The Greek Debt Crisis: Political Bankruptcy

I found it instructive to see the fact that Greece has officially requested the first installment of its EU-IMF bailout package tacked on almost as an anecdotal footnote to an article describing the larger EU-IMF bailout plan approved over the weekend. It reflects the way that the “Greek debt crisis” has now become a signifier for something much larger, in the way that “Lehman” or “subprime” did before it.

What is that much larger something?

For one thing, it’s the fact that in the space of a few months, there no longer seems to be a solid foundation under what we still call the European Union. Of course, this is the outcome of a much longer process. I remember when I first arrived in France, watching the transition to the euro, and later seeing the film, “L’Auberge Espagnol,” and believing that I was witnessing the emergence of a new identity among the continent’s younger generation then coming of age — a European identity.

Within a year, Jean Marie Le Pen had reached the second round of France’s presidential election, signaling that nationalism was far from dead. The run-up to the Iraq War subsequently demonstrated the very real cleavages within the union, and the French “no” in the 2005 constitutional referendum marked an abrupt rejection of further European construction.

That European identity — or demos, as Amitai Etzioni called it — was the only way that the historically elite vision of the European project might have won popular support. But as Etzioni rightfully argues, it has so far failed to materialize. Or else it was just a mirage.

What we have now is a Europe seemingly unwilling to move forward toward a more federal union, and unable to reverse course. There’s plenty of blame to spread around, between political elites preoccupied with defending national privileges, and European populaces who remain skeptical and mistrustful of that bogeyman, “Brussels.”

But a quick glance around the continent shows that the threat of fiscal bankruptcy is mirrored by a generalized political bankruptcy: Belgium, the Netherlands and now Britain are essentially without governments, while France, Spain and Germany’s leaders are significantly weakened. Silvio Berlusconi now represents stability in Europe, confirming that if you live long enough, you’ll see everything.

The economic measures mobilized to head off a financial meltdown, both in the U.S. in 2008 and in Europe in 2010, are for all intense and purposes a sham. The wealth that is being protected is virtual, as would be its loss, the result of what has become a business cycle based on bubbles and stopgap interventions designed to convince everyone that they can carry on as usual. Now it seems that the market’s insistence on pulling back the curtain that was covering that sham has ended up revealing an even greater one. Over the past few week’s I’ve seen frequent references to the “Emperor Has No Clothes.” But this is closer to the “Wizard of Oz,” writ large.

I’m pretty certain we’ll pull back from the edge in time, but not without having caught a glimpse of the ruins that lie down at the bottom of that cliff. It looks a lot like the kinds of ruins you see in history books about ancient civilizations. Scary stuff, indeed, perhaps enough to scare us to our senses. The problem is, I’m not quite sure things would look any better once we’ve come to our senses.