The Man That Could Break The Euro

Published in Investing on 6 June 2012

Just who really is Alexis Tsipras?

'But he has nothing on!' said a little child at last.

'Just listen to the innocent child!' said the father, and each one whispered to his neighbour what the child had said.

'But he has nothing on!' the whole of the people called out at last. -- The Emperor's New Clothes, Hans Christian Andersen.

The political scene in continental Europe is one built on diplomacy, on political niceties, on subtlety and on consensus. No leader rides roughshod over another country's feelings. Aggression and obstinacy are frowned upon.

Now, most of the time this system works well, and it has succeeded in keeping the peace in Europe for 60 years. But what if the cosy consensus in Europe turns out to be wrong? Suddenly, the system doesn't work so well.

For the first time since the Second World War, we seem to have reached this point. The European project is in dire trouble, and nobody knows what to do.

In the search for answers, the attention has turned, not to one of the established, mainstream leaders in Europe, but to the leader of a party that was, until recently, at the margins of Greek politics. That leader is Alexis Tsipras.

An explosion of popularity

Tsipras was born in the mid-70s in Athens. He trained and worked as a civil engineer. He became a political activist from his teenage years, and was active in his university's student union.

In the turn of the century he held the leading position in the youth wing of Synaspismos, a coalition of radical parties. By 2009 he had risen to become the head of the Coalition of the Radical Left, the organisation we now know as Syriza.

This party has exploded in popularity recently. In the 2009 legislative election Syriza won a paltry 4% of the national vote. Current opinion polls give the party around a 22% share of the vote, vying with the centre-right New Democracy party to be the leading party in Greece. Pasok, which makes up the current government, lies a very distant third.

It is perhaps not surprising that parties that support austerity have been losing popularity to parties that are against it. The Greek people have suffered terribly, and finally they have found in Alexis Tsipras someone who has given vent to their feelings.

The road to hell

He has described the path of austerity as the road to hell: 

"We have never been in such a bad place. After two and a half years of catastrophe, the Greek people are on their knees; the social state has crumbled; one in two youngsters are out of work; there are people leaving en masse; the climate psychologically is one of pessimism, depression, mass suicides.

"We cannot accept that this is the future of a European country. And precisely because we recognise the problem is European, and it will spread to the rest of Europe, we are sounding the alarm bell and are appealing to the people of Europe to support us in an effort to stop this descent into what can only be called social hell."

His message is clear -- Greece cannot go on this way -- something has to change: "All these years we allowed the people who governed us to destroy this country. And we have to stop them."

No more bailouts

He is adamant: he will not veer from his pledges to repudiate the terms of Greece's bailout that has forced such incredible hardship on average Greeks. Such a stance could lead Greece's lenders to withhold further aid and set off a default.

He says that he wants Greece to stay in the euro, just not under the terms of its current bailout. The reality is that such a position could lead to Greece rapidly crashing out of the eurozone.

He is trying to change the game in Europe, and if it means pushing Europe to the brink of Armageddon, so be it.

A change would do you good

But it would be simplistic to call Tsipras some sort of wild-eyed anarchist. Instead, all he is saying is: this system is not working, so let's change it.

He really is like the little child who saw that the emperor's new clothes did not really exist. He is just saying what many have been thinking for months now: Europe cannot go on like this, it has to change. Europe, and particularly Germany, has been ploughing on too long with its policy of austerity at all costs. It's clear we need a rethink.

Perhaps this is summed up best by the graffiti scrawled in blood red letters on a wall in Athens. It says, quite simply, "Wake up".

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Comments

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scooby114 06 Jun 2012 , 12:44pm

You borrowed it, you pay it back.....

4spiel 06 Jun 2012 , 1:01pm

Easily said. The people who lent it knew the risks. The people who suffer most are not the same ones who gamble the money. Proportion. -as the mortgage spivs we had in UK and the loan sharks that still thrive - better loan criteria would help in future .

snikmij 06 Jun 2012 , 1:20pm

Reminded me of an old couple on one of those money programs, think it was Rip off Britain, who had to repay a loan which in todays criteria wouldn't have been lent. After months of being hounded by the bank (lloyds) with letters, rigouously interviewed by the manager the loan had to be written off.

