Sailing through the Greek Crisis| Hugh Hewitt |7.2.2015

Last week, as Greece, and, as a result of Greece, the EU, were approaching a point of no return in their five-year economic and financial crisis, I was put-putting with four school buddies in a boat through the Greek Islands -– our ports of call a tour of life before the deluge.

That life was a grand life. Over dinner in one small port, we cheered and clapped in rhythm as a line of waiters danced to the theme of Zorba the Greek. Several very watchable women joined in. Their effervescence and energy left me musing that this must be why Ulysses took so long to find his way home.

Tourism is the top “export” (that’s how economists classify it) of Aegean Greece. Tourists deliver the Greeks their dollars, pounds, and francs; the Greeks deliver these consumers from off shore their fun. Trade is booming. Every port was a party. You might have thought that the revelry could never stop — until last Saturday when the Greek prime minister announced that he was putting to a nationwide vote the refinancing conditions of the European Central Bank, the International Monetary Fund, and other European countries, principally Germany.

Not that things changed much after the PM’s surprise move – at least not immediately.

But by Monday the first signs of national sobriety were setting in, and I heard a different kind of talk. “We have given as much as we can,” one Greek told me. “Over the last five years incomes have dropped 25 percent. No one thought of Greece when they put together the Eurozone. The British were right to stay out,” he concluded.

He was a sophisticated man. I gathered he worked at a fairly simple occupation, so maybe after five years Greek’s financial travails all Greeks can speak knowledgably about matters of international finance. I have listened as former UK cabinet ministers described the Euro in almost identical terms — as a political, not an economic project. It never made economic sense to bind northern Europe with its technologically advanced economies and high levels of productivity together with the more joyful but less dynamic south, meaning Greece, Italy, and Spain.

In another port at another bar I found myself talking with an actual international banker. Everyone hates bankers, he said. But you can’t run a country without them. They provide the instruments of liquidity. Without a bank, how does your restaurant with its dancing waiters (I had told him about them) make payroll and buy fish on Wednesday, when most of its revenue will come in on Friday and Saturday? Global players can access cash and capital globally, he added. But if Greek bankers are shut out of the global capital markets, as will happen, at least for a time, if Greece leaves the Euro, your dancing waiters will find themselves sitting a lot of songs out.

On Sunday night our little vessel docked, as had been planned, in a Turkish port. That made us one of the last boats to exit Greek waters before capital controls were put in place, though, as tourists, controls might not have affected us. Still, we were relieved not to test the Greek government’s widely circulated assurances. You never know when some martinet will refuse to stamp a passport because a never-before-mentioned or imagined detail is out of order.

After the Second World War, the U.S. championed the development of a European economic union as a part of a broad strategy to prevent another world war. Now because of the European Union’s own overreaching and mismanagement, that union is in jeopardy. Even if Greece votes to stay in the EU, Europe’s crisis will continue, which is a problem not just for Athens and Brussels but for us.