A new financial word has been coined: GREXIT.
It is short for Greece exit from the Euro. This has now become unavoidable and politicians in Greece unable to form a new government are playing a mad game of chicken thinking that they can have they cake and eat it. They are crazy to think that the EU can be held at ransom and continue to throw funds into a Hellenic bottomless pit to avoid financial contagion on other EU countries who are working hard to address their financial crisis.
The point of no return was passed through the last election in Greece. Going for any early election when a technical government could have been formed with a life time much longer than the technical government in Italy, was sheer madness, crass stupidity and concentrated arrogance on the part of the New Democracy leader Samaras who must have thought he had high chances of winning an outright majority. As usual, politicians put their interest before those of the country.
Oh how wrong he was! And what confusion he has thrown his country into!!
Nobody knows exactly what the electorate voted for. Probably they voted their anger against the two main political parties who between them have rendered Greece bankrupt, corrupt, a repellent for new investment and now ungovernable. The electorate knew what they did not want but clearly they did not, and probably still do not, know what they want.
The electorate voted to end the austerity programmes and renege on the bail out agreements signed with the EU and the IMF, which involved a debt write-off of some Euro one hundred billion by private creditors, but at the same time they voted to stay within the Euro. This is a contradiction in terms. A typical case of fairy tale demagogue politics that convinced Greeks that they can have the cake and eat it too.
It does not make sense any more for Greece to stay in the Euro. This is a pity as the ones who will gain most by Greece's exit are the oligarchs who corrupted Greek politicians, evaded taxes, exported their capital and are warming their hands for when a crisis government after GREXIT will be forced to sell state assets under severe price stress and they can buy them with their hidden Euros which will be converted to pay the price in highly devalued New Drachma.
Yes, things now are beyond repair. Europe can no longer support Greece that does not want to support itself. Europe's resources should now be diverted to protect the other countries who are performing serious restructuring programmes, to protect them from the crisis of confidence fallout following GREXIT. If Europe were to support Greece and roll back the restructuring programmes on which such support is conditional, they will weaken the democratic support for the governments in Italy, Spain, Portugal and Ireland. If Greece can get away with it why cannot the others too?
There is only one way how GREXIT can be avoided. Fresh Greece election must be held and these are to be a referendum on whether Greece want to stay in the Euro and embrace the bail out conditions or they want to renege on the bailout and consequently, GREXIT. It should be Yes or No and nothing in between. Yes if and No but just won't do. This is just what George Papandreou wanted and was forced to resign for even suggesting about it. Merkel must be discovering a bit too late just how right Papandreou was and how much better it would have been if the austerity package had been submitted to a national referendum about whether the country wanted it or preferred GREXIT.
And let there be no doubt that a GREXIT would be a bone shaking experience for middle class and poor Greeks. If they are exasperated with the austerity programmes they should know that compared to the pain of GREXIT the present austerity would be like a picnic. Whether democratic institutions in Greece can survive the social upheaval caused by GREXIT I have great doubts.
But like an aeroplane that lost all engines we must now all prepare for a crash called GREXIT.