Diary of a Financier

Papandreou Plays Prisoners’ Dilemma

In Politics on Thu 3 Nov 2011 at 10:46

I’ve been quiet lately because I’m a bit tired of pounding the table. Everything is panning out as I suggested for the past year, so there’s not much more else for me to say without gloating or repeating myself. I have to record some thoughts about this Greek referendum though, because I’m starting to get infuriated.

My frustration with the Main Stream Media boiled over in a recent Diary entry entitled “Here’s Something That’s NOT a Rumor“:

This has evolved into more than politics, economics, et al. This has become existential…

Do the people really need shock & awe to affect a democratic bowel movement from their capitals? If they congregate peacefully, in droves, is that not enough? Is violence the only form of persuasion?

The Greeks in the streets won’t fade away. Eurocratic shuffling of the deckchairs will not send the demos home. They will demand their say. So when they’re ignored by finmins in fine suits, when they’re cast deeper into indentured servitude, when they’re slipped arsenic offered as ambrosia… what’s their next move?

I thought the Suits would pursue their agenda, leaving the people to take control via the streets once they’d been cast into implicit slavery. Greek Prime Minister George Papandreou nipped this in the bud by opening the question of the country’s future course to a public referendum. That’s the focal point. Multiple Main Stream Media outlets have offered this [sarcastic] reaction unto Mr. Papandreou: “Bravo.” I bid him my own “Bravo,” with the utmost sincerity.

Washington’s Blog has the right idea:

We’ve been here before, remember? Here in the United States, at the end of 2008 and start of 2009. Wall Street had made lots of bad loans, and the question we faced then was whether to bail out the Street.

The difference is, we didn’t hold a referendum. Instead, the Bush administration told Congress the nation risked “economic Armageddon” if it didn’t immediately authorize a giant bailout of the Street – with no strings attached. [Our comment: Indeed, Paulson threatened martial law if the bailouts weren’t approved.] Of course Congress hastily agreed…

So instead of allowing the Street to live with the consequences of its negligence, we bailed it out – and allowed the Main Streets of America to suffer the consequences.

If Americans had been consulted about the bank bailout, I doubt it would have happened the way it did. [Our comment: Polls showedthat Americans were overwhelmingly against the bailouts. And see this.] At the very least, strict conditions would have been placed on the banks in return for the money. The banks would have had to eat the losses of the predatory mortgages they sold, and help homeowners reduce those mortgages. They’d be required to improve the capitalization of small banks in communities across the country. They’d be forced to accept stringent new regulations, including resurrection of Glass-Steagall.

But Americans weren’t really consulted. It was an inside job.

The bias on CNBC I’m hearing this morning struck a nerve in me again. (With the exception of Rick Santelli & Simon Hobbs, CNBC is a media microcosm of the corrupted crony capitalist US Congress.) CNBC’s groupthink-stance averts mention of Mr. Papandreou’s referendum call as the democratic route. His gambit should be celebrated as a triumph of democracy, rising from the ashes of burning oligarchies across the developed world. Instead, CNBC frames it as a cowardly ‘passing-of-the-buck,’ conjuring images of Mr. Papandreou as a James Taggart. They suggest the Greek Prime Minister has turned the reins to the people to salvage his own political career and disown responsibility for [inevitable] failure.

Perhaps–in a rare dependence on altruism–I’ve miscalculated the motives of Mr. Papandreou. He may be passing-the-buck, acting with egocentrism, or employing the Prisoners’ Dilemma. Nevertheless, the resulting resort to democracy is the right move. Let’s not lose the forest through the trees now.


  1. Romeo:

    I’m uncertain if this was right path for Greece. Is it Ortega y Gasset’s “Revolt of the Masses” or Popper’s “Open society”.

    There is no such thing as “true” democracy in human affairs. It’s a nice utopian idea but has never worked in history. We need wise leaders to make the important decisions for the society he/she leads. If Papandreou is not the wise leader then he can/should voted out or removed and replaced by someone with the wsidom to make the right choice. The human mic and hand signals don’t work in a complex global society. We need good wise leaders. The so called tyranny(elected government) that your fighting against is the same tyranny(free “financial” market) that you are trading each day to make a living.


    • I have no argument with the notion of tyrannical financial markets. (See my “About” page.) Nor do I argue with the necessity of elected government, infeasibility of true democracy, etc.

      While democracy depends on the romantic capstone of the ‘wise leader,’ I will suggest that it’s rarely the case. Wise leaders are (and maybe should be) hard to come by in the political realm, as society’s greatest minds contribute via the private sector. (I’d agree if you were to suggest that too many great minds have been wasted/lay waste to the financial sector.)

      G-Pap has horribly mismanaged this crisis and deserves resignation. He’s not fit to lead, clearly. However, I think he’s so deeply entrenched in the conversation that he cannot soberly contribute anymore. Much of his discourse and interface has been external–with the troika. His parliament also hear more of the EU’s cries than of their own peoples’. G-Pap is justifiably torn by allegiance to the EU and Greece.

      Yes, leaders are elected for their capacity to lead and make the right decision. But they’re not give carte blanche. The people voted on whether or not to join the EMU, they should vote on whether or not to remain at this critical juncture–especially with their sovereignty on the table for the first time.


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