Monday, May 21, 2012

"A hideous ecstasy of fear" - The media and the Greek crisis.

The best things in life are free by Teacher Dude's BBQ

The possibility of Greece leaving/being forced out of the Eurozone has been dominating the local news cycle for days. Ever since Athens failed to form a government last week, the press has been full of stories of what might happen if Greece once more returned to the Drachma.  'The Gates of Hell will open', 'Greece will live scenes straight out of the Apocalypse'' are two examples of the kind of fear tactics being used by politicians and reporters.

Internationally, the quality of debate is not much higher, nor more informed. Instead, normally sober news agencies pump out the kinds of headlines usually associated with the possibility of Godzilla stomping down town Tokyo. However, behind the hysteria and hyperbole there is also lot of very poor journalism going on with facts taking a back seat to sensationalist "scoops". Whether this is just editors demanding juicier headlines or something darker is going on is a matter of debate.

(For the sake of full disclosure, I don't not live in a aluminium foil lined room for fear of the NSA trying to brain wash me with microwave signals broadcast from Area 51 LOL).

The most commonly misreported story is that Greeks see next elections as either a pro or anti Eurozone vote. This is simply not true as the vast majority of those asked in polls have reported that they want the country to retain the euro, a reminder that the historical fear of hyperinflation is not limited to the German psyche. Nor do any of the parties (with the exception of Greek Communist Party) advocate exit from the Euro as part of its election platform.

To give a taste of just how wide of the mark some of reporting concerning Greece is I've chose this article which appeared on the Reuters site today. It is not the only one of its type and compared with the abysmal domestic examples of panic journalism, not the worse. However, it is riddled through with factual errors, and unsubstantiated conjecture masquerading as in-depth analysis.

The first paragraph of the story claims that Greece will not even have time to print drachmas should it leave the EZ and is based on a interview with Marios Efthymiopoulos, a visiting scholar at Johns Hopkins University Centre for Advanced International Studies and president of Thessaloniki-based think tank Global Strategy. who says that "You wouldn't be able to pay anyone except in coupons. There is only one (currency) printing press in Greece. It is in the museum in Athens and it doesn't work any more."

Ah, those boring olĪ“ facts are such a drag in the fast moving 24/7 news cycle. Well, first of all there is no Global Strategy think tank, based in Thessaloniki. There is, however, a right leaning organisation called Strategic Initiative headed by Marios Efthymiopoulos and his brother, coincidence perhaps?

Also the idea that Greece has no printing press is also mistaken, As well as the defunct printing press now housed in the museum in Athens, the Bank of Greece also has facilities to print notes and mint coins. The Banknote Printing Works of the Bank of Greece (IETA) is based in Holargos, which is the Halandri district, Attiki.

The author, Peter Apps also says that "Already this week, Greek savers - and smaller numbers elsewhere in the southern euro zone - have begun to take money from banks" Well, people often take their money out of banks, even when there isn't a crisis and without an idea of the scale of withdraws (Link? Source?) this is just so much speculation. Perhaps Reuters is helping recycle the rumour that Greek banks were being deluged by customers taking out their savings and so had imposed a limit of 50E at ATMs. The good thing about a bank run is that just suggesting the possibility of one can make it real. That way analysts can ensure the accuracy of their own predictions.

From 28 to 17 in three easy steps

Later on the article raises the idea of borders being closed and tanks on the streets. No self respecting scare story about Greece these days is complete without at least one reference to either civil war or military coup. (Strange how none of this is ever mentioned in discussions about Spain or Portugal which also suffered both).

The idea is that with a collapsing economy people would stuff their life savings and smuggle them out over the mountains to the north or across the Adriatic, so prompting Athens to close the country's borders. In which case, Greeks would not as they have done so often in the past, either hide money somewhere closer to home or covert it into a more easily concealable form? Rather they would lug suitcases full of cash around the country?

"Troops in the streets" Once again the idea is put forward that the army would be used to bring order to the streets? Who would give such an order if there is no government apart from an unelected caretaker one? And would the army obey? Gone are the days of the Cold War and the possibility that Greece could become a part of the Eastern Bloc. Given that the paranoia and tensions that helped fuel the 1967 military take over no longer exist, could conscript military units be persuaded to take on their own people in defence of a government that lacks popular support? Undoubtedly , there would be some Greek politicians who'd quite happily give the order but whether they would be listened to is unlikely.

As I mentioned before the article is a mish mash of ham-fisted speculation, deliberate exaggeration and sloppy reporting. unfortunately, as the Greek elections approach we are likely to see much more of its ilk as the stakes concerning the future of the Eurozone get higher and the gloves really come off.


Rusty said...

The issue about Greece leaving the Euro Zone is really a big issue, in fact, it is aired in the radios for days, until now. Greece is really in great trouble if they will leave Euro Zone. It is predicted that Greece will face business bankruptcies, market turmoil, and political backlash, if they will leave from Euro Zone. Euro Zone does not have to worry about this, because, United States will take Greece's place in the Euro Zone.

By: exchange rates

currency exchange rates said...

I don't think Germany will let Greece fall in its knees. Germany is like a strongest stone in this Euro mountain. But who knows how long will Germany need this association...