18 May 2012

I don't know about you, but I'm beginning to feel as if I'm watching the highest-stakes game of poker ever played.

On one side of the table, sweating nervously, Greek voters. On the other side, gimlet-eyed, poker-faced (sorry), the German chancellor Angela Merkel.


And there, in the middle of the table, where the pile of chips should be, the future of the European economy. Which means, to you and me, our jobs, our savings, our mortgages and our pensions. Greek voters know they're holding a lousy hand.

And they know that Chancellor Merkel knows. What they don't know is whether she's prepared to risk everything on the possibility that they will keep upping the stakes, even with no hope of winning.

After all, if they're bust, they're bust -- so it doesn't matter how much they lose, because they won't be able to pay. So maybe Frau Merkel will fold first. Offer a life-line, perhaps, to keep them in the game.

Also at the table are the onlookers, and they're sweating even more profusely than the Greek voters. Here's the governor of the Bank of England, Sir Mervyn King: "We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country's history, the biggest fiscal deficit in our peacetime history and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution."

And here's the former Labour chancellor Alistair Darling: "This has the seeds of something disastrous. It is madness."

Oh, and the head of the International Institute of Finance, Charles Dallara: if Greece leaves the euro, the damage would be "somewhere between catastrophic and armageddon". OK. You get the picture. European leaders are very, very worried, as they head to the US for this weekend's meeting of the G8.

So what will they do? My hunch: not a lot -- and here's why. Politicians don't start sounding panicky unless there's a good reason -- and my guess is that the reason this weekend is that they want to panic Greek voters.

They want them to fear that if they vote for an anti-austerity party in their rerun election next month, all hell will break loose. They want to persuade Greek voters that they can't have what they want, and what the anti-austerity Syriza bloc is promising them: an end to the pain, but continued membership of the eurozone.

The message to Athens from Berlin and Brussels is (cue ominous drum-beat): Be afraid; be very, very afraid.

Are you sure you want to stay in this game of high-stakes poker? What happens if Frau Merkel has stronger nerves than you do, if she forces you out of the game and then takes the shirt off your back and throws your family onto the streets? Is it a risk you're prepared to take?

 Now, the implied threat may or may not be well-founded. I'm in no position to judge, and -- more to the point -- nor are Greek voters. All they need to know is that the threat is there, and the risk is real.

For Chancellor Merkel, the threat is a different one. Do you really want to risk Greece crashing out of the euro? More pressure on banks in Spain and Portugal, perhaps Italy as well? Even the collapse of the entire euro project?

After all, Frau Merkel (the Greek poker-player might say), the euro has served Germany well, has it not? Isn't it the euro that has bought you your economic strength, your export-led growth? Do you really want to risk throwing all that away, just so that you can punish us Greeks for our past profligacy? See what I mean about high-stakes poker?

I suggest you put a note in your diary: 17 June, election day (again) in Greece. A day when Greek voters may well be deciding a great deal more than who's going to form their next government. Unless, of course, the whole euro-caboodle has come crashing down before then.