European debt problem --- Time for a Fresh Start?

Since all current rescue efforts are treading in troubled waters (Greek PSI, IMF's funding by ECB, paid-in capital of ESM and EFSF leveraging), I revert to a proposal which I had first made in the beginning of the year. At that time, it was meant only for Greece. At this time, one might as well consider it for all banks.

Concept
All Eurozone-countries must clean up their banks' balance sheets at all cost. Financial institutions must be forced to write-down the value of their sovereign risk assets to realistic market prices. That would be a one-time shock which probably many (if not most) financial institutions could not absorb at once. Thus, the governments of the home countries of each financial institution must recapitalize their banks with preferred stock. When the dust has settled on all of this, perhaps even within 10 years, each government would have very significant privatization potential (and, hopefully, privatization gains). 

This would not only apply to private banks but to all holders of sovereign risk assets (including the ECB, insurance companies, etc.).

No haircuts and/or PSIs! Only a write-down to realistic market prices (a provision for loan losses) which should be uniformly prescribed by the ECB for each country. For instance: down to 50% of nominal (or even less) for Greece; 80% for Italy; 70% for Spain; 70% for Portugal; 60% for Ireland. These are only suggestions. The actual percentages would have to be discussed in detail (but they have to represent a mark-to-market!).

All that is required to implement this is a directive from each country's Financial Institutions Supervisory Authority to all of its members (in coordination with the ECB). Financial institutions should be given a period of 30 days to comply with the directive. 

Implementation
Based on figures published in the past, total write-downs would be in the range of 1-2 trillion EUR and they would wipe-out the capital & reserves of most financial institutions. Thus, these financial institutions would be required to go to their respective governments to request a bail-out.

In the case of public financial institutions (e. g. ECB), the governments would have to make direct capital increases. In the case of private financial institutions, the most appropriate instrument - frequently applied by Warren Buffett - would appear to be the issuance of preferred stock.

Governments should establish special budgets for this purpose so that the respective principal amounts and revenues/expenses can be segregated. Whether or not they should be Maastricht-relevant would need to be discussed.

The funding of this excercise should be handled by each country's National Central Bank. Since the liquidity needed for these capital increases and purchases of preferred stock would need to be neutralized simultaneously, there would be not net increase in money supply.

At this point, nothing has changed for the borrowing countries because they still owe 100 Eurocents for each Euro of nominal debt and the nominal debt is still 100% of the original emission. The financial institutions, too, still have a 100% claim on the borrowing countries but they show less than that on their balance sheet because of the write-downs.

As a second step, the borrowing countries and their respective creditors negotiate directly a rescheduling of the existing debt. The creditors must elect amongst themselves a Steering Committee which is empowered to negotiate on their behalf. All agreements will eventually required the approval of all creditors. I will now continue my proposal using Greece as an example (the same procedure would apply to all countries). 

Rescheduling
1. The sovereign debt must be segregated into different categories, for example: debt equivalent to the amount of loan loss provisions already made, other long-term debt, short-term debt. Each of the categories will have seperate rescheduling terms.
2. The debt equivalent to the amount of loan loss provisions already made should be rescheduled into "Evergreen Bonds" (with a maturity of, say, 31.12.2099) carrying a fixed interest rate. How much of that interest is payable in cash and how much is to be capitalized depends on the "all-interest-formula" (see below).
3. The other long-term debt should be rescheduled into Regular Bonds with maturities between 20-30 years carrying a fixed interest rate. How much of that interest is payable in cash and how much is to be capitalized depends on the "all-interest-formula" (see below).
4. The short-term debt should be rescheduled into Regular Bonds with a 10-year maturity carrying a fixed interest rate. How much of that interest is payable in cash and how much is to be capitalized depends on the "all-interest-formula" (see below).
5. All-interest-formula: Greece must be assured that her budget is charged only with "tolerable" amounts of interest. Thus, the interest to be paid in cash must be variable during at least the first 10 years. I recommend a "percentage of total government expenditures" formula. If such expenditures go up, so does the interest payable in cash. Vice versa if they go down. Economists should discuss what that "percentage of total government expenditures for a tolerable interest expense" should be. If it were 5%, it would be very low. If it were 10%, it would be high but not as high as the 15% of government expenditures which Greece must presently allocate to interest. The portion of interest which is not paid in cash must be capitalized and payable at maturity of each bond.
6. Allocation of interest to different categories of debt: more important than the overall interest rate per category is the allocation of cash interest to each category. It will be particularly important to make sure that the Evergreen Bonds receive an adequate cash interest payment because that is what will determine their value in the secondary market (no one alive today will live to see their maturity) and there must be an active secondary market for Evergreen Bonds. They may trade at only 10% of nominal at first (or even less) but, going forward, their prices in the secondary market will be an indicator if confidence into the Greek economy develops or not. 

