever happens the result has shown that markets and bankers don’t have a monopoly on power, and that the voice of the people can’t be ignored.