THERE is a moment in many Greek tragedies when the hero goes beyond the point of no return, often because of his or her own excessive pride or self confidence. The ancient Greek word is ‘anagnorisis’ and defines the instance where the character realizes the full extent of his or her recklessness and foolishness and the waiting disaster that is to come.
Other literary examples of anagnorisis would be the popular ‘plot twist’ as when we discover that Darth Vader is actually the father of Luke Skywalker in Stars Wars, or when the “good guy” turns out to be the “bad guy.”
But in the classic sense of anagnorisis, it is when someone follows a certain path, absolutely convinced of the correctness of their actions, unwilling to listen to opposing views, and continues on the path until the truth of their failure becomes obvious. Then it is too late.
We are seeing the beginnings of current examples of anagnorisis and we are going to see more.
It is ironic or, perhaps, a proof of karma that the Greek government is coming up its own anagnorisis in regard to its debt negotiations. Greece’s Syriza government, elected earlier this year, came to power on the promise that it would repudiate the austerity package that was forced on it during the last several years by its creditors.
Greek Prime Minister Alexis Tsipras and his Finance Minster Yanis Varoufakis took a hard line stance with the International Money Fund, the European Union and the lending nations demanding that Greece be given more loans in spite of its unwillingness to make fiscal reforms. Tsipras demanded that cuts in government pensions be restored and that an increase in the nation’s value-added tax not be implemented. Further, Tsipras wanted some of the debt forgiven.
The lenders would not accede to these demands and now negotiations have stopped pushing Greece to the brink. Tsipras and his advisors will very shortly have their own anagnorisis as they realize that no further funding is coming and they must leave the Euro currency mechanism.
Either Tsipras will completely capitulate to whatever demands the lenders make and completely fail on his election promises—throwing the country into a political crisis—or leave the euro. Abandoning the euro, and, perhaps, the European Union, will collapse the Greek banks and the Greek economy. Capital controls on money flow will be put in place and the country will be totally broke. Imports will stop and the Greek government debt will become all but worthless.
With the Syriza party being hard-left, we may see policies that will turn the country into a European Venezuela.
A collapse is avoidable, but it would require Tsipras coming back to the negotiating table willing to sacrifice his politics and his party and attempt to cut a deal that satisfies the lenders. Unfortunately, negotiating now from that point of weakness would probably mean that the lenders get everything they want and that too would not be good for Greece either.
The US Federal Reserve (the Fed) is nearing its point of anagnorisis regarding an interest rate hike. While the business press and media are pushing that the US economy is doing great and that an interest rate hike is perfectly justified, the facts say differently.
Job creation in the US is supposedly the best in the last ten years. People are supposedly so optimistic about the future, that even those who stopped looking for a nonexistent job are now back checking the “Help Wanted” ads. Ignored is the fact that the number of full-time jobs is still declining. The number of people seeking government welfare and public assistance continues to increase each month and wages of the rank-and-file are flat, while supervisor wages are increasing.
The press keeps saying the US is on track for interest rates to return to normal from near zero without mentioning that at historical rates of interest, the debt service of the US government cannot be paid.
But the Fed assures us that if after they raise rates, that hike negatively affects economic growth, they can always quickly lower rates again. We thought that they were going to raise rates because the economy is doing so well? So, if the economy might not be able to handle a rate increase, why raise them at all? Yes, it certainly seems like the Fed has everything under control and absolutely knows what it is doing.
There is an interesting thing about moments of anagnorisis in ancient Greek tragedy. Most of the characters that experienced it committed suicide.
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