The Forced Neoliberalization of Greece

The recent Greek capitulation under pressure from other euro member countries, led by Germany, demonstrates that euro members have de facto ceded sovereignty over fiscal policy to the EU. While this arrangement may be acceptable to some countries, ­­perhaps even Greece,­­ it will be resisted by others. However, as the Greek failure also demonstrates, any eurozone country wishing to restore fiscal sovereignty, or restructure some of their debt, or implement any policy or set of policies that runs afoul of the preferences of certain Eurogroup finance ministers will have near­-zero negotiating leverage if they fail to plan, credibly and in advance, for the introduction of a viable alternative currency. Without this critical card to play, the country in question will be held hostage by the now ­politicised ECB. Its domestic banking system and financial markets will be shut down, the economy will grind to a halt and the government will face either a humiliating retreat or full capitulation.…

The Guardian Greece crisis proves the need for a currency Plan B John Butler

The Greek government is to surrender powers over vast areas of economic and social policymaking to its eurozone creditors under draconian terms agreed for a new three-year bailout.

The 29 pages of conditions concede ultimate authority over much of Greek policymaking to the eurozone and establish a system of quarterly reviews of the reforms by the troika of institutions – the European commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – representing the creditors. The document says: “The [Greek] government commits to consult and agree with the European commission, the European Central Bank and the International Monetary Fund on all actions relevant for the achievement of the objectives of the memorandum of understanding before these are finalised and legally adopted.” The terms for the bailout – worth €85bn (£61bn) according to a senior EU source – foresee a radical overhaul of the Greek economy, stipulating major reforms of health, welfare, pensions and taxation systems, alongside more ambitious privatisation schemes. It also awards the troika decisive influence over reforms of the struggling banking sector…

Ian Traynor and John Henley, Greek bailout terms to give eurozone vast powers over policymaking Alternative Currencies Flourish in Greece as Euros Are Harder to Come By It is summarized at Zero Hedge: Greeks Ditch Euro For Alternative Currencies As Parliament Votes On Bailout