Re: The final stretch
Another logical article from Mr Papachelas, except I don?t see the pressure for a return to the Drachma coming from the Far Right to be of any importance; our concern should be with the policies of the Far Left. These are the parties which are brainwashing the population to believe that we have lost our democratic rights, whereas the two main parties in the coalition hold the vast majority of seats in Parliament. Now we have a few MPs from various parties voicing the views of the more responsible members of the Greek public, that elections should be held much later in the year, preferably November/December. We know that most Greeks want to stay in the Euro because they realise at this late date it would be a disaster. However, now we hear that the population?s support for Mr Papademos is waning even though he has been in power for less than three months. As foreigners, we know that most Greeks have very little patience; this is obvious from queueing to their driving skills. This coalition Government has started so many projects in relation to modernising the Greek infrastructure, which in the past 37 years that I have lived here, no other Government has even attempted. With the help of European technocrats there is an opportunity for Greece to change and provide a better and more secure life for all its citizens. We have no data base for public workers to see who and where they are employed, so how can you select who to dismiss? Our tax system is incomplete as all departments and areas are seperate. More teachers per child than any other European country, as our city schools are too small and teachers work short hours with long holidays. More doctors per capita than any other European country and yet our health system is a disgrace. Our courts are not functioning. Our universities are badly managed. Our labour laws wouldn?t be tolerated even in Russia. One does wonder just what any of the parties jostling for position can attain from elections. For sure there will not be a clear majority and none of them have the ability to continue with the work in progress. The most sensible approach would be to be patient and wait until the programs are in force and then go for elections.
I would also differ with Mr Papachelas regarding the bargaining power that Greece has at its disposal right now. Obviously Mr Papacheas is not a businessman or he would know very well that if you are bankrupt, owe interest and loans to banks, your only position is to agree. You have lost the momentum to bargain at this late stage.
Finally, perhaps all our parties should read the news from the UK, where the Socialist party in opposition has already confirmed that they agree to the wage freeze for public workers till 2015 and in cutting back on public expenses. This is acting in a responsible manner when their country is in financial difficulties. Common sense of course, because this will give them kudos in the next election. Everyone knows that when a country has financial problems, you have to cut back on public expenditure when you have the infrastructure to know where the cuts should be made.
Why is everyone is so scared of the possibility of a Greek default? A default typically has two major consequences for the borrowing country: it wrecks the country?s creditworthiness and it makes it impossible for the country to return to capital markets for quite some time. Well, Greece has already paid that price.
Greece has been in default for over half the time since her independence, so a default now would not be a radical precedent. It all depends on how a default is handled. The first question is: was default provoked by the borrower or did it come about after all attempts to avoid it had failed? Greece would be foolish to provoke a default but she could consider letting it happen.
Once default happens, all hell can break loose — outside the country! In the country, it all depends on whether the government has ?put aside? enough liquidity to allow normal operations for a reasonable period of time. Here I would have confidence in ?Greek creativity? on the part of the government that such liquidity has been put aside.
A liquidity run on Greek banks? Could very well happen, which is why a temporary freeze on deposits (with only minimal withdrawal possibilities for personal use) must be imposed.
Bankruptcies of Greek banks? Would be a real threat considering that banks would have to write down the value of their Greek bonds. The government would have to be prepared to put in place a bail-out package.
The most important thing is that Greece can reach as soon as possible a situation where she is deemed by the EU to be acting in good faith to reschedule her debt with existing creditors. If that can be accomplished, Greece should expect the EU to provide bridge financing for the budget and current account deficits. Based on the numbers of the last few months, this should come to about 3-4 billion euros per month in fresh money requirements when including full interest expenses. Since significant reductions of interest would be part of the rescheduling negotiations (and perhaps even capitalization of some interest), the monthy cash requirement could be reduced quite a bit.
Could creditors boycott the above action plan? Yes, they could, but it wouldn?t make sense for them because they have much more to lose from a boycott than from an orderly and fair debt rescheduling. And for those who predict the end of the world should governments not pay out private sector creditors, the EU should have lists prepared of all the sovereign debt reschedulings which have been made since WWII so that private sector creditors (and the public!) understand that a debt rescheduling is quite a normal thing to do.
Tax payers of surplus countries who have become accustomed to hearing amounts of first 110 billion euros and then another 130 billion euros should be quite relieved when they now hear that ?only? about 3 billion euros per month are required.
And parallel to the debt rescheduling negotiations, a giant private sector investment stimulus would have to be arranged for Greece (private foreign investors, EIB, Structural Funds, etc.).
?The final stretch,? by Alexis Papachelas
Perhaps Mr Papachelas should remind all those who long to a return to the drachma that this is not a simple matter for the printing presses! For a start, let us examine the following:
Does the Bank of Greece?s vaults contain a few hundred metric tons of gold?
Does the Bank of Greece possess at least 15 billion in hard currency, US $, British pounds sterling, Canadian $, Swiss Francs and, ah yes, Euros?
Will this new currency be a floating currency where the international money markets set the rates of conversion to the above? Or is it just a local currency where the Bank of Greece sets the daily rates against the above?
Will there be foreign exchange controls and restrictions on the export of capital?
Has anyone dwelt on these problems, particularly those who imagine that a return to the drachma will relieve them of the necessity of instituting drastic reforms?
Perhaps all those armies of unemployed and underemployed PHDs in Economics from fancy Western European and North American universities can be put to work to (a) educate their nation about the facts of international economic life; (b) work out a scenario for the return to the drachma taking into account all the above plus all the economic, social and political ramifications. It will be money well spent even in this eleventh hour!
As for the political primitives and economic imbeciles called PASOK, words fail me to describe my utter revulsion. One thing these creatures must realize is that the United Kingdom, a country of 62 million people, infinitely richer than Greece, has 440,000 civil servants — my source is a recent article in the London Daily Telegraph. Greece, with 12 million, a poor country unable to feed itself and which imports potatoes from Belgium, onions from Holland and lemons from Argentina, has 800,000 civil servants! The groceries are from my own experience in the village of my late father in May 2010.
Small wonder Mr Venizelos, the worst Minister of Economics in Europe, is trying to cure cancer with fake aspirins! Instead of laying off at least 60% of these, he prefers to destroy his country rather than destroy his electoral base. Shame on him!
Calgary, Alberta, Canada
Hellenic pride — strength or weakness?
This may be my last contribution for a while unless I feel especially inspired…
Something I discovered early on in my life as a teenage Greek patriot (I thought I was in those naive days) was that even though Greece might have been the centre of my Universe as it was then, it was not the centre of anyone else?s… Ouch!
In fact, apart from the stalwart band of Philhellenes in the world (why do they bother? Is it really love?), and 10-16 million ‘2-week Greece? tourists, and maybe also just a few actual Greeks, no one, or hardly anyone actually gives a damn what happens there.
It is only due to truculence, profligacy and various other sins that anyone is noticing Greece at all. Not the best reasons to call attention to itself. Some Greeks talk about Hellenic Pride. Yes I used to have that until I found myself as a young idealistic adult at the receiving end of other Greek sins (dishonesty, unreliability, delusional behaviour; not just Greek sins perhaps, but Greeks seem to have a particular flair for these specifically) then I ditched the Pride (that really hurt) for a good dose of realism.
I figured: if the nation was working together well, progressing well, using resources wisely and intelligently, educating its young wisely, engaging in wonderfully creative and imaginative pursuits, R