Dear co-Europeans and to whom it may concern.
We all read too many things about
the European crisis and Greece in particular. It may seem that Greeks are the
eye of this turmoil, or at least the brute force behind the Aeolus vents that
go wild in this desolated from money continent of ours. You’ve heard of all the
Greek demerits, of the frivolous lifestyle and of the rightness of the biblical
punishment masterfully inflicted on them. That’s all very theatrically dramatic
and very easy reading -novel style served for someone not to be suspicious. Can
a nation of ten million all be blind to their downhill path? Was Greece saved
from their unavoidable disaster by their Euro partners and their helpful hand?
Talking about Greece without talking
about history is like a man just out of prison that doesn’t think about women. But write about it and it’s like having to
read the telephone book of Mexico City. To make a long story short we’ll focus
on their economy. It’s obvious to anyone that some of each nation’s most
intelligent people are their ambassadors put in duty in other countries. As a
consequence every country that has an ambassador in Greece has a very good
knowledge of the modus operandi of the Greek government, the state servants and
the most important entrepreneurs. So there was no mystery about
how things were in Greece, who was in command and if he slept face down or on
the back. The way the Greek economy went on those last decades is easily
described. It was based on the tourism, shipping and export of raw materials,
either agricultural or minerals. In the later decades the agricultural sector
was in decline and the services sector was in rise. But the later was oriented
exclusively in the Greek market. So the exports were in decline and the imports
in rise. Bad recipe for a healthy economy, but nothing the world hasn’t seen
before.
Furthermore the
state operated in a theological way, meaning it believes that it is eternal,
and it tries to establish the one and only universal truth in everything it
does. The politicians wanted it to keep this way and reinforced that attitude,
because it produced more state job positions (more control, less product) and
since those were distributed to partisan favorites those were vote producing
jobs. Nothing new under the sun again. Nothing the world hasn’t seen before.
The main thing that was wrong with the Greek economy is that it’s counterproductive.
The state borrowed money instead of the entrepreneurs and was buying votes by selling state
assignments or elevated national economy champions that monopolized the Greek
market or created oligarchies, usually with EU money from development programs.
The public servants took part in this corruptive operation due to lucrative illegal
payments. They also acted as a surveillance force of those markets counteracting
via bureaucracy any market opponents of the chosen ones. Foreign operators in
the Greek market used local entrepreneurs associated with the local politics to
overcome those bureaucratic barriers and take part of the local market and
assignments. Usually all the competitions for a state work have as participants
conglomerates of some local company with a foreign one. Those connections between
locals and strangers were held and promoted, or at least acknowledged by the
local ambassadors.
So at the starting
point of the Greek drama we have an indebted public sector, not the private and
the homes. Even the Greek banks were less exposed than the e.g. German ones
with lower dumping, but, unfortunately for them, were tied with the Greek state
bonds. So when it flopped, they did too.
We had a market in almost complete state control, with few exports and many
imports. Not a good base for recovery. The country had lost credibility due to the
last idiots Finance Ministers before and at the beginning of the crisis,
Alogoskoufis and Papakonstantinou (add Papandreou the prime minister). Those
made stupid confessions of Greek statistics alterations in the data provided to
the EU before and after the Greek entrance in the EU mostly for internal political vindictiveness. Those statistics
later proved unworthy and insignificant, and last but not least, nothing
different than what other countries have done. We always must remember during
the Eurocrisis that statistics is a half true and so it’s also a half lie. And nothing of the abovementioned wasn’t
crystal clear to any other state on earth and most importantly to France and
Germany.
The plan five years
ago was to struggle the Greek economy by cutting the imports, lower the cost of
workmanship, cut public spending and improve the productivity and the exports
of the Greek market. As any good General knows good intentions aren’t enough.
The main thing in a battle apart of the target is how and when and with how
many loses. So the first thing that went wrong was the competitive pumping of
the Greek economy by lowering the local demand and the local work cost. In a bleeding
wound you first want to stop the bleeding. But in Greece they cut the cost in
the private sector and resisted as much and as long they could in the public
sector. They deregulated the maximum possible the work market. As a net result Greece
still has a public sector overpriced and underachieving from which continues to
lose money and a private sector that shrank “unexpectedly” quick because there
wasn’t any public money pumping its veins any more. Now there’s unemployment of
30%, which means that in reality is 36% (there’s always a discrepancy between
the official statistics and the real ones, numbers by the Greek General Confederation of
Labour). The local work force saw salary cuts of more than 25% and most of the
jobs are now part time. Also 30% of the active workforce suffers from salary delay
payments of 3-4 months, or even worst (estimated at 1million workers). Those reforms
were probably laden due to Greek bankers and the Greek hotel entrepreneurs that
wanted to slush their workforce and reduce their costs, and were adopted firstly
by the Greek government and then by the Troica. It’s difficult to be sure about
who makes the first move on those things, who brings the ideas on the table, because
there’s too much propaganda and organized misinformation in the media, either
Greeks either global. We must take note that the economy crisis of 2008 was
held in the USA and we haven’t completely overcome it yet. So the interest in
the Greek and Euro crisis is global. But most of what is written in this issue
is easily accessible in the internet and if it’s the writer’s interpretation it’s
based on the contradiction of the statements of the parts involved prior and
after their acts, p.e. cutting of the Greek debt in the beginning of the
program.
