Formidable-looking woman burst into the manager’s office of a large bank, and having listed her connections – political and other – began to describe a grand investment plan for the health clubs she headed. The manager listened to her with some misgivings, but her torrent of words and the references she had brought brooked no contradiction. He heard her out, and as she took her leave, confined himself to uttering the usual formalities: «We’ll look into your plan.» Time passed and the manager forgot all about the incident. Suddenly, a few days ago, he heard that the bank had been left with a debt of millions of euros thanks to the same woman, who had found a way of furthering her plan through one of its subsidiaries. The plan had been grand but doomed to failure from the outset, as the lowliest bank clerk could have seen. This is one of many examples of the corruption in which the Greek economy is mired. Supposed business miracles that eventually fizzle out, crash dramatically or explode with a bang, leaving wreckage behind them, and banks that have lavishly offered money are left with heavy costs. At the same time, the government objects that these are common phenomena and refer to the abundance of newly formed companies, which more than outnumber those that have closed down, putting across the image of a prosperous economy pulsing with life. What’s going on? What’s going on with the economy? Are these occurrences bolts out of the blue or are they signs of a new crisis emerging? What they demonstrate is that, while the distortions of Greek capitalism are part of the market, the government does nothing to stop them. Apart from the sectors that have been tried and proved abroad, and some individual businesses based on timeless values or the established business class which insists on working purely on market terms, the remainder revolve around the state and policy. The latter involve the peculiar nouveau riche business class which grew up over the past two decades, and which relies largely on political connections and friendships, always in the expectation of getting hold of state funds. Around them have formed smaller groups with the same or even worse characteristics, making up a very problematic and offensive microcosm. Three to four thousand people – politicians, party officials, senior state functionaries, bank and company executives, eminent lawyers, members of the judiciary and academia, entrepreneurs, media chiefs and hangers-on willing to help for a fee – constitute this particular power circle that has made distortion the rule. The microcosm has had its moments of glory; it has enjoyed wealth and power; but it became prominent as its misdeeds and irresponsibility caused offense. And now it is shaky, because some factors in the equation have changed. The distortions have dominated, making high economic growth difficult. The Greek economy, an unusual model of capitalism which operated on the principle of putting off problems for the future, has been brought face to face with its contradictions. It has lost the weapon of floating currency that helped out at times of crisis; it has lost some degree of freedom for the sake of stability; and it has certainly lost control of the internal game, which is now decided at other places in Europe where delays and distortions at this end are not taken into account. Gaps remain This is the great problem facing the government, which thought it had the time and the opportunity to fill the gaps. But that hasn’t happened. The gaps have remained and grown wider, and the demands of politics have not permitted the timely recognition of new needs. Measures were not taken and now the government is on the defensive, unable to betray their manufactured myth of a strong economy. Everyone knows that 2005 will be the year of a spending explosion, but no one wants to admit it. Everyone knows the Olympiad will put the country deeply in debt, but nobody refuses to spend. Everyone knows that competitiveness has fallen by 20 percent in recent years but nobody does anything about it. They are all aware that social insurance and non-wage cost will exert pressure on employment for years to come, and they have done nothing. But this model doesn’t function any more. It is exhausted, it cannot produce new wealth, it is based on loans, and the only thing it does is to overburden the Greek people, whose tolerance is also being exhausted. There is no leeway left. The sooner the underlying crisis is acknowledged and the truth presented to the public, the better for the country. Only by acknowledging the problems can regeneration truly begin. Restructuring Everyone must take initiatives as fast as possible. They must recognize the problems left over from previous years and act decisively to restructure the state and the authorities which govern the operation of the economy. Otherwise we will have more victims like Palco (an underwear firm which is closing its Athens factory and moving production to a foreign company, as a result of which hundreds of people will lose their jobs). Rage will build up in the working class neighborhoods of Athens with their stifling inequality, just a few kilometers away from the lofty, protected regions of the northern suburbs.