Prosperity and reality

Although much has been said about Greece’s economic woes, most people remain on the surface, entranced by the illusion of prosperity and the plethora of ongoing projects. The size of deficits and debts, the faltering competitiveness and lagging productivity – the structural shortcomings – are all ignored. People close their eyes to the impending crisis – they think the fallout will be containable. But there is strong evidence to the contrary. Economic indicators paint a very grim picture. Public debt in the first quarter exceeded the target set for the entire year. Inflation is swelling because of rising oil prices, growth is slowing down and overall economic activity is on the wane. The situation is expected to worsen after the Olympic Games. Economic players ought all to be on the alert. Few are. Most fail to see the whole picture. They ignore the fact that economic woes are a reflection of Greece’s major structural deficit: Everyone is living on money borrowed from the future. Greece and the economy seem to take progress for granted and behave as if the rosy future is already here. In truth, economic activity is based on funds that don’t really exist – a state of affairs that is obviously short-lived. A major crisis is almost inevitable. It is only a matter of time. There is no room for complacency. And, as economists like to point out, there are no magic solutions. Either the economy will end up at the level of its genuine capacity or a mammoth effort must be made to create new wealth to close the gap between reality and prosperity. Or – a third possibility – both could happen. Expenditure can be trimmed while efforts for wealth creation intensify. Complacency can only bring damage.

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