Greece, to Everyone: “I Can’t Live….With or Without EU”

This article was originally published on on July 1st at 2:30pm EDT

It’s become increasingly apparent this week that Greece’s recently-elected Prime Minister, Alexis Tsipras, is not afraid to bite the hand that feeds him. In fact, that appears to be his primary modus operandi. Despite demonstrating an apparent willingness to accede to some of their creditors’ demands in the past 24 hours, it doesn’t appear those concessions were anywhere near sufficient for a deal to be struck.

“…you can’t trust a guy [sic] acts like he’s got nothin’ to lose.”
Frank Costello (as portrayed by Jack Nicholson) in ‘The Departed’

* Ironically, the actual Frank Costello—the Italian-American gangster and crime boss—was known as Frank “The Prime Minister” Costello.

Sometimes, though, people who act like they have nothing to lose … actually have nothing to lose. Think about it—Tsipras was elected on the promise of “no more austerity” for Greek citizens. A promise on which he had absolutely no ability to deliver.

It would appear Alexis Tsipras is backed into a corner—a situation in which he is damned if he does, damned if he doesn’t. Right?

If he blows up these negotiations with the rest of the EU, then Greece effectively forfeits its position in the Eurozone (or is kicked out) and can no longer use the Euro currency. This is a bad option because everyone knows what condition Greece’s standalone economy is in. So yes, they would be starting from scratch with no debt, but is anyone going to be anxious to lend to them at that point? And in what currency (and at what rate) will they want to lend to the Drachma-using nation, knowing the Drachma will almost certainly be weakening from the get-go?

But does Tsipras have an out? How about the fact that it was the most telegraphed move of all time—hell, it was his entire campaign five months ago. “You guys voted for this!”

Alternately, Tsipras can go against the very principle that won him the job, and negotiate a new rescue package with updated terms (i.e. Austerity). But if he makes this choice, he is a coward for caving to peer pressure. So he can’t make that choice—even if it is the “right” one, now that all the information is available.

Tsipras’ out? “I didn’t vote for the austerity, you did!”

While the likelihood of this option seems to be gaining steam in the media, I simply can’t imagine the Greek people will allow it now. At this point it looks like Tsipras is giving the choice over to the Greek people, via a nationwide referendum to be held on Sunday (after a week of Greek banks being closed). A week of Greek banks being closed may not seem like a big deal when you are sitting in California, but every day that goes by until a resolution is reached Greek citizens are almost certainly getting more scared, if not desperate. As each day goes by, the drachmas in their bank accounts are worth less and less. And many of them probably fear their money, when they can finally get it, will be nearly worthless.

Like the stock market, people prefer certainty over uncertainty. Even if certainty comes with a few strings.

So at the end of this weekend, Tsipras will cement his position as either a coward or a fool—which will he choose?

“When you find yourself at a fork in the road, take it.”
Yogi Berra

So how does Alexis Tsipras avoid looking like a coward or a fool? I don’t know if he can, but this referendum is sort of a great way out. What if the Greek people vote for a new aid package this Sunday, even one that includes some additional austerity, so they can pay their immediate debts, remain part of the Eurozone and live to fight another day? Tsipras won’t have gone back on his word, technically, nor will he be known as the man who singlehandedly threw his people—knowingly?—into a depression.

Is it possible Greece has Germany right where they want them?

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Adam B. Scott
Argyle Capital Partners, LLC
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Los Angeles, CA 90067
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