February 15th, 2012
02:32 AM GMT
London (CNN) – It is official. The Greek economy has gone into meltdown.
The numbers released Tuesday show that during 2011 the economy contracted by 7%. Barclays estimates that much of that loss came in the last three months – when the economy dropped a whopping 5.1%.
A look at the IMF's World Economic Outlook puts it into context. In the darkest days of the recession no other developed country came close to suffering such a large loss (U.S. -2.4%; UK -4.9%; Eurozone -4.1).
It is now clear Greece's economy has fallen off a cliff. It has endured five years of grueling recession and every prospect of much more to come, as even the Greek prime minister warned that things would be tough for years to come.
The situation seems to be as grave as it has been. On the one-hand the eurozone nations are playing hardball while back in Greece, there is instability, poverty and the destruction of the economy. But is the eurozone demanding too much? If Greece sinks into riot and rebellion, will we look back on this time as being an error in history because, even for understandable reasons, the Europeans pushed too hard?
Comparisons can be made with the Versailles Treaty and the way Germany was treated after World War I. Hefty reparations and a humiliating defeat were heaped on the country. It all ultimately led to such resentment and anger that the seeds were sewn for the nationalism which followed. In Greece's case there are the years of debt burden on future generations, the humiliation of making elected politicians sign pledges to other European governments and ultimately the destruction of a way of life (albeit unsustainable) that is precious. I don't think I can push the analogy much further though. Greece hasn't had territorial appropriations or restrictions on its military.
But the point remains. What some in Greece are calling the "German boot" on their throat is stoking up a level of nationalist fervor and resentment that, if not careful, the Europeans may literally push too far.
The eurozone is an example of everyone being clever after the event – "coulda, shoulda, woulda" galore on how the Euro was set up. It would be a terrible shame if Greece's political and economic collapse became another footnote setting back Europe decades.