George Papandreou need only look out the window of his office to see how effective any vote of confidence for his reshuffled government will go over with the citizens he is supposed to represent. But what are his choices, really? If he were to step down as prime minister, who is there that can take the reins and lead Greece toward solvency? Samaras? Please. New Democracy had eight years to squander Greece s money (already loaned to it by the EU in huge tranches since 1981) and line their pockets, as their Socialist predecessors did before them.
The prime minister s offer to form a coalition government was apparently sincere. But the obvious political jockeying for power that his offer ignited caused him to retract the offer, and rightly so. Nevertheless, the prime minister and his government cannot continue to ignore the tens of thousands of people massing in indignation against further attacks on their livelihoods and quality of living. Some attempt must be made to investigate and charge those individuals most responsible for the crisis. Transparency must be achieved. Every elected government official should be subjected to a financial audit. Any elected official who refuses should immediately be removed from office.
Will this discourage men and women from running for office? Possibly. But once it is clear that participating in Greek government is not a fast track to piles of money then perhaps people of quality with genuine leadership skills may step up and seek elected office. Greece needs its best and brightest at the helm, not the mediocrities from powerful political families that have been in office since the 1970s and even before. New blood is needed. But who is out there?
The Indignant movement has been mostly a successful, peaceful one. Let s try to keep it that way. And while we re at it, can we come up with some bargaining points, some clear issues to represent, rather than mere politician and IMF bashing? What can be done to keep Greece afloat? Can we do it without aid? How? It doesn t seem likely that the country will revert to its own currency and exit the eurozone. But if it does, what are the ramifications for the country? The debt will still remain.
At the moment Greece is poised on a precipice. Historically, it is at times like these that the country loses its young people, who want to live in a country with some prospects for a successful future, not looming misery, so they disperse to places like the United States, the United Kingdom, Australia and Germany.
The Spanish protesters accused the Greeks of being asleep. Now that we re awake at last, like Rip van Winkle, we re still a little groggy and disoriented. But we see that it s time to pay close attention to our national health and well-being. Let us not make the mistake that we can shout and paint signs and post our opinions on social networks and call that being effective. Let s use the democracy we ve got before we lose it again. Vote out the criminals, accept that we will have to bow to such measures as huge cuts in the budget and state jobs, a higher retirement age, and the recognition of university degrees earned outside of Greece, and let s get busy. There is so much work to do, and no one to do it but the people who love, and live in, this wonderful country. This is not a dress rehearsal, or a practice game. This is it. Losing is not an option.
Greece’s debt levels
There is so much confusion, even among experts, as to how large Greece’s debt really is. At the same time, it is so easy to find out (Bank of Greece; Statistics).
Typically, one talks about the sovereign debt and the number 330 billion euros is most frequently mentioned. That, however, is misleading because a large portion of the sovereign debt is held by Greek institutions and, as a result, has no effect whatsoever on the foreign debt position of the country.
Greece’s gross foreign debt as of the end of 2010 was 410 billion euros, of which 195 billion euros was sovereign foreign debt and 202 billion euros foreign debt of the banking sector.
The EU might manage to one more time transfer money to the state to keep the state solvent. That can be controlled.
What cannot be controlled is the foreign debt of the banking sector. Capital flight offshore continues with every day, which means that the Greek banking sector has to take down more refinancing from the ECB practically every day.
At some point, the lending resources of the ECB will hit a ceiling and when that happens the moment of truth will come. The Greek banking sector still has almost 200 billion euros of deposits (not too long ago it was over 250 billion euros). At the rate capital flight has been occurring in the last 2 years, those deposits will stand at 175 billion euros by year-end 2011 and at 150 billiion euros by YE 2012. For every debit there must be a credit. The money which leaves the Greek banking sector in the direction of Cyprus or Switzerland must be replenished by the ECB and sooner or later the ECB will no longer be able to replenish it.
That will be the point where Greece will have to freeze bank deposits and in a worst-case scenario, even countries like Germany or Austria may have to freeze their bank deposits.
