A remarkably decisive vote coming in now from Greece. I’m school holiday bonding with my son, watching CNBC’s coverage (Steve Keen and all). No one can say with any confidence how things unfold from here. No doubt, establishment leaders in other vulnerable countries desperately don’t want the Greeks to leave the euro, but those in other countries might be glad to be rid of them. No doubt, the ECB won’t want to find itself as the agent who finally determines whether or not the first brick is removed from the wall. No doubt, Greek opinion is still reluctant to face up to leaving. But further default is surely coming very soon. And the banks must re-open eventually and even if there is more ELA support, who would sensibly leave more than transactions balances in a Greek bank account. It is very hard not to see Grexit happening some time very soon. And that is unlikely to be the end of it. Yes, the ECB and national authorities can ensure adequate liquidity buffers for banks in other countries for the time being. But central banks can do nothing about the tide of public opinion, which – in the north and the south – seems increasingly unsure about just what good the euro is doing.
In reflecting on Greece and the wider edifice of the euro, John Donne’s 17th century words spring to mind.
No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thy friend’s
Or of thine own were:
Any man’s death diminishes me,
Because I am involved in mankind,
And therefore never send to know for whom the bell tolls;
It tolls for thee.