The mother of invention

The economic crisis that has broken out across the world looks like the beginning of a difficult time for many countries. Even Europe, with its relatively well-off population and sophisticated safety net for the poorest citizens, looks like it will suffer greatly in the storm. And Greece is no exception. Just six months ago, the government and bankers were proclaiming that Greece would be immune to the credit crunch caused by the subprime mortgage fiasco in the United States. But that crisis kept deepening, making money more expensive after a long period of low rates, at the same time that fuel and food prices, as well as other commodities, began to reach unprecedented highs. The result is that, as elsewhere, people in Greece are beginning to feel the pain. Things are changing rapidly and people are starting to get angry. Angry and desperate. Because the high prices are hitting them at a time when many are already at risk from higher interest rates because they borrowed freely when money was a lot cheaper. At the national level, as Greece will be obliged to borrow more than 37 billion euros through bond sales this year, it will have to pay back an additional 350 million euros because of the international situation. Think of that in terms of money that will not go toward improving schools and hospitals nor toward providing for the needs of the weaker social groups. Similarly, consider the households that will have to pay a lot more to keep up their monthly payments on homes, cars and consumer goods while also having to deal with unprecedented food and fuel prices. The government knows that dealing with prices and inflation is its top priority. From the time he took office in 2004, Prime Minister Costas Karamanlis spoke about the need to focus on «everyday problems.» But his government, like those before it, has proved unable to control the forces that make Greece one of the most expensive countries in the European Union (with incomes that are just touching on the EU average). Our reports on pages 4 and 5 point out the problems in the economy: Big suppliers, such as multinationals, charge higher prices here than they do elsewhere; the merchants and middlemen then add very high profit margins and allegedly even form cartels that defeat the concept of competition; shoppers pay the high prices because they believe they have no alternative. But if there is any comfort in the steep price rise, it is in the fact that consumers are waking up and appear to be more discerning. Necessity being the mother of invention, people are looking for ways to beat high prices – either by buying cheaper, no-name goods, or by collaborating and sharing. The Internet-savvy are even exchanging tips, such as promoting the use of bus tickets that are still valid when the first buyers no longer need them. That is a minor aspect of the whole story (especially as public transport is still so cheap here), but it is indicative of where we are going. When this evolves into more people using public transport or forming car pools, when consumers leave unreasonably expensive goods on the shelves and shun restaurants and nightclubs with exorbitant prices, when they cut down on their use of central heating and air conditioning, choosing instead to wear sweaters and insulate their homes, then, in these personal choices, Greece will have taken a big step toward tidying up its economy and preparing for the difficulties ahead.