Overspending with paper money
The US has printed and spent trillions of depreciating dollars since ending the gold standard in 1971. The dollar has lost more than 95% of its value since 1913 when the federal reserve was created. Greenspan and Bernanke inflated the internet stock bubble, followed by the housing bubble. Now propping up the insolvent banks, GM, Fannie and Freddie, Bernanke is trying to delay the crash to help Obama win in 2012.
This farce is coming to an end.??The USA, Japan, Greece, Ireland, Portugal and Spain will default once interest rates rise. Hopefully American voters will end the Fed and go back to the gold standard. The dollar, the euro??and the yen are all flawed and steal wealth from their citizens. Replace them with gold. Price oil, cars and food in grams of gold not dollars and euros.
Rediscovering the Aegean — the McGilchrist Guides
What can I say? This lucky man has discovered what it means to have a soul, to be alive, to enjoy every day and to understand what it means to be almost a god. For as you travel anywhere in your life you will never see anything more beautiful than Ellada. No greater mountains whose awesome magnificence like those in Epirus leave you feeling that you have met the almighty. No more stunning nature views as you find in Sparta. No more magnificent beaches as you find everywhere where there is a beach. No more amazing waters than in the Aegean, Ionian and Mediterranean seas. As if Poseidon still guards them and continues to create greater beauty day by day.
The nation called Greece by some but Hellas by us stands proud as the most amazing land on God’s earth and the tourism potential is yet to be even well approached.
Angelos Eleftherios Kenos
No faith in new elections
Elections are no solution alas. It’s now time for Papandreou to form a small efficient team of people who can take the necessary measures which must be taken now! ND has proven in the past too to have no solution either. The client system in Greece at last must be destroyed and tax reform, a good educational system and reformed institutions will bring a new just future for the Greek people. Let European countries like mine (Holland) lend their expertise (an efficient tax system, open the closed professions, let the rich pay at last their taxes, and reform the school system) so people regain trust in institutions. It is a very difficult path, but there is no other way.
Turn a weakness into a strength
Prime Minister George Papandreou has had to make many decisions that go way beyond his Socialist beliefs, for that I commend him. Unfortunately the last set of austerity measures are a step too far, and rightly so for the Greek people.
There is a saying, ‘If I owe you 100 euros it’s my problem, however, if I owe you 100 million euros that’s your problem.’ This is the bargaining tool he should use to reduce interest charges even further. Time to get off the back foot and throw the ball back into the bankers hands i.e. our terms now or nothing, we will default. If he is worried about his creditability, forget it, that ship has sailed as far as the Greek people are concerned, he will be confined to history at the next election, whenever that may be anyway. He may as well go out fighting for Greece, whatever the personal consequences.
As an observer from across the pond, I read about Greek problems day to day.
What has happened to the proud Greeks from eons ago?
Why are people rioting in the street in protest at the government’s attempt to cut waste and rebuild the world’s trust?
French banks are worried because of their exposure to Greek debt. Germany seems to be fed up with the situation.
Why on earth doesn t the EU suspend Greek partnership in the EU?
Giving more loans to a country that cannot pay its debt just fuels the fire of incompetence.
Perhaps the EU, or the Greek government on its own, should just default on the debt and «do an Iceland.”
Perhaps going back to the drachma and learning to live within one’s means could straighten out the situation.
Hi from the Netherlands,
Our politicians may demand austerity from you, but we the people in the Netherlands do not agree. The latest polls show 71% against bailouts and the euro. Don’t believe that those politicians who insult Greece represent us, they do not.
Best for Greece is to escape from the euro and default. You’ll be better off in a few years time, just like Argentina in 2002-3. Remember how the bankers, IMF and World Bank howled when Argentina defaulted? How they predicted decades of dire poverty? Argentina recovered in record time.
The IMF and the anti-democratic EU do not want you to know or realize you’d be better off without them and with default. Their plan is to take all wealth and pension money from the people and give it to the bankers, and to destroy democracy by moving all powers to the EU’s Supreme Soviet Politburo (aka the European Commission). Strike a blow for freedom and democracy by rejecting IMF-imposed measures. The IMF recipe has caused mass devastation in Africa, just look at how those natural resources and state property has been looted by international corporations.
