In my view George Papandreou and the Greek government are doing completely the opposite of what other countries are doing these days to manage their sovereign debts.
Countries like the USA, UK, Japan and even Germany have accumulated large sovereign debts, with the UK around 250 percent of its GDP worse than Greece.
But they and nearly all other countries in a similar situation have a strategy, which is to avoid paying short-term debts. Because these days they can borrow money around 1.2 percent and if they don’t get this low interest rate then some go ahead and print money, thus avoiding the application of stringent austerity measures. What is also relevant in these countries is that the unemployment rates are high, going up and up, but businesses and companies are not closing down. Furthermore they do not sell their national assets to balance their economic budgets or pay off loans.
Their companies are making more and more profits. These countries are collecting more taxes and defer payments of debts to invest in large infrastructure projects, like in health, transportation and education. Here in Australia, all the four major banks are reporting best quarterly profits ever.
Similarly the mining companies and large food chain stores are doing very well.
In Greece it is not the same; more and more shops are shutting down, there is panic and uncertainty in the markets and the government is passing stringent laws without much concern for the public welfare and the long-term social and economic consequences. Either something is wrong here or the government is not telling the truth.
Unfortunately, Greece is locked in now by signing this memorandum. The government doesn?t have any short- or long-term control, or countermeasures to avert the complete downfall of Greece’s economy.
I worry that things from now on will develop from bad to worse.
Dr Louis Doukas