If lenders hadn't lent without making sure there euros could be repaid they deserve everything they get. Of course the problem is where did they get the money to lend, banks, pension funds perhaps?

theRealGrinch 06 Jun 2012 , 1:39pm

just nuke the feckless lot

AlysonThomson 06 Jun 2012 , 2:01pm

Greece signed up to the bail-out package. Keep to your word, for a change, Greece. I say that because they have defaulted on debt several times in their history.
If the people stopped retiring at an earlier age than other European countries AND they all paid the tax they owe, they would not be in the mess they are in.

DirtyDollie 06 Jun 2012 , 2:41pm

4spiel: "The people who lent it knew the risks. The people who suffer most are not the same ones who gamble the money."

I agree to a point. The ones who gambled were the banks and the government. The people who pay are the average citizens.

However, the average citizens elected the government, who allowed the banks the freedom to gamble and allowed the citizens to under-pay their taxes.

If the citizens knew the country's financial situation, then they have no cause to complain about austerity now. If they didn't know, then the former government officials should go on trial for fraud for false reporting of finances.

jongleur100 06 Jun 2012 , 2:52pm

"He became a political activist from his teenage years"
Or more accurately, he joined the Greek Communist Youth Movement, and stirred up as much student protest as he could.
"But it would be simplistic to call Tsipras some sort of wild-eyed anarchist."
What do you call somebody who pursues a policy that ostensibly aims at a stated goal while knowing it will inevitably achieve the opposite, causing maximum disruption to the economic order?

SevenPillars 06 Jun 2012 , 2:59pm

The RealGrinch - Shouldn't we nuke ourselves first?

ANuvver 06 Jun 2012 , 8:53pm

Reading your quote from The Emperor's New Clothes, I initially assumed you were referring to Tsipras himself and his fairy-tale election pledges.

I actually think that should he win, he will go down in history as the man who unwittingly saved the euro.

scotsboy1 06 Jun 2012 , 11:28pm

I think Tsipras, if elected, will go down as the man who saved Europe, by killing the Euro and ushering in an age of sanity. Of course, his own country will perish in the conflagration he sparks, but a visionary such as he cares not for the electorate once they have fulfilled their purpose, driving him to his personal glory.

Back2Value 07 Jun 2012 , 4:54am

The Greeks - and their politicians - are primarily responsible for the mess that they now find themselves in, not international lenders or other members of the Eurozone. So it's hardly surprising that someone like Tsipras looks good in comparison to what's gone before.

The trouble is, it seems unlikely that Tsipras's solution is realistic. How many times does the bailout require re-negotiation, only for the Greeks to once again declare it unfair or unacceptable? This has to come to some sort of conclusion, so in my view the sooner that the other members turf Greece out of the Eurozone, the better. It shouldn't be up to the Greeks because they have shown themselves incapable of making a rational choice.

Greeks are often outwardly patriotic, but how many wealthy Greeks, even in this time of crisis, have publicly stated their intention to pay in full the taxes that they are liable for? None that I've heard of.

Greece's attempts to hold the rest of the Eurozone to ransom must ultimately fail, and the longer this goes on, the more damage that it will do.

harryhoudini 09 Jun 2012 , 2:19pm

I think the article is very thoughtful and deep. I am certainly review my thoughts about the Greeks, which was pretty much in line with the comments above.

I do still agree with Alyson that the Greeks have to wake up and pay their taxes and other bills.

I recently read a blog from Greece, written by a Greek, from the FT Alphaville site- I can't remember the author's name but it is a lesson.

Back in 2009 the Greek Government introduced a property tax but not many paid and none do now. Then some bright spark in the Government noticed that the people were still paying their electricity bills so they added the property tax to the electric bills. Result: the people stopped paying their electric bills. The the state owned owned electric company has had to receive a 250 BILLION euro bail out. Money not in the Greek bail out plan. Oh, and the electric company is forbidden by law to cut off supplies for non-payment of bills.
ho hum....

