The moment of truth is here. The Greeks, as most of us expected, have voted no to negotiating more cuts with the European Union in exchange for aid. More interestingly, they did so at the bidding of the Greek Prime Minister, Alexis Tsipras. A man who, true to his promise prior to election, has put Greece up against the Powers That Be in Europe.
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| Last week the president of the European Commission, jean-Claude Juncker had warned that a 'no' vote would signify a no to remaining in the European Union |
The Greek vote for the ‘no’ was staggering, at over 68%. A few days before the election, the president of the European Commission made it clear in a press conference that the Greek’s should understand that a no on Sunday would mean a no to Europe and the Euro Zone. It seems they agreed.
In the end, the need for security and tranquility in Southern Europe –this was still during the Cold War- and Greece’s annexing took place in 1981. Their entrance led the way for other equally medium-poo nations like Spain and Portugal to join.
By then, it was too late: actually being part of the Union made it harder for Greece to change its internal policies to improve taxation and lower pensions –the Greek pension system was startlingly generous-, and because their currency was the common European one, they could not tweak it to make their exports more attractive to the outside world. Taxes and pensions seems like a trifle when speaking about an economy, but when you understand what a study revealed in 2012, that the average actual income of a Greek person was 92% higher than what they declared on their taxes, and their pensions 68% higher, well… this led Greece to borrow from very unscrupulous American banks (yes, JP Morgan Chase and Goldman Sachs) behind closed doors and it turned out that while the allowed deficit in each nation of the EU was 3% of GDP, when the lid blew off the whole scheme their actual deficit was over 12% of their GDP.
In the meantime Greece had been experiencing a fake boom right along its European neighbors but when depression hit in 2008, it hit the Hellenic nation twice as hard.
Had Greece still had control of its currency, they could have printed drachmas to compensate and boost their economy. Instead, when the first EU-wide austerity measures were set in place to control the outrageous behavior of the Greek everyday citizens, and the dirty deals of politicians and crooks, there was suddenly no place from where to obtain more money because the American banks were in a whole world of trouble of their own. This created an ever-sinking spiral economic depression that led to obtaining two packages of debt relief from the EU in 2010 and 2012. Each one of them carried more austerity measures, and demands for reform as conditions, which in turn increased Greece’s inability to pull out of it. And here, at the gates of the third bailout, the Greeks have spoken and put a stop to the cycle. Because the truth is, the EU made a huge mistake in imposing huge austerity measures (that means cuts in social services, pensions, unemployment, student subsidies, education and healthcare, along with a cost of job losses from positions being cut in all those areas of the government offering those services) while demanding equally huge legal reforms that will further curtail those very services and increase unemployment even more.
I cannot think of a single global economy that could have made it through those conditions without having control over its own currency. I understand that this was necessary to make taxpayers of the countries lending the money to agree to it, but it was a mistake, to lend like an economist but impose conditions like a politician, and that is what the EU leaders did. Ours, at the hands of our elected officials, and now we have to live with it.
Furthermore, let me clarify one point for anyone wondering. What led to the Greek crisis specifically, what tipped the proverbial glass over, was the European austerity measures that were set in place to favor the northern European nations when the crisis hit –Germany and friends- at the expense of poorer nations like Greece, Spain, and Ireland. It has become quite clear that there is a schism within the European Union, and every decision made seems to benefit Germany and other richer nations –but always Germany- is ruled for, while anything that would be to their detriment never gets a seal of approval.
As you see, nobody is free to throw the first stone.
If you ask me, something history has taught us that someone is always willing to lend a hand, for a price. It may mean that Greece gains some unlikely business partners, those that operate outside the Western world. Regardless, it is going to be very tough going, and they will go through a period of severe depression; what they have lived to date will be like cake in comparison. But honestly, how anyone believes that Greece can somehow pay back a debt that is, as of right now, 175% of their GDP (this is the current balance of their debt, they have borrowed from that 12% to 175% in 7 years), and still somehow be willing to take more, is beyond ridiculous to me. I hope it makes them stronger.
Maybe it’s right; maybe this is what the Greek people truly need, to stand up for their nation and say no –ironic as that might be, considering their inability to help their own country by paying taxes in an honest fashion-. They are a very old country, rich in history and they have, many a time before been main characters in events that changed the world thereafter. Maybe this is another one of those moments.
Ultimately, no matter what they do, the Greeks need to change the way they live, how they view their own government, and their own laws. They have to take a long, hard look in the mirror and start working to rebuild their government and economy using integrity and honesty. They are the cradle of democracy, they just need to remember. Both the idealist and the realist in me hope that they do.