What will all of this cost eventually? Theoretically nothing because no creditor forgoes any of his claims and there is a possibility (perhaps with only a 1% probability) that all these bonds return to 100% face value in the secondary market. In the final analysis, the total cost will be the difference between face value and market value of these bonds at some future date of reckoning. If that cost exceeds the amount of loan loss provisions, governments will have to, again, invest money. If it is less than the loan loss provisions, governments will get money back.  

Who will pay for this cost? The tax payers of the countries where the creditors are located. Should a country be overcharged with that burden, solidarity within the Eurozone would be called for. 

Why would the financial institutions - via the Steering Committee - be willing to agree to a rescheduling as described above? Because they have already recognized their losses through the write-downs and loan loss provisions. Thus, the rescheduling no longer affects the value at which they show these assets on their books. Also, governments are now their major shareholders and can determine the direction of the rescheduling.

Necessary collateral measures
1. The EU must gurantee all savings deposits and retirement plans until the dust has settled on this rescheduling.
2. The EU must permit capital controls, if necessary, in those countries which may be affected by capital flight.
3. The foreign debt of the banking sector of each country must also be integrated into the above rescheduling (above all: existing providers of trade credit must commit to keep their trade financing lines available). 

Time-line
On a Friday evening, a 1-week bank holiday through the Eurozone is declared. All necessary legislation is implemented in the week following. 

Net effects/benefits for all concerned
Effect 1: no Euro-exit for any country.
Effect 2: the debt maturities of existing debt are taken care of via the above rescheduling. Risk takers remain risk carriers.
Effect 3: Fresh Money is required only for the financing of budget deficits (thus: much more manageable amounts).
Effect 4: it becomes justifiable for tax payers in surplus countries to underwrite the Fresh Money via guarantees because (a) the amounts involved are now manageable and (b) they serve a meaningful purpose.

Good news - Bad news

In times like this, bad news often travels faster than good news. First to the good news.


A - Good news

"Greek-German cooperation boost" writes the Ekathimerini. According to the arcticle, a new bank for investment is to be formed in Greece and Germany, which has know-how with her own KfW, together with the EIB, will bring in assistance and know-how in order to allow the Greek economy to fund investments while the country remains shut out of international financial markets. More importantly, when the Greek Development Minister and the German Economy Minster appear jointly (and smilingly) before TV cameras in Berlin, that can certainly be considered as good news.

Mind you, Greece desperately needs foreign investment to finance part of her current account deficit because debt financing for that purpose is drying out (and when the current account deficit can no longer be financed, imports will collapse leading to a significant decline in living standards). And remember, the beautiful difference between foreign debt and foreign investment is that the latter does not need to be repaid (nor does it carry interest). But even more important than money, foreign investment brings along know-how which the Greek economy desparately needs.

Along those lines, it is excellent news that the Greek government is now pursuing the establishment of Special Economic Zones. This blog has argued since inception that SEZs are the key instrument to bring foreign investment into the country. Under current conditions, no sane investor would transfer money to Greece. To make the entire country investor-friendly will take years if not decades. Therefore, one has to start with "pockets" which offer, essentially right away, the foreign investor excactly that business framework which he seeks. And if those SEZs work well, their business framework may rub off on the rest of the economy over time.

Permit me to ask: why do I see a tweet coming out of Greece saying "IT HAS BEGUN... Eur/USD 1.3057.." (as though one were celebrating the impending collapse of the Euro, which would be a disaster for Greece) instead of a jubilant tweet saying something like "Good news; foreigners are interested in investing in Greece!" (which would be one of the best news which Greece could have)?


B - Bad news

"German industry eyes local talent" writes the Ekathimerini. According to the article, the European Employment Service (EURES) is organizing match-making meetings at Greek universities to "marry" German demand with Greek supply. I have heard that other countries (Australia, Norway, etc.) are taking similar initiatives towards Greek talent which seeks greener pastures elsewhere.