With bank lending inexistent,
consuming reduced to the minimum, with no public spending, only cutting; there
was the last big hit to the Greek economy from the IMF agenda, to raise taxes. So
in a private market with too many companies of under 500 employers and too many
self employed that only meant the closure of many of them. In this stage of the
plan those unemployed and with the reforms that should have accompanied
those cuts should have created the spring on which the Greek economy should
have rebounded almost immediately. There were only two reforms of any
significant interest apart from the deregulation of the jobs. One was the freeing
of the transports and the other of the milk market. How they went? If you can
see any positive effect or you are on drugs or your oculist and neurologist haven’t
seen you for too long. And this thing of Greek paradoxes is all over those five
years. So there is no spring, no launch. There’s only stagnation and sinking. Even
if the salvation program stipulated on economics had rough edges, then came the
politicians and blurred the things. The targets where there, but the timing was
always wrong. Its common believes nowadays that the rhythm of the debts payoff
from the Greeks is out of reach by any government apart from a Hercules and
Midas crossover. Germany insists that this rhythm must be maintained, and so
does the rest of their band. But German politicians made a promise to their
voters that knew from the beginning it was outlandish to fulfill, that they’ll
move their bank-private debt (who lend to south Europeans) to the German
taxpayers, but this new loans will be absolutely repaid back. Further this
austerity south stream was obviously creating a counter vent of money from
South Europe to Germany that counterbalanced many of the woes of German banks
that are too big to fail. Also there was a stream of young and highly educated
South Europeans immigrating in Germany and the north of Europe in generally. So
from one hand we have an impoverished South Europe that is losing youngsters to
the north Europe and out of the Continent and from the other hand we have a
North Europe that is widening its competitive gap with the weak south neighbors.
Why stop this?
Troica only cared that the stream of
recovered debt was held steady. Reforms, development, toxic effects of the
program interested them as much as someone who gets big bonus for the first and
nothing for the rest. Now everybody agrees that there should have cut a big
part of the Greek debt in the beginning of the program, that the cut in the
second program was too small and too late… Except the Germans of course: “Why mess with a toy that’s not rotten and in
any way suits you too”. Good mechanics thinking. If you are from another
continent you may think but why the hell don’t guarantee their debts as one
economic entity they want us to consider them and find their way between them
without risking the global economy? Because the euro has to stay down, so the
German export keeps raising. As one politician sometime mentioned “it’s the
economy stupid”. So we keep the fear that Greece will blow first, and then EU
will blow until Germany and its band members start losing money from the
situation, or lose politic credibility (which is also money) and in the
meantime they find a way to convince their voters that they’ll have to take
more debt on their back. The problem is that those voters have made and are
still doing economic sacrifices to keep the German economy competitive, but the
retribution of those sacrifices was received from the German economic aristocracy
and then was loaned to the South Euro partners and afterwards they have gambled
with those loans and when they lost their gambling and had to pay achieved the nationalization
of their debt. How many times can you fool a voter and how many promises can
you break?
If you are a Greek politician the
answer is many. Goldfish and Greek voters are close related cousins. Now in
Greece there’s a new government, the fourth in five years. It was elected by
promising the impossible. To make the Germans change route. What a promise you
may think, but think again. In a country that doesn’t want to change it was the
right publicity to get elected. “I’ll change the others”. And this is the
common thing in Europe. It’s always the others. So now Europe has two parts
that are trying to do the wrong thing and between so many political lies and so
many economic mistakes time is clicking away. In the meantime Greek citizens
(and Spanish, Italians, etc.) are watching their life passing away meaningless,
struggling to keep up with the raise of the cost of life and the taxes
inflicted.
So all this politic who benefits? Is
this a ephemeral sacrifice for a better future. The South of Europe asks when, the
north answers when the time is right. Go figure. In economics the base is
addiction and subtraction. The rest is sociology. But is this Europe, democratic?
Is it only a economic experiment that went wrong or was it the economic bait to
make the continent a country? In the time of globalization which European
country can prosper alone? Probably none. Even Germany…
