Just when you thought it might be safe to swim in the blue waters of the Aegean economy again . . .




 For one who loves Greece, at least the way it was five years, or even better, before it entered the candy shop of the Euro zone, there is nothing at all in the news to cause optimism about the future. The country is being systematically destroyed by very clever people who have no eye to the long-run consequences of their actions. These clever people are financiers and politicians in Brussels, Berlin, and Athens (among other places). They wear extremely expensive suits, speak in an incredibly sophisticated econo-talk, and are expert at spotting their own short-term interests.

We all know the way these politicians and financial king pins (hereafter, “the suits”) first smuggled the Greek economy into the Euro zone candy shop and then systematically set about exploiting easy credit. We all know that these policies have led to disaster. People outside of Greece for some reason cannot understand that these same people are leading the country to complete political implosion and perhaps civil war.

Yes, civil war. The Greeks invented it (along with Democracy) thousands of years ago when the Greek civil societies, Athens and Sparta, had a go at it. After World War II they had another disastrous civil war when the far Left and far Right (Communists and Monarchists) tried to solve their political differences with guns. They are on the brink of trying it again unless some people in Brussels, Berlin, and Athens - who seem to be in full denial - wake up to the fact that they are driving the country to disaster again. 
Justine Frangouli-Argyris has written an article, "Greece's Daily Torment", in the April 12, 2013 Huff Post World. She argues persuasively that the focus of the Greek government has shifted from saving the economy to appeasing the creditors.

Instead of the Samaras government focusing its attention on long overdue legislative and taxation reforms to bring in much needed revenue and kick-start some semblance of an economic recovery, it is continuously forced to enlist armies of staffers to prepare documentation showing a shrinking budget hole in order to receive the next bailout installment. Trapped by the relentless demands of its northern European partners, Greece has become a disturbing model of idleness and stagnation.

Those who know a little history will recognize that the situation is not unlike what happened almost a hundred years ago when the Allies put impossible conditions on the defeated Germans, which led to the destruction of the Weimar Republic which in turn ushered the Nazi horror show. Greece has almost an identical cast of characters today: the new "Allies" - Greece's European creditors, a weak and gormless center coalition government, a radical left, and - my, my, my - the powerful Golden Dawn party which openly espouses the old Nazi philosophy. 

It would appear that the men in expensive suits either have never read history or do not believe that similar conditions produce similar results.

Unless the Greek people and their European creditors do not wake up in the very near future, Greece will go off a cliff and drag down with it a great deal of what Europeans have fought for since the French foreign minister Robert Schuman in 1950 began the process leading to the formation of the European Union. 

The Greek debt must be brought down to a truly sustainable level now, and a relief program along the lines of the Marshall Plan be put in place. (For those who have not read much history, check out why Europe - especially Germany - was able to rebound from the economic disasters of World War II. This will cost lot of money, especially if other nations demand similar relief. Nations outside of Europe will have to pitch in.

Take a look for instance, at the situation in Cyprus. On April 11, Liz Anderson wrote an article in the New York Times, "Future Looks Bleaker Than Anticipated in Cyprus, Its Creditors Claim". Her analysis indicates that Cyprus is in downward spiral similar to that of Greece, but much faster and without any sign that there is a possible turnaround:

Cyprus is under pressure from the troika to speed development of the natural gas reserves that have been discovered off its coast. The hope, as stated in the commission’s assessment, is that the proceeds would be used to keep Cyprus’s debt under control as the economy slumps.

But this could set off a hornet’s nest of geopolitical tension. Turkey, which is north of Cyprus, last month challenged any move by the nation to speed exploration, especially if it means Russian involvement. Turkey warned that it may “act against such initiatives if necessary.

Austerity, recession, depression, inflation, civil war: one can hardly imagine a better mix to produce the destruction of wealth in Europe and the decline of democracy, civil rights and the dignity of human beings. If they stay the course, all that the creditors of southern Europe may get out of this is the satisfaction that, while they may have destroyed the European dream, they at least maintained their fiscal principles.

On the other hand, somebody better begin thinking, to use that silly phrase, “outside the box”. Thinking somewhere between the early Marx and the late Keynes, people in power must realize that to stifle spending and to let everything run on the basis of the profit motive with no regulation leads to disaster. To use an analogy in the micro level, we should cancel all the old debt and old credit cards and issue new credit cards to governments with strict limits. If  that sounds too radical, how about good old fashioned revolution and civil war in which everyone loses?

[Please pass this blog on to friends who might be interested.] 

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