Author: Pericles

The Greek Situation

Many people blame the Greeks for the financial situation they have found themselves in. They have austerity up to the eyeballs, pensions, benefits, and social services have been cut to the bone, and unemployment is horrendous.

Why has this happened?

Before Greece joined the Eurozone, almost nobody (except the government) used credit. If they couldn’t afford it, they didn’t buy it. Any extra money was put into property so that something solid could be passed on to heirs. When girls of the family got married, they were given at least a plot of land, normally with a house on it as well. This secured their future as that property stayed in their names (unless they were foolish enough to sign it over to their husbands). The only credit was personal. i.e. If you went to the builder’s yard and asked for some bricks, cement, etc. and told them you would pay in the summer (when the tourists came), they would either give it to you or not, based on your reputation. Yiannis always pays, so he gets it. Thanasis is a problem, so he doesn’t.

When Greece cheated its way into the Eurozone (with the connivance of Goldman Sachs and many of the EU governments, who knew that Greece was in no fit state to join the single currency), the Greeks were told that their credit was now as good as the Germans, Brits, Dutch, etc., so they could spend, spend, spend! “Have a credit card, have two, have three!” they were told. For people who had never had this kind of credit, it was fatal (like giving candy to a baby). However, that was not the main problem, a lot of Greeks still maintained the “spend it only of you have got it” attitude. The real problem was that the big European banks (German banks in particular) loaned massive amounts to the Greek government, which then went on a spending spree – the Olympic Games, the Metro, the infrastructure for the Games, loads of armaments (including submarines?!?!?!??), etc. Did you know that Greece is the biggest spender on armaments, per capita, in all of Europe? Why?

The banks were well aware of Greece’s incapacity to properly repay these loans, but as long as they were making lots of money from the interest, and were pretty sure they if everything went wrong, the governments of their respective countries would bail them out. Many foreign firms bribed Greek government officials (among others) to accept contracts which greatly benefited those firms. Siemens, for example, got caught and paid a large fine in Germany, and one (yes, just one!) Greek government minister, went to jail. However, that was just the tip of the iceberg, there was much more corruption. Now I have many German friends (good friends) who say that corruption is endemic in Greece, but, as they say themselves, “It takes 2 to tango”. If no bribes are offered, none can be accepted. Vice versa, bribes can be instigated from the receiver, but the payee still must play. Whatever happened, nearly every project put the Greek government (& therefor its taxpayers) deeper in debt. Rich Greek companies, and rich Greeks, took a lot of this money and sent it abroad, to buy good, safe investments in Swiss and London property. So, the money evaporated, and the Greeks got some infrastructure and a fancy Metro, and were saddled with a huge debt (but the Greek government were saying nothing about it!). Then came 2008/9, when nearly all the major banks and investment houses went belly up as all their unregulated, bad investments came to light. Countries all over the western world (USA, UK, Netherlands, Belgium, to name but a few) bailed out their banks to the tune of billions of Euros, which meant that the tax payers of those countries were forced to shoulder the burden of the banks’ bad debt. Germany, however, did not offer to bail out its banks and was (& has been) negative about bail outs by other countries. This left Germany in a difficult position as their banks (particularly Deutsche Bank – http://www.reuters.com/article/us-germany-deutsche-bank-idUSKCN1213D5) were also badly exposed to debt, and particularly to Greek debt. So Angie & her cohorts (particularly the rather obnoxious Finance Minister, Wolfgang Schauble) decided to con the German people (& the rest of the EU) into bailing out the “lazy” Greeks* (as an act of kindness you understand!). Of course, this money is not given, it is loaned, putting the Greek people even more in debt! What the German people do not realise is that almost all the money that they think is going to help Greece, goes straight back to the German banks! So, the Greek tax payer is actually paying off the German banks and having to suffer horribly to do so! Even just a couple of days ago, Herr Schauble was refusing to consider any form of debt relief for Greece, even though the IMF have recently been saying that it was the only way forward. See: http://www.pappaspost.com/germanys-finance-minister-wolfgang-schauble-drops-yet-another-bomb-greece-ahead-crucial-eurozone-meeting/

Such a kind man!

Apart from the major tourist islands, the Greeks are suffering horribly. Often they must decide, with what little money they have, whether they should pay the rent, pay the electricity bill, pay for their medicines, or eat! They can’t do them all! Pensions have been cut by 48% and the “Troika” (European Commission, European Central Bank, and the International Monetary Fund) are now asking them to be cut even more. Many families are only just existing on the pension of one or two of the grandparents as there is no work for parents, and certainly not for the youth! Now they will have to accept less again!!???
The present government of Greece (elected democratically twice and backed up with a referendum), tried to reason with the Troika (& particularly with Herr Schauble), but were met with stony stares. No one wanted to really help the Greek people, they just wanted money!

There will be more about the EU in a later post.

That’s it for today.

* About the “lazy” Greeks, the citizens of which countries work the longest hours, and which country works the shortest? The answers: Greeks work the hardest, the Dutch & the Germans the least:

Figures from the Organisation for Economic Co-operation and Development (OECD) show that the average Greek worker toils away for 2,017 hours per year which is more than any other European country.
Out of the 34 members of the OECD, that is just two places behind the board leaders, South Korea.
On the other hand, the average German worker – normally thought of as the very epitome of industriousness – only manages 1,408 hours a year. Germany is 33rd out of 34 on the OECD list (or 24th out of 25 looking at the European countries alone).
Only one other OECD country’s workers put in fewer hours, and that’s the Netherlands with 1,377 hours.