Now, one could see this positively and say that it reflects the high opinion which foreigners have of Greek talent. Or one could take it for what it really means, namely: the first step towards national economic suicide. Greece has spent enormous sums on education (allegedly, Greece has the highest rate of academics in the EU). Note: that was an investment and not an expense! Losing one's investment can never be a praiseworthy accomplishment. At the same time, if steps towards an economic turn-around are not initiated soon, there will no doubt be a massive drain of young talent (and talent overall) to foreign economies. Those foreign economies will undoubtedly be grateful to Greece for having produced such good talent but the Greek economy will not get very far without talent.

Permit me to ask: when the Greek government sees that foreigners are beginning to snatch up Greek talent, why doesn't it immediately announce plans so that such talent finds it more interesting to stay in Greece?

Finally, the importance of current account balances is being discovered!

This blog has argued since inception that, more than budget deficits, external debt, etc., it is the current account balances of Eurozone countries (specifically Greece) which need to serve as the starting point for any discussion of long-term solutions to the structural problems within the Eurozone (actually, in the entire world, because what happens between Greece and the rest of the world is only a miniature version of what is happening between the US and the rest of the world).

So far, the focus of the debate was on the Eurozone's debt problems and possible solutions to it while the issue of current account balances has been more or less ignored. However, the debt problems are only the symptoms; the major underlying cause are the current account balances. Without current account imbalances, there can be no cross-border debt! With current account imbalances, the cross-border debt is the consequence!

Of late, there have been "awakenings" to the issue of current account balances. Dimitris Kontogiannis wrote an article in the Ekathimerini. John Mauldin published an analysis by Anatole Kaletsky, Charles Gave and Francois Chauchat (GaveKal). Stephen King published one in the Financial Times. And those who are interested in simple, common-sense explanations should refer to Warren Buffett's tale about Thriftville & Squanderville. All focus on the right issue even though they come to somewhat different conclusions.

Let me briefly state, once again, what a country's "current account" really is. The English expression for it could not be worse. The German expression translated into English would be something like "the international operational performance balance of a country" and that comes closer to the truth.

In essence, the current account is the cross-border cash-flow-from-operations-statement of a country. The table included in this post explains how it is composed. That is economics, but now to mathematics: a negative current account balance MUST find its corresponding entries in the capital account of a Balance of Payments (capital imports), as must the positive current account balance (capital exports). In short, if a country's cash-flow-from-operations is negative, it needs to import capital and vice versa.

Confusion with a country's trade balance must be avoided because the trade balance is only one part, albeit the most important part, of the current account balance. If a country manages to compensate the negative trade balance with operational incomes through services (e. g. tourism), the current account can be brought into balance.

A country's negative current account balance represents the transfer of wealth from it to the rest of the world. Greece, for instance, transferred 199 BN EUR of her wealth to the rest of the world between 2001-10 (and all of that "wealth" which she transferred abroad was first borrowed from abroad). Note: this is only wealth transferred abroad out of operations. It does not include wealth transferred abroad via capital flight!

As with a company, a negative cash-flow-from-operations is not bad per se; it all depends what the cash is used for. If the cash is used for investments in revenue-generating projects, today's cash-flow-deficit will in the future lead to cash-flow-surpluses. If it is used for consumption, the cash disappears but the debt remains.

Some opinion-leaders (particularly Greek ones) have attempted to construe present day's problems of Greece as a German conspiracy to "exploit" Greece. Facts do not support this because Germany, from 2007-10, has accounted for only 15% of Greece's current account deficit. What Greece has to do, as she makes a long-term macro-economic plan for her economy, is to analyze her ENTIRE current account balance, i. e. not only the 15% with Germany but also, and foremost, the other 85% with the rest of the world outside Germany.

GraveKal come to an astonishing conclusion. They say that the bulk of the Periphery's current account problems is not a function of deficits with Northern Eurozone-countries but, instead, a function of essentially oil and imports from China. If that is true, then it represents a REAL problem!

If current account deficits are driven by the import of cheap products which could also be produced domestically or products which are not essential for the domestic economy, a strategy of import substitution through new domestic production or import controls could quickly show positive results. On the other hand, if the deficits are driven by the import of products essential to the domestic economy (oil, cars, etc.) or products where one cannot compete due to pricing (China), the task of correcting the current account deficit assumes enormous dimensions.