Tell the IMF, the undemocratic EU and the banksters this: NO PASARAN!
Re: Political farce
What naivety: «The country is not run by the opposition, the masses, the unions, the business community or by the pundits. Papandreou has failed us miserably — and the price of this failure is to be paid by all people across party lines.» Do you really think Obama, Sarkozy, or any of the other heads of political parties run their countries!
In the West it is business, media, the masses (where did that outdated phrase come from?) along with the politicians, who run their economic systems.
The failure of Greece, if there really is a failure, is a failure of all parts of society to accept any responsibility for anything. It is a collective responsibility.
Support for Greece
On June 24 we will be in Greece again. Writing our books, visiting a restoration we did in 1997 in Hania.??
Our friends in Holland think we are foolish, even more foolish than last year, as we also went to Greece. During the last 35 years every year we have been in Greece.?? Four years ago we saw the crisis coming, with rising food prices.
In Holland the budgets for restoration of historic monuments have been cut by 50% during the last 15 years. So we know how to work under difficult circumstances with limited budgets.
Working with limited budgets requires a special way of management and organisation, which also can be used in other circumstances.
We contacted the Greek Ministry of Culture and the prime minister to see what we could do for Greece. Free of cost, without asking for anything in return. The Office of the Minister of Culture forwarded our offer to a so-called political adviser, who did nothing. He was not even working in the minstry… Getting money for doing nothing? I am not surprised.
Maybe it could be useful to have a nonprofit, Greece-friendly foreign adviser, speaking Dutch, German, French, English, Greek and some Italian. But a prime minister and a minister of culture should be able to respond.
So Athens is deaf in splendid isolation. Politicians, including Samaras, do not take their responsibility.
On June 24, we will be in Greece, for the 36th year. I will start our stay with drinking my first real Greek metrio.
Dr. Theo Elsing,
The Netherlands Advising Office for Monuments,
You’re not alone
If you borrowed from banks in your own country, who could afford your loans, you would be on your own. The problem is, you borrowed from outside, in this global marketplace, which acts ruthlessly when times are good, and without pity when they’re bad.
The real prospect of not being able to pay public servants including police is now upon Greece. How did it come to this?
I wish you luck, for all our sake.
Who is at fault?
As I sit in my law office on far-off Vancouver Island, Canada, watching in horror at the events in Greece, I am left to wonder if those gathered in the streets outside Parliament consider themselves immune from blame for the present catastrophe that has befallen our country. Blaming the rich or the politicians only is easy but not based on reality. The reality is that everyone from the poorest citizen to the richest has benefited from the corruption that pervades Greek society. Can any of the «Indignant» say that they have not accepted paying less for a service or a purchase by offering to pay in cash without a receipt? Can any say that they have not asked a customer to forgo a receipt? Can any say that they have not accepted a favor for cash from a corrupt official or sought to use whatever political connection available to them to get ahead? I doubt it. As the saying goes: «we have seen the enemy and the enemy is us».
Domino effect theory
Among the ‘indignants’ or others, there are those willing to try defaulting on the debts, not willing to pay for the ‘debts of others’. Some even entertain the idea of a chain collapse of the whole system, by means of a domino effect. This will not happen, because the day Greece defaults, it will be economically ruined, the standard of living of its inhabitants will be more than halved, and the whole world will be able to contemplate this tragedy on TV. And you know what? Watching this, the people of other countries having debt issues will be very happy about ‘only’ having to suffer austerity measures… So long for Greece, it has the choice, but it is likely that nobody will follow the Greek path towards chaos.
The Greek solution
If one follows the world’s best economists, there appears to be consensus that it is impossible for Greece to pay back all these debts, simply because the GDP growth rate is too small to keep up with the growth rate of the national debt.
The main reasons the rich EU countries are trying to give more loans is to protect their own banks and give these banks time to hedge their bets in preparation for a Greek default.
In the meantime the Greek economy only gets worse.
The best thing to do for the Greek people is to default on the loans now, followed by fast transition to a new drachma, and followed by drastic devaluation. After that the Greek economy will have low labor costs, will again be competitive and will move to complete employment, have good GDP growth and will be able to pay back their restructured loans.
