There were no ticker-tape parades or Kodak moments when German Chancellor Angela Merkel arrived in an "exhausted" Greece yesterday. In fact, Merkel departed Greece so quickly that for most Greeks, the tear gas wafting over the streets of Athens was the only proof that the Iron Chancellor had visited at all. The Chancellor's message was severe: Greece would have to find another $13 billion in cuts, and never mind the wailing and gnashing of teeth.
If it seems like we've been here before, it's because we have. Only Europe's deep exhaust-erity has suppressed what must be by now a deep, artistic itch to erect a new Literature of the Absurd on the foundations of Europe's pain. Merkel's jet arrived in Athens flying both the Greek and German flags. The Chancellor herself proclaimed that "We Are Partners, We Are Friends," but in friendship, as in enmity, one side usually ends up getting the better of the bargain.
Meanwhile, in the streets of Athens, 50,000 angry protestors waved banners that read: "Angela, Save the world, Kill yourself," "Greece is not your colony," "This is not the European Union, it's slavery," and "Out With the Fourth Reich" as protestors hurled rocks, Molotov Cocktails, and various other things on fire at police. Parallel demonstrations called by the CGT labour union sprung up in France.
Merkel's message, that she was "not here to preach...nor have I come as a teacher to give grades...but to listen, and be informed," was sneered at by the German reporters who had flown in from Berlin to cover the German Chancellor.
"Saying that she is not here to preach is bullshit," said one journalist assigned to the Chancellor. "She is here to tell them exactly what to do."
Things have gotten so bad in Athens that rich Greeks have started showing up dead à la an Agatha Christie novel.
Two Greek businessmen on the now infamous "Lagarde List" - a list of 1,991 wealthy Greeks with Swiss bank accounts who are being investigated for tax evasion and corruption - have turned up dead since Friday, both apparent suicides. The first was Leonidas Tzanis, a former Greek minister who had been under investigation. He was found hanged in his home on Friday. There was no suicide note. The second was Vlassis Kambouroglou, a Greek businessman accused of embezzling $1.29 billion from defense contracts. He was found dead in his hotel room in Jakarta, Indonesia, on October 8.
The Lagarde List doesn't just contain the names of wealthy Greeks. Another 20,000 individuals with Swiss bank accounts are listed.
According to MarketWatch:
The list comes from data obtained by a Geneva software technician, who filched details of around 24,000 accounts at HSBC Holdings PLC's Swiss private bank, according to Greek newspaper Kathimerini. It's been a literal treasure trove for French government as it searched for tax evaders. Data was also shared with Italian, Spanish and British authorities, reports say. (emphasis mine)
The existence of the List is putting increased pressure on Evangelos Venizelos, leader of the Socialist PASOK party, who has come under heavy fire for not investigating the List when he was the Greek finance minister. Venizelos, in turn, blames his predecessor, Giorgious Papaconstantinou. Lagarde's List will likely mean the end of both political careers.
We Want Out
According to a poll published by German newspaper Die Welt on September 17, 65% of Germans now think that Germany would be better off without the euro. This opinion is supported by a separate poll published by French daily Le Figaro, in which 64 percent would reject the Maastricht treaty if a vote were held today. (The Maastricht treaty was pivotal to the creation of the euro.) Finland has already begun preparing for a eurozone breakup, as the euroskeptic parties begin to peel off voter support from the coalition party.
Indeed, it may be time for a realistic reassessment of the near-term viability of the European order. Clear polling trends among likely voters tend to be reflected at the ballot box eventually. As it stands, a "multi-speed Europe" now appears to be on the horizon.
There's also the rising risk of individual provinces seeking autonomy within the EU system. The recent Catalan revolt is just one indicator of how the existence of the EU is eroding sovereignty within member states. If Catalonia can do business with the EU regardless of the outcome of the independence referendum, then why should Catalonia remain a subject of Spain?
The ECB stated today that "European governments should carefully monitor budget-cutting plans to make sure they don't undermine economic growth too much."
Many of us said that from the very beginning. The ECB's speech was clearly fine-tuned for Italian and Spanish ears, as "some countries" (i.e. Portugal, Ireland and Greece) "have lost market access and have no option but to consolidate in the short term."
Don't expect any help from Southern Europe in October. The unions in Greece have called another strike to coincide with the next European Summit on October 18, the Rajoy government in Madrid is apparently committed to playing the "we don't need your help" card until the Catalan elections are concluded, and France's ratification of the European Budget Discipline Treaty on Tuesday works against European growth in the near term.
Investors looking for a way to hedge their portfolios against uncertainty in Europe should consider staking out a position in ProShares UltraShort MSCI Europe ETF (EPV).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.