Greece has become a household word recently, regrettably, for the wrong reasons. Barely a day has passed during the last fifteen months when its imminent default and doom as well as the Euro's consequent demise have not been predicted.
These verdicts have not come true for the simple reason that they are based solely on numbers, ignoring the political parameter known as the "European Union (EU)," a fundamental variable in the equation, which alters the picture entirely.
I attribute this omission to a simple lack of understanding of the EU's complex inner workings. A person more cynical than I might conclude that it has to do with the hundreds of billions of dollars invested in the Euro's downfall.
It is not the first time that the collapse of the EU is considered as "just around the corner" during its history. Such was the case with the Lisbon, or so-called "Constitutional" Treaty, which ultimately approved and implemented, despite predictions to the contrary. Who can forget the front-page headlines of the time, carried by the majority of prestigious media, heralding "Europe's final days", "EU system collapses" and "Europe is dead"?
History repeated itself a few months ago, when the EU was in the process of devising a mechanism to support member-states like Greece to deal with the impact of a global economic crisis. Again, against predicted failure, the mechanism was put in place and is consistently becoming more effective, though one might argue that Greece served as the guinea pig.
Such foregone conclusions of gloom and doom underestimate the commitment of EU member-states and, at the very least, indicate a lack of awareness about the very nature of the EU, an organic and evolving institution, which handles its challenges through collective and exhaustive deliberation, reaching decisions through consensus. While this is a long drawn process, the EU always emerges from it stronger, healthier and more defined.
Furthermore, prophecies about the EU abandoning or expelling Greece or any other member-state, or vice versa, is just as frivolous as suggesting that the U.S. could drop one of its states because of economic troubles, or, for that matter, a state opting to leave the U.S. or even stop using the dollar as its currency.
Another misconception taking root is that the money given to Greece is free and simply wasted money, offered at the expense of the American taxpayer. On the contrary, this is a loan to be paid back at a punitive interest rate. And thus far, Greece is living up to this obligation.
Similarly ignored is the fact that the bulk of the money comes from European sources. The International Monetary Fund (IMF), to whose budget the U.S. contributes 16.8 %, is providing only part of that loan to Greece, approx. 30%. Furthermore, the IMF has priority for reimbursement over all other creditors.
I am not, by any means, disavowing Greece's responsibility for the state of its economy, which has been mismanaged for decades, even at the expense of the Greek people themselves. Greeks understand the need for change, accepting extremely harsh and painful measures, and exhibiting great tolerance throughout this past year and up until a month ago. Drastic wage and pension cuts, significant tax increases and major service cutbacks, are some of the measures implemented and affecting hardworking taxpayers, measures, which, by the way, I am often told by the majority of my interlocutors on Capitol Hill, would bring about a revolution, if they were to be implemented in the U.S. Additional and harsher measures and a new legal framework are on the way that will combat corruption and implement a more just tax system.
Just this past week, in a "vote of national responsibility," as it was hailed by the European Council, and after much heated debate and in the midst of understandable public reaction, the Greek Parliament approved a new package of harsh measures, tax hikes and spending cuts - an important step towards stabilizing the country's dire economic situation and creating opportunities for development and growth.
But, let's also look at the bigger picture. Given that Greece's economy barely represents 2.4% of the European economy, while the country itself is no larger than the state of Alabama, it behooves us to address the elephant in the room, none other than the lack of market regulation and its unprecedented greed.
It has been said repeatedly by respectable economists and published by major newspapers, more recently in the New York Times editorial titled "Greece and You," that "it was derivatives that were behind "the near meltdown . . . in the global financial system". It was indeed the relatively new financial instruments, derivatives, CDS, CDOs that created the 2008 U.S. economic crisis and its global implications. Yet, three years later, no one has dared take on those who seek quick and short term profit, betting on the destabilization of the European Union and ultimately on the global economy.
Perhaps the time has come for us to grab this beast by the horns and tame it, before we lose total control and the entire global economic system collapses.
Greece and its people take responsibility for their own failings and have launched an unprecedented effort to make them right.
We will not, however, be held responsible for a global economic crisis, the roots of which lie elsewhere.
Andrew Pyle: What We'll See in Q3: Lowering Earnings Expectations
Teddi Knight www.fullyinformed.com
Fannie and Freddie have now become the repository for every other crappy mortgage written by other banks.
Through TARP – A Bush and Republican strategy.
The one thing they ever did that was right—what RUINED it was the Republican ideology that they did not ask the banks to be accountable for the tax payer dollars that saved them. That would be gubmint interference.
The gubmint can give private business taxpayer money—no problem there—but to be accountable—that would make libertarians scream about Marxism.
The Greeks must realize that Real Wealth and THE ASSOCIATED JOBS TO CREATE WEALTH FOR OTHERS is created and/or acquired mainly (maybe only) when the members of a family (or the citizen businessmen of a nation, city-state, island, tribe, etc.) perform one or more of the following tasks:
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
6. collect payment for patent and copyright uses;
and then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family.
