Sunday’s vote in Greece – with over 60% of the public saying “no” to European creditors – means a line has been crossed. The odds of Greece eventually exiting the euro have gone from something less than 50% to something more than 50%.
Markets are down as a result, but hardly panicked. To understand why, take a look at this chart prepared by Peter Vanham of the World Economic Forum showing how the ownership of Greece’s debt has changed in the last three years. European governments, the IMF and the ECB now own three quarters of that debt, and they can create all the money they need to cover it. That means this crisis isn’t really an economic crisis at all – it’s a political one.
Except in Greece. There, the economic effects are very real. Banks will have to remain closed until either the ECB provides more credit – which is unlikely, absent an agreement – or the Greeks come up with some sort of alternative to the euro – a proto-drachma. A very messy and painful time ahead, regardless of the outcome.
Oh yes, and Greece’s finance minister, Yanis Varoufakis, resigned. That’s a good thing for the world, but a bad thing for journalists. Varoufakis has been the source of endless irritation to European ministers and endless diversion for scribes – crediting Marx for framing his world view, comparing the European Union to the Hotel California, and quoting Dylan Thomas to describe Greek politics. “I wear the creditors’ loathing with pride,” he said in his resignation statement.
With July 4th fireworks still ringing in our ears, it’s probably worth remembering that the architects of democracy never intended for tough decisions to get punted to the public. The Greek vote was an abdication of leadership – which is why it didn’t solve anything.
Enjoy the day.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
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