What applies to Greece applies also to the other deficit countries: the current account deficits must be brought under control! If free market forces cannot accomplish this, then the process needs to be "managed". Countries which have the industrial base to stimulate exports must focus on that (Italy). Countries which do not have an industrial base must do other things (Greece). Here is just one proposal what Greece could do. Greece's opinion-leaders should feel obligated to discuss intensively what other proposals should be considered. Without addressing the issue of the current account deficit, an economy like that of Greece has no chance to sustain a reasonable standard of living because, at some point, foreigners will no longer transfer cash through the capital account which cash is lost (wasted?) through the current account.

A final anecdote
Half a century ago, we had a most interesting history professor in an Austrian Gymnasium. Since the teaching of history, then, ended with the year 1918 (because Austrians did not want to teach about their role in the 1930s/40s...), our professor had much time to teach us other things. One of the things he taught us was how the Austrian economy worked after 1945. Here is his story:

"Children", so he called us teenagers, "we (Austrians) don't have oil and we don't produce cars, but we need oil and want to drive cars. Thus, we have to import a lot. Since we need foreign currency to pay for those imports we must find ways to obtain foreign currency. Thus, we have to try to export as much as possible but, as a small economy, we cannot export enough to pay for all the imports. So we have to find other ways to obtain foreign currency and one of them is tourism. The more tourists come to our country and the more foreign currency they leave here, the better our chance to close the hole between the imports we need and the exports we have. And since that hole cannot be closed even after tourism, we need to be a very attractive place for foreign investment so that foreign investors bring us their money and the government needs to keep its household in order so that it can borrow money abroad".

That sort of says it all!

A roadmap to a prepacked, not apocalyptic Greek Default

This article was published in Bloomberg View on September 29, 2011. I only came across it today.

The article spells out exactly the procedure for a restructuring of Greece's debt which I have been arguing for over a year now. By now, it may be too late to do this but it certainly would be worth a try to re-visit the issue. When the article was written, Greece was the country at issue. Today, this roadmap would have to be applied to all PIIGS-countries.

The principal elements of this roadmap are:

1. Banks have to recognize the full damage at once by making adequate loan loss provisions (the level of which should be mandated by the ECB).
2. Immediate re-capitalization of all banks affected by this via government preferred stock (unless banks can handle their re-capitalization on their own).
3. EU-guarantees that all savings and retirement plans are safe (possibly combined with a temporary deposit freeze in certain countries).
4. Temporary capital controls in those countries affected by the risk of capital flight.
5. A new and plausible debt structure for affected countries including a variable (and tolerable!) interest rate during the first years (interest tied to economic performance or to a percentage of government expenditures, or whatever).
6. No Euro-exit for Greece!

Effect 1: the debt maturities of existing debt are taken care of via the above rescheduling.
Effect 2: Fresh Money is required only for the financing of budet deficits (thus: much more manageable amounts).
Effect 3: It becomes justifiable for tax payers in surplus countries to underwrite the Fresh Money via guarantees because (a) the amounts involved are now manageable and (b) they serve a meaningful purpose.

Time-line: declare a 1-week bank holiday on a Friday evening and get all legislation passed during the next week.

On Prof. Yanis Varoufakis

Prof. Yanis Varoufakis runs a very interesting blog. His focus is not on Greece. Instead, his focus is on possible solutions for the European debt problem. His ideas are excellent and one needs to question why his Modest Proposal does not get more attention on the part of EU-elites.

It appears, however, that Prof. Varoufakis, purposely or not, also pursues a kind of hidden agenda. That hidden agenda seems to suggest that Greece is nothing other than the first domino to fall in a falsely-desigend Euro-structure and that, in consequence, all the blame goes elsewhere. Prof. Varoufakis has not yet made a single proposal as to how Greece could turn-around her economy. But he allows readers of his blog to post silly (if not rude and/or racist) opinions without challenging them. In fact, occasionally he even supports, for instance, the idea that "Germany is out to kill Greece".