Some of this accumulated wealth is then also available to be confiscated in the form of taxation in order to create funds to form a government with money to build and operate schools, streets, water and sewer systems, repay sovereign national debts, pork barrel projects, green projects, infrastructure projects, wars, streets, bridges, highways, welfare, unemployment, school teachers, policemen, fire fighters, social security and other government provided bureaucratic services for that family.
There are limits to the amount of wealth that can be taken from the wealth creators in the form of taxes and paid to the government for various expenses, no matter how much these government expenses are deemed as being "necessary" (by the government bureaucrats).
US government administrations of both major political parties have created "Free Trade" legislation killed and eaten that golden goose that laid those golden eggs (created new wealth), won WWII, and created the abundant lifestyle that US citizens enjoyed for a couple of decades after WWII until the US government de-emphasized science, technical, engineering and mathematical (STEM) educations.
The US government created free trade treaties that economically required that US business utilize foreign labor, environmental regulations and electrical costs.
This is oversimplified, but the principal of accumulation of wealth (manufacturing marketable things with value) is basic.
Many corporations have needed products or services to sell.
SERVICE SECTOR - Accountants, Lawyers, Educators, Healthcare, Insurers (casualty/ property/ product liability), Wall Street, Banking, Unions (worker and professional), etc merely redistribute wealth, feed-off in the process and add their costs. These groups justify themselves if they improve efficiency; making the entire socio-economic system more productive.
Current Service Sector is a hurdle and economic drag with high cost and grinding inefficiencies; which stifle manufacturing (creators of new and added-on wealth).
Current Choice: Do more of the same (system that gives high costs, huge trade imbalance and massive inefficiencies) or make system more efficient.
Its for US (govt, private enterprise, and us-all) to bring down cost of Service Sector for economy to once again become a lean-mean-competitive machine. No question we need "More Bang for the Buck'.
Even after corporations move to low labor costs regions, they still have over-head service sector costs, included inflated top management wages and compensation package. That drag does not permit them to compete on price and efficiency.
Above groups added their costs (at every corner) both for employer and for employee. At first all passed costs along. Govt, ultimate consumer ended paying for these increased costs directly and indirectly. With national debt, costs are passed to grandchildren and yet-to-be-born citizens.
Those who continue to merely extract money from society (for perceived worthy goals) are "killing the goose that lays the golden egg."
But I think the "Supply and Demand" model of the economy has not worked. It just creats a "Bubble and Burst" scenario with is rescued by more "Supply and Demand."
At some point things cascade out of control.
Our artificial high standard of living (including supporting our seniors and those with disablity) is not supported by our economic through-put.
In any Nation, private businesses must be profitable and generate wealth so that a portion of that wealth can be SKIMMED OFF or FORCIBLY TAKEN as taxes by various federal, state, county, municipal, school district and other government taxing authorities to pay for various Government Bureaucratic Employee Payrolls, Retirement Benefits, other government expenses and also to pay off any bonds when they become due at maturity.
Though some would like very much to force one (but not themselves, oh no, someone else...), we're not enough like Europe to take to the streets for things that really matter. Kim What'shername's butt is too important.
The system works :-)
I think that the Ambassador is entirely right to remind us that there are two crises currently in play.
The financial and banking crisis was caused by uncontrolled and badly regulated banking practices. Major banks were bailed out at taxpayers’ expense and are now plying their trade and making hay once more.
The Crisis with the Euro is a separate (though connected) problem. In opposing the Euro, Margaret Thatcher correctly pointed out that a single currency would harm the economies of the weaker countries. She was entirely correct.
It is true that some countries (Greece included) were profligate and irresponsible when they joined the Euro and foolishly behaved as if a non-stop gravy train had arrived.
As the Ambassador correctly points out, it is up to Greece to find a solution to its reckless financial behaviour. However it is hard to see how Greece can dig its way out of it’s financial hole as long as it is shackled to the Euro.
As I have pointed out several times before in this publication, the solution is for Greece to leave the Euro, renege on its debts, and start again with a new Drachma.
This is not as radical as it may sound. Countries do not go bankrupt; the German bailiffs will not turn up at the border and turf all the Greeks out of their country.
Sincerely, Derek Lantin. http://dereklantin.booksabuzz.com
Bankers become rich from the poor people,not from the wealthy.The latter are too smart and also there are too few as compared to the zillions of suckers always ready to take the bait.
There are obviously two ways in banking : the normal way is "nickel and dime the masses".Actually that is a legitimate way of providing a financial service at low risk.
And the smart way : creative Ponzi schemes whereby the risk is dispersed into insurance deals and becomes hidden from the general public.They call it "investment banking."
thats as close as a diplomat can get to sticking a finger in someones eye .
but i think we know who and what he is talking about
Greek fiscal policy is set by Greece. Greek bonds are issued by Greece alone. All Greece's own fault.
Thales of Thales of Miletus 624-549 BC, Founder of the Ionian school of philosophy.
And European multiculturalists with a wink-and-a- nod accepted these financially negligent and irresponsible statements. What's worse they and the Greeks colluded in trying knowingly misleading European citizens that the Greeks finances are in order.
Now is time to pay the piper.
Greek proverb:
"Aν πιαστείς στο χορό θα χορέψεις." "If you join the dance-circle, you must dance."
Second part: No!
Along with utter inability to accept responsibility.