How did this all really happen?
Greece has always been one of the moderately poor countries in Europe, like Spain. A nation that has always lived on tourism and agricultural exports. And like all truly old nations, a country of corruption, sale of favors and private interests. When they started their process of application to the European Union in 1975 many were skeptical. The European stipend and quota system might negatively affect Greek farmers, there was the conflict with Turkey to consider, and northern neighbors were worried about a wave of Greek migrant workers might overwhelm other nations.In the end, the need for security and tranquility in Southern Europe –this was still during the Cold War- and Greece’s annexing took place in 1981. Their entrance led the way for other equally medium-poo nations like Spain and Portugal to join.
And then?
Like all other nations, Greece dropped is low-valued drachma in favor of the euro in 2001. By then, the European Union realized that things had not been quite as they seemed when Greece joined the Union. For one, Greece had a severe deficiency in their tax collection system; but they also had a huge corruption problem in their economy that was just then becoming apparent: putting those two together, it soon became apparent that Greece had doctored its numbers when applying to join the EU, and that its debt was much greater than they had let on. |
| Protests in Greece |
In the meantime Greece had been experiencing a fake boom right along its European neighbors but when depression hit in 2008, it hit the Hellenic nation twice as hard.
Had Greece still had control of its currency, they could have printed drachmas to compensate and boost their economy. Instead, when the first EU-wide austerity measures were set in place to control the outrageous behavior of the Greek everyday citizens, and the dirty deals of politicians and crooks, there was suddenly no place from where to obtain more money because the American banks were in a whole world of trouble of their own. This created an ever-sinking spiral economic depression that led to obtaining two packages of debt relief from the EU in 2010 and 2012. Each one of them carried more austerity measures, and demands for reform as conditions, which in turn increased Greece’s inability to pull out of it. And here, at the gates of the third bailout, the Greeks have spoken and put a stop to the cycle. Because the truth is, the EU made a huge mistake in imposing huge austerity measures (that means cuts in social services, pensions, unemployment, student subsidies, education and healthcare, along with a cost of job losses from positions being cut in all those areas of the government offering those services) while demanding equally huge legal reforms that will further curtail those very services and increase unemployment even more.
I cannot think of a single global economy that could have made it through those conditions without having control over its own currency. I understand that this was necessary to make taxpayers of the countries lending the money to agree to it, but it was a mistake, to lend like an economist but impose conditions like a politician, and that is what the EU leaders did. Ours, at the hands of our elected officials, and now we have to live with it.
 |
| The EU and Greek flags at the Acropolis in Athens |
Furthermore, let me clarify one point for anyone wondering. What led to the Greek crisis specifically, what tipped the proverbial glass over, was the European austerity measures that were set in place to favor the northern European nations when the crisis hit –Germany and friends- at the expense of poorer nations like Greece, Spain, and Ireland. It has become quite clear that there is a schism within the European Union, and every decision made seems to benefit Germany and other richer nations –but always Germany- is ruled for, while anything that would be to their detriment never gets a seal of approval.
As you see, nobody is free to throw the first stone.
What now…
Honestly, as I type this I let out a big sigh and raise my eyebrows in puzzlement. I can tell you my personal opinion. I don’t think they will work this out. Greece will be the first euro nation to go into bankruptcy; they may leave the European Union altogether. Many say that the Greeks don’t understand what they’re doing, that they can’t go through and pull out of the Euro because nobody will trust and lend to them after that.If you ask me, something history has taught us that someone is always willing to lend a hand, for a price. It may mean that Greece gains some unlikely business partners, those that operate outside the Western world. Regardless, it is going to be very tough going, and they will go through a period of severe depression; what they have lived to date will be like cake in comparison. But honestly, how anyone believes that Greece can somehow pay back a debt that is, as of right now, 175% of their GDP (this is the current balance of their debt, they have borrowed from that 12% to 175% in 7 years), and still somehow be willing to take more, is beyond ridiculous to me. I hope it makes them stronger.
Maybe it’s right; maybe this is what the Greek people truly need, to stand up for their nation and say no –ironic as that might be, considering their inability to help their own country by paying taxes in an honest fashion-. They are a very old country, rich in history and they have, many a time before been main characters in events that changed the world thereafter. Maybe this is another one of those moments.
Ultimately, no matter what they do, the Greeks need to change the way they live, how they view their own government, and their own laws. They have to take a long, hard look in the mirror and start working to rebuild their government and economy using integrity and honesty. They are the cradle of democracy, they just need to remember. Both the idealist and the realist in me hope that they do.
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