Of course the German and French will not like the losses of their banks, but that is too bad for them. I don’t see any reason the Greek people should suffer to prevent that. It has to happen anyhow.
Interestingly, after the default (say loan restructuring by 80%) and (say 50%) new currency devaluation, the Greek debt is manageable and it will be much easier to get loans at much better interest rates, since the risk for the new lenders is now much lower.
Of course, imported goods will be double the price and imports will drop steeply; Greeks will again have to make and grow their own products.
The austerity measures can in part be turned back and private employment will rise steeply due to the low prices of exportable Greek goods.
Debt restructuring and new currency devaluation is the way out (and has always been). Austerity measures will only make things worse.
Why hasn’t Greece been thrown out of the EU for violating spending rules?
I am having trouble figuring out why Greece, a small nation within the EU, is causing so many financial market stresses when it has a trivial amount of the global economic activity. It seems to me that instead of a bailout the EU should have merely thrown Greece out of the EU for its failure to comply with government deficit limits.
Greece has only 0.4% of the global gross domestic product according to the CIA World Fact Book, available on line for free. It has become the tip of the dog’s tail wagging the economic dog, and it makes sense only as charity. The EU should kick any nation out which simply does not comply with the treaty’s public spending limits. The nations left would be much stronger and Greece would be free to devalue its currency to balance its budget by devaluing its national debt. Greece might not be able to borrow ever again in its own currency, but the rest of the EU and the world would be better off.
Greece should do the EU a favor by withdrawing from the EU of its own choice. Greece has failed to pay its debts back before and no one would have lent money to its government, so what losses they suffer are from their own mistake in lending to Greece. French and German taxpayers should not be adding to their own national debts to bail out a nation that can’t seem to live within its means.
Continued bailouts of Greece only increase the financial losses and risks of the nations and individuals who lend to Greece for no good reason. If it is intended as charity, other nations should be running Greece until its debt is in line with other EU nations.
It is nearly as foolish to continue lending money to the US government, which has only had a day in its history when it was not in debt and whose Congress has no financial discipline to face in the US Constitution. If oil were no longer sold in US dollars, I believe the US dollar would collapse.
In response to Mr Christoforou’s letter titled ?Well said from Silicon Valley?
In response to Mr Christoforou’s comments about the only thing young Greeks «care about [is] IKA and their sintaksi,? I have to say that as a Canadian who recently moved to Greece, this is a very unrealistic and culturally biased view. This describes none of the Greeks that I have met of my generation. They all work very hard, are extremely under-paid (1,000 euros average private sector monthly salary) and want the best for Greece. Your comments about IKA having to go, I must say, have a very American bias. There are many countries in the world with healthy economies (look to your neighbours to the north) who have a publicly funded health care system and are not going bankrupt because of it. Certainly, Greece has many problems, but the dogmatic disdain of any kind of government involvement in private lives, let us not forget, is what got America into the economic trouble it is in at the very moment. In order to understand the troubles young Greeks face here, try to have a little unbiased perspective.
You are wrong!
You got it wrong!
The issue here is not the size of Greece or the size of Greek debt vis-a-vis the combined $30 trillion of US and EU economies (each roughly $15 trillion or of equal size).
At issue here is the web of interrelated holdings of financial institutions. Greece has the potential of a chain reaction to the global finance system.
Therefore, whatever Obama said was not meant for Greece, rather for Germany. It was a call for Germany to get its act together and abandon its rather amateurish handling of such serious matters.
For those who can understand and read between the lines, Obama is on Greece’s side both directly and indirectly. The US has and will continue to make sure that there is only one way out for the Greek debt issue and that is for the EU to get its act together.
What «getting its act together» means is a topic of another conversation.
However, you general thesis is wrong and the complete opposite to Obama’s position.
To His Excellency Van Rompuy
But we are united, dearest President, in Greece! For the first time in our history, extreme nationalists, traditionalists, nationalists, royalists, conservatives, liberals, libertarians, socialists, ecologists, greens, communists, far left wing, Maoists, Trotskyists, anarchists, Orthodox Christians (New