Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Merkel and Schäuble might sleep easily, but Brussels had more invested in the idea of the good Europe. In May it seemed that the troika might be wavering. The commission was warming to the plucky Tsipras. The French government did not want to see Greece humiliated. The IMF was skeptical about the sustainability of the creditors’ demands. It took a meeting on June 1 in Berlin to harden the resolve of the troika and to force Syriza finally into the corner.54 The IMF and the eurozone “bridged their differences.” The Fund’s worries about sustainability were soothed by requiring Athens to force through tough reforms of its labor markets and business regulations. That would allow the creditors to make optimistic assumptions about future growth and relieve them of the need to make any immediate commitment to future debt forgiveness.55 As far as Athens was concerned, it was the worst possible outcome.56 Economists in the City of London estimated that under the creditors’ plan, the Greek economy would plunge by a further 12.6 percent by 2019 and the Greek debt ratio would soar to a staggering 200 percent. As Wolfgang Munchau put it in the Financial Times, Greece had nothing to lose by saying no. “[A]cceptance of the troika’s programme would constitute a dual suicide—for the Greek economy, and for the political career of the Greek prime minister.”57