In a recent posting, Prof. Varoufakis quoted his "good friend, co-author and interlocutor extraordinaire, Joseph Halevi, who spends half the year in a small town on the shores of an Italian lake". This good friend had written Prof. Varoufakis the following:

"The new Euro-17 Club is like the small town on the shores of the lake that I spend many of my days. The owner of the main café is also the main force in the local association of shopkeepers. He fights, successfully, against any proposal to open new posh cafés allowing only the lesser ones to exist. Hence he gets the best clientele. Many, if not most, come from Rome. Thus he runs a surplus with both his town residents and Rome. Importantly, he does not have to care about their finances. But the trick that makes his enterprise work consists in that the clients are external to him and he does not determine their source of income. Germany, on the other hand,  wants to be like the owner of that café. Yet it also determines a great percentage of the income of the clients. For this reason, and unlike the little town of my lakeshore, the new Euro-17 area is an unsustainable club".

I live by a lake, too, but it is not in Italy but, instead, in Austria. We also have "local matadors" who have enormous influence over what happens in the community. But to make an analogy of that with the perception of what happens between Germany and Greece these days (or rather: between Germany and the Southern Periphery), that - dear Joseph Halevi (and dear Prof. Varoufakis for adding your stamp of approval to the opinion of Joseph Halevi) - well, that is a joke!

Who, dear Mssrs. Halevi and Varoufakis, is the owner of the main café in Greece and also the main force in the Greek economy? Do you really believe that Germany is that owner? If you do, please take a sabbatical far away from Greece and ponder the situation from the distance!

The "shop owners" of the Greek economy are those who determine which professions need to be protected (my understanding is that, presently, way over 200 such professions are protected). There is no foreign country, Germany or otherwise, which is telling Greece to make that protection. On the contrary, they are hoping that Greece will do away with such socially unfair systems/structures. But Greece doesn't manage to make her economy any more competitive than the local community of where Mr. Halevi spends some of his time. Shame on Mr. Halevi's local community; shame on the Greek government which acts like the government of Mr. Halevi's local commity; and shame on all those who give credence to silly messages by adding their stamp of approval!

On the importance of current account balances

As long as today's Eurozone countries had their own currencies, the status of a country's current account balance was given high importance. Why? Because a country needed foreign currency to transact business outside its borders and if it didn't have foreign currency, it could not do that. What business does a country transact outside its borders? The most important item is imports. Other items would be foreign travel, investments outside the country, etc.

When Greece had the drachma, she could only import as much as she had foreign currency available for the simple reason that no one outside her borders had use for drachma outside Greece. In order to be able to import, Greece had to obtain foreign currency from abroad. She couldn't simply buy that foreign currency in FX markets because foreigners would only accept Greece's drachma if they had use for it. Typically, a country obtains foreign currency from abroad through exports, revenues from services like tourism, investment capital from abroad, grants from abroad like funds from EU Structural Funds, remittances of Greeks working abroad and, above all, loans from abroad.

Since the introduction of the Euro, countries' current account balances seemed to lose importance because now Greece and 16 other countries had the same currency. That was a big misjudgment because current account balances are important, whether it is 2 currencies or only one, as long as a country cannot print the currency which it needs to do business outside its borders.

Example: the Federal Republic of Germany consists of 16 Federal States, all of which share the same currency but none of them can print it. If a weak state has a deficit, it needs funding from the other states to stay in business. In Germany today, only 3 states have surpluses and the other 13 states have deficits. The 3 surplus states are: Bavaria, Baden-Wuerttemberg and Hesse. Once a year, there is a Financial Settlement among all states where these 3 states transfer their surpluses to the other 13 states which have deficits.

One of the reasons why Bavaria has surpluses is that the Bavarian government had implemented years ago austerity measures in order to balance the budget. Many social benefits had to be reduced or cut. Berlin, on the other hand, has significant deficits, among others because the Berlin government had even increased social benefits. That may work within one and the same country/nation although even Bavarians are starting to make noises that “they no longer want to live with their lower social benefits if that means that they have to finance higher benefits in Berlin”. Imagine how that would work between two different countries/nations in the long run.

The below table shows, for the years 2007-10, the current account balances of Greece as a country and between Greece and Germany.

