Editorial
The presentation of the latest state budget ahead of the launch of the euro currency underscored – apart from any critical observations that may be made – the fiscal discipline which seems not only to pervade the Greek economy but which also seems to be evolving into an irreversible reality. Being the exact opposite of the vicious cycle of inflation-deficit during the 1980s, this development is the product of persistent efforts by all the governments over the previous 12 years and, above all, the fruit of the sacrifices of the Greek people. This is the good news. The bad news is that the gains reaped from the restructuring of our public finances tend to be eliminated by the growing frivolousness in private finances. As shown by the inexorable numbers published in Kathimerini’s Sunday edition, the unfettered use of credit cards and consumer loans has led to a precipitous rise in Greek household debt, which has already climbed to 1.6 trillion drachmas. Within just a year, the total number of credit and debit cards rose by 68 percent, while private debts increased by 60 percent. Of course, plastic money comprises one of the facilities of modern life and is a tonic for economic activity during lean periods. It is a bit like medicine. The use of medicine according to the instructions is beneficial and can even save one’s life, but its unchecked use reduces it to possible poison. It is indeed tragic that sections of the workforce go on strike demanding a 5 percent rise while, at the same time, they themselves curtail their incomes be resorting to purchases with plastic, which easy as they may seem at first, prove to be a heavy financial strain later on. What is called for, then, is reason and self-restraint. Not only by private consumers but also by the government itself, whose recent bunch of measures (interest rate cuts, taxation on deposits and repos) has encouraged an increase in private consumption as it anticipates a higher inflow into the state budget. This is a risky bet as the excessive borrowing by private households can, in the long-term, only cast an ominous shadow on the fiscal economy, threatening the stability which has been achieved after so much effort and sacrifice.
