Portside

The European bankers who imposed austerity on Greece chose to believe in the confidence fairy — that is, that the job-destroying effects of spending cuts would be more than made up for by a surge in private-sector optimism. While pretending to be hardheaded and realistic, they were peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.

The assumption in German Chancellor Angela Merkel's entourage before Sunday's Greek election was that Tsipras, the charismatic leader of the far-left Syriza party, would eke out a narrow victory and shift quickly from confrontation to compromise mode. Instead, after cruising to victory and clinching a fast-track coalition deal with the right-wing Independent Greeks party, he has signalled in his first days in office that he has no intention of backing down.