WSJ Get's it Right: It is Up to The Greek Voters

     It's not that often I get to agree with the Wall Street Journal editorial page but today they had an op-ed that nailed the current problem with the recent Greek elections and the euro.

     Mind you when I saw the subtitle of the piece I didn't expect to agree, "Greeks have to accept the consequences of their own political choices"

     http://online.wsj.com/article/SB10001424052702304371504577405600138308504.html?mod=WSJ_Opinion_AboveLEFTTop

     It sounded like the usual sanctimonious lecture about how the Greeks need to go full speed ahead with austerity. No doubt the WSJ is partial to austerity and "structural reforms"-for me it's more like structural deforms...  Still they are right that it's the decision of the Greek people, not Angela Merkel or Mario Draghii or foreign bondholers:

    "One way to look at this week's events in Greece is as George Papandreou's revenge. As Prime Minister last November, he proposed that Greeks vote on whether they could live with the conditions the EU and IMF were imposing in return for a bailout. The idea sent markets into a tizzy, Mr. Papandreou lost his job, and the referendum never occurred."

     "But Greek voters are having their say anyway. On Tuesday Greek President Karolos Papoulias called a new election for next month, after no party could put together a majority following this month's splintered election."

     "The rest of Europe may find this inconvenient, but this strikes us as progress and in any event was inevitable. That was the wisdom behind Mr. Papandreou's stillborn idea. Like every other country in the EU, Greece is still a democracy. Greek voters reserve the right to say no to Brussels, or even to elect those willing to abrogate agreements made in their names by former governments."

      "For decades, the European conceit has been that voters would gladly cede their national right to democratic accountability in return for Continental peace and prosperity. This worked as long as there was prosperity. But now that pan-European governance includes painful policy choices imposed from afar, the national publics want their franchise to mean something."

       Whatever the benefits of euro membership-I understand for a country like Greece they are considerable-they have had to give up a great deal as all members have in terms of national sovereignty. There's the sense that a country's political decisions are no longer it's own to make but up to Germany,  the EU, the IMF and the foreign bondholders. But the upside is hard to see right now.  Also give the WSJ credit by admitting that the Greek people have a right to renegotiate an unpopular bailout decided in March without their consent that doing so is not illegitimate.

       The WSJ points out that the hope of even Syriza the coalition leftist party who polls indicate will win the upcoming June elections-I'm presuming there will be no success in coalition building-hopes to nullify the bailout agreement yet remain in the euro. Yes, WSJ is right that Merkel and company to a man say this is what will not happen. And of course WSJ thinks this is right and proper:

     "European leaders will be doing everyone a favor if they make clear that there is no such easy way out. If Greeks want to continue being rescued by the rest of Europe, they must meet European terms. If Greeks can't manage that, then Athens will get no more bailout cash and will have to find the money to pay its own bills."

     "And if Athens fails to do so, then default and ouster from the euro zone are likely, with all of the predictably terrible consequences for Greek living standards following the return of the drachma and devaluation. Instead of staying as part of modern Europe, Greece will slide toward a Third World future."

       See I don't agree this is what European leaders should do though I acknowledge this may well be what they will do-certainly the most likely scenario  Yet even here, given the choice if the EU makes it clear as they have done till now that it's "Our way or the highway" either continue with the growth killing austerity with no end in sight or leave the euro I would say that if I'm Greece I leave the euro.

      As to the idea that Greece will end up a Third World nation, well what are they now? As Stalin would put it in the alternative of staying in the euro or leaving both alternatives are worse. It's true that leaving the euro will lead to real problems in the short term. We already see what the future might look like with $898 million dollars in deposits being withdrawn from Greek banks just yesterday alone.

     Yet in the end there is no end in sight to austerity. It only generates demands for more as it weakens growth further and lowers tax revenues. Something has to stop this viscous circle. As both alternatives are worse, at least leaving the euro would restore Greece's political subjectivity, their right to make their own political decisions. There are times when it makes sense to in some sense "bite your nose to spite your face."

    Then again, the EU's decision not to renegotiate terms with Greece is also a decision. A decision which may well hurt the rest of the euro countries as much as Greece. While there has been some attempt to argue that if Greece does leave it's no big deal-ie, the pain will be all Greece's-in recent days the truth has been admitted.