One more thing did anybody see Have I got News for you last night. Apparently some one has come with a solution with the euro area problem and it involves the Germans getting involved in running all the struggling economies.... I'm sure some one thought of that before.... just can't remember his name.... :-)

regards

harryhoudini

harryhoudini

SaintGermain 09 Jun 2012 , 3:09pm

"Instead, all he is saying is: this system is not working, so let's change it."

No. And for two reasons.

1. The people who are actually saying that are those who support good governance and sound financing.
We tried 'borrow n spend' in the UK and many other countries. It dosn't work. Unless, you think that Italy's economy is stronger than Germany's?

2. That is not 'all' Tsipras is saying. He wants to nationalise the banks, raise corporate tax to 45%, not fire any public worker, stop privitisations, expand health care system, and engage in wholesale investment in infrastructure. And the EU are going to pay for it, whilst he refuses to comply with EU-IMF reforms.

As for the comments on Germany, I don't think the Germans need any lessons from Tsipras or any of the 'pro-debt' lobby on how to run an economy. The 'pro-growth' policies of Germany (in fact its the EU-IMF) involve bailout money in order that they buy time in order to make reforms that create liberalisation and growth.

It's a pity the Greek Government doesn't implement them. But they don't mind taking the money and, then turning around and threatening a hard default if they don't get some more.


Tsipras is an idiot and, will ruin Greece. The Greek people deserve better than this, but hey, they are voting for him.

The graffiti on the wall may have said 'Wake up' but it could read 'Wake up to the Drachma' soon enough.








ANuvver 10 Jun 2012 , 12:06pm

"Tsipras is an idiot, and will ruin Greece."

I agree. The awful thing is that there is a persuasive argument that the previous lot did that job and Greece is already, if you'll pardon the turn of phrase, in ruins. His fairytale is sadly so seductive because many people feel things can't get any worse. Personally, I believe they can. Much worse.

He could campaign on the single issue of leaving the euro, of course, but all the indications are that he'd clearly lose. To me, that indicates political mendacity, not vision. The most charitable interpretation is that he's trying to engineer precisely that outcome by stealth, so he's either deluding the Greek electorate or himself. Neither possibility is very palatable. If he does command a governing majority next week, Greece will be under the military by year-end. And maybe that's the necessary outcome.

He's on a donkey trying to play chicken with a tank (although it will take a lot of work to clean the donkey giblets off the tank). This is a sideshow for Europe's future. It will be decided in Spain, then France and Belgium. Again, and again it will be "the nearest run thing you ever saw".

An irresponsible politician spouting pretty rubbish for cheap and easy political advantage, eh? Thank goodness that could never happen here...

SaintGermain 11 Jun 2012 , 9:39am


Well Tsipras line of thinking is that

1. The EU won't throw Greece out because it is against the rules
2. Greece is 'too small,not to bail'
3. Spread the scare stories about the Euro break up if Greece goes first
4. If we don't get what we want (and you can pay for it) we wil default and screw you over

There is a problem for him. This variant of 'Mutually Assured Destruction' doesn't really work, if the other side know they won't be destroyed.

The EU could and should (if Syriza wins) tell Greece that if you won't make the reforms then you won't get the package. Now, how would you to default and exit? Soft and with aid? Or hard and on your own?

I love Greece and, it saddens me to see what people like Samaras and Tsipras are doing to the country.

RomfordDOC 12 Jun 2012 , 11:07am

He's popularity has exploded because he offers salvation.

Salvation from the pain being experienced by those that offered salvation previously.

And like all salvations that went before, all populist salvation's can offer is a circular route swirling ever faster in a downwards spiral.

The end is near, or at least nearer and in the least ugly contest everyone is ugly.

ANuvver 13 Jun 2012 , 12:57am

Amazed that noone has yet channelled McEnroe:
"You cannot be Syriza!"

Or maybe I'm just old and warped.

I'm very fond of Greece too. When I first visited, Athens and Piraeus were what estate agents refer to as "charming" and the ferries were like cheerful troop transports. For a bankrupt country, it's very slick these days. Borrow'n'spend on infrastructure anyone?

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