Yves Smith — Outlook Darkens for Syriza and Greece

Mike Norman Economics 2015-07-01

Greece's finances look to be more precarious than previously thought, which puts Syriza in an even weaker bargaining position.
The real threat to the EU and EZ is not Greece but France. That optimistic possibility now looks hopeless. Syriza is finding its options narrowing dramatically. And as we will discuss shortly, a Grexit is not something the government wants or is seeking, and for good reason. But the short-sighted pounding of Greece will if nothing else play into the hands of Marine Le Pen, the rabidly anti-Eurozone leader of Front National. A Le Pen victory in the French presidential elections of 2017 would mean a rapid departure by France, an almost certain fatal blow to the Eurozone project. So even if a victory over Syriza winds up looking decisive, it is likely to prove to be Pyrrhic. Why Syriza won't actually push the exit button.
Evans-Pritchard’s assessment is that Syriza is willing to play an extreme form of a game of chicken because the costs to the Eurozone will be high if Greece is forced out. He like many observers believe that once the Rubicon of defining exit mechanisms is crossed, other exits are inevitable. The idea that a Grexit will be contained, even if it is “contained” in the immediate sense of limited immediate financial contagion, will prove to be illusory as the spring 2007 delusion that the subprime criss would be contained. And let me again stress that Varoufakis sincerely believes that a Grexit would be a disaster for Greece. The idea that Syriza is executing a nefarious plan to produce a Grexit while looking blameless to Greek voters is implausible. The damage to the Greek economy, not just short term but longer-term, would almost assure Syriza’s ouster and pave the way for big gains by the Nazi party Golden Dawn. This is what Varoufakis wrote in 2012 on why a Grexit was a terrible idea (emphasis original)
It's looking more and more likely that eurocrat intransigence may end darkly, with rightist ascendency in Europe — the very thing that the euro was established to preclude from ever happening again. Yves brings in a lot of other relevant information. I've just emphasized one particular point. Naked Capitalism Outlook Darkens for Syriza and Greece Yves Smith