The word “Grexit”, discussing the possible exit of Greece from the Eurozone, is my favorite new portmanteau. For starters, a “Grexit” sounds like a Dr. Seuss creature. Second, for much of the European union, it sounds like a relief.
The Syriza party in Greece has been insulting and blaming their creditors for the problems in Greece since they were elected in January 2015. In the 2011 Eurozone crisis, the anxiety of the dissolution of the Eurozone was palpable; nobody knew how many countries would break apart and how, legally, it could be accomplished. In 2011, a large scale exit from the institution was a great change from the status quo, during a time of global instability. By 2015, many of the troubled nations in the Eurozone periphery (Spain, Ireland) have significantly recovered and, more importantly, have made demonstrated healthy improvements to their fiscal discipline. Now, if Greece exits, the ministers of the ECB and IMF have had years to consider and prepare contingency plans.
The government of Greece feels they are defending their voters a dual mandate which swept them into office: keep the Euro but get rid of austerity. Well of course that’s the will of the people; everyone likes something for nothing. In contrast, the voter mandates in other parts of Europe have reflected the continued frustration with the Greeks for breaking the rules, and not fixing their own problems. Specifically, recent polls now show a majority of Germans (the largest creditor) have lost patience and want Greece out of the Euro. In other words, just pull off the band-aid quickly and get them out of our club. So, If the Greek Prime Minister Tsiparas continues to blockade negotiations and concessions, Greece will default on their debts this month and – possibly – be forcibly ejected from the Eurozone.