 

		Greece's current account balances 2007-10
		Current account			Shares of current accounts
			Greece/
		Greece	Germany		Germany		Greece of
		(BN EUR)	(BN EUR)		of Greece		Germany
Revenue from abroad
	Exports	69.658	8.070		12%		0,3%
	Services (e. g. tourism)	120.865	13.782		11%		1,8%
	Other income	17.987	531		3%		0,1%
	Current transfers	23.526	2.392		10%		1,1%
		----------	----------		----------		----------
	Total revenue from abroad	232.036	24.775		11%		0,5%
Expenses abroad
	Imports	214.253	28.597		13%		0,7%
	Services (e. g. tourism)	61.249	3.927		6%		0,6%
	Other expense (e. g. interest)	55.043	9.837		18%		1,2%
	Current transfers	17.685	36		0%		0,1%
		----------	----------		----------		----------
	Total expenses abroad	348.230	42.397		12%		0,8%
Net foreign deficit (current account)		-116.194	-17.622		15%		2,9%

It is clear that Greece as a country/economy has enormous external deficits and Germany is one of the great beneficiaries thereof. Some people plead for a new local currency which could be printed and devalued and thus make Greece internationally more competitive (i. e. “cheaper”) again.

Devaluations certainly help to bring the current account into balance but social consciousness requires to consider who is actually paying the cost of inflation/devaluations. On one hand, inflation is the most wonderful tax of all because the tax payers don’t physically have to pay it. On the other hand, it is also the socially most unfair tax: the “clever ones” can protect against it and “the other ones” pay it in full.

Current account deficits mean essentially two things: import of capital and export of jobs. In the long run, this is not a good policy because it impoverishes a country and makes it dependent on subsidies from abroad (like Berlin is dependent on subsidies from other states). Also, the import of capital cannot go on forever.

Thus, it would appear that one of the most important issues for Greece to address as she makes economic plans for the future is how to get the current account deficit under control.

The Southern Periphery blames the North for not sharing in their economic pains. What the Southern Periphery (and the North as well) must understand is that the surplus countries will have to pay one way or another. Either because they have to make transfer payments to cover deficits in the South or, if they don’t want to make such transfer payments, because they reduce their current account surpluses with the South. It is like with inflation: the former is money actually transferred (and Northern tax payers have to pay it). The latter is wealth transferred (and Northern tax payers only “feel” it in the form of lower growth but they don’t actually pay it).

Surprise, surprise --- the EU Task Force was discovered!

The Ekathimerini deserves praise for publishing a lengthy report on the activities of the EU Task Force. One of the key questions/answers in this interview is the following:

"Do you understand why some Greeks might view the Task Force’s presence in Greece with suspicion? How would you respond to those who fear that you and your colleagues are here to impose orders from Brussels — or somewhere else — and that this implies a loss of sovereignty for Greece?

The main stakeholders with whom we work — the ministries, the different public organizations but also the private sector — know that none of this is true. Colleagues in the public administration and at the ministries know that we do not impose anything on them, we respect their wishes and it is for them to make the decisions. We are very much aware that if you impose a decision that is not accepted, it will never work. We want all the resources that Greece and the European Commission put in this effort to bear fruit".

Any "European" reading this interview (or the 1st Report of the EU Task Force) should be proud to be part of an EU which provides such assistance to member states and any Greek reading it should be glad to belong to such an EU! The mission of the EU Task Force is summarized in the executive summary of its 1st Report as follows:

The Task Force is a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos.

Can one think of any better news for a country which has been in dire straits for quite some time now?

Unfortunately, it is not sufficient that only the "main stakeholders" are familiar with the objectives of the EU Task Force and that there is a huge difference between the EU Task Force and the Troika. The EU Task Force aims at the interests of Greece; the Troika aims at the interests of Greece's creditors. Both are important but there should be no question that the EU Task Force is the more important one for the future of Greece.

Thus, the Ekathimerini article will hopefully be only a first step in communicating to ALL Greeks that there can be light at the end of the tunnel if one only goes for it, and that it could indeed be quite a bright light.

I strongly hope that there will be more publicity given to the objectives and activities of the EU Task Force (following the motto: "Don't only do good things; do also talk about them!"). My Greek friends, "experienced Greeks", call me an illusionist when I talk like this but I have this unwavering belief that Greeks, when told what the mission is and what positive things will come out at the end of it, will be prepared to rally around such a cause.

And once the majority of Greeks (perhaps beginning with the young generation) rally around such a cause, politicians who spend their time fighting over petty things may start feeling very lonely. One can only hope that they will!