UNDERSTANDING THE GREEK CRISIS

The last 2 years have hit Greece very hard. The Economy has completely collapsed and especially the country’s reputation has declined to a historical low. Philhellenism these days seems so distant like years that have past from the death of the probably most acclaimed philhellene himself, Lord Byron.

International media have attacked Greece and other peripheral countries of the Eurozone in a quite aggressive and consistent way, claiming these countries were the PIGS of Europe (which is obviously not just an unlucky wordplay referring to the countries first letter). The European citizens feel also irritated by the fact that their tax money has to leave the respective country, in order to help another nation. They see the Greek citizens as a lazy and corrupt population. But this is highly arguable. It is just an ignorant form of racism.
So what happened that Greece fell into this doomed circle?
There are several causes that need an in-depth analysis.

Beginning from the most basic one, it might sound more understandable already. The structure of capitalism implies a crisis.  Social Scientist David Harvey claims, that “there’s no such thing as a crisis free capitalism”.

Private credit was introduced with the Financialization of the economies, in order to sustain the consumption of goods and maintain a high demand of production. This bubble had to burst sometime. With the globalization of markets this problem became global too. The unsustainability of this system showed its limits in Real estate business a couple of years ago. Governments had to save Banks and Companies by lending them money, skyrocketing the national debts. The financial crisis became, soon enough an economic crisis

In addition to this, it must be said that Greece has been struggling with its national debt from the beginning. Since the war of independence against the Turks in 1821, Greece borrowed money from Banks, in order to rebuild the country. Despite this there is one exception: During WWII Greece was forced by the Nazi occupiers to lend money to the Germans. This money has never returned.

The rise of the national debt in recent years is due to a systematic inability to implement an effective and fair system of taxation. After the downfall of dictatorship in 1974, Andreas Papandreou created the necessary welfare state without increasing corporate and high income taxes. To save jobs, loss-making private companies were nationalized. Public deficit and sovereign debt increased dramatically.
In 1992 the Maastricht treaty imposed world markets as the only mechanism for deficit control, prohibiting other means of money creation.

Ex-Prime Minister Kostas Simitis was luckier, although no necessary reforms where done. So Greece seemed to be able to stabilize its deficit and debt, but that was more due to the European interest rate and international economic growth, rather than his endeavour, and in the five-year period between 2004-2009, Kostas Karamanlis delivered the coupe de grâce by decreasing capital taxation by 10%.

What worsens the Greek situation is the fact that the debt incurred by Greece recently bears evidence of illegitimacy. Siemens made gifts to authorities to bribe ministers and officials for at least a decade. Greek justice proved inadequate in this case and it was too slow in other cases of deals made without public knowledge. Deals, which were made with large International Corporation, have increased the debt. The most famous case that comes in mind is the one of Goldman Sachs, when in 2001 Greece mortgaged the future with Swaps, to present a false prosperous present. Switching from Japanese Yen to the at the time virtual Euro with outdated exchange rates made the debt look lower than it actually was.

If we consider now the current Greek debt, it seems very unlikely that a short-term solution will be effective. The agony is even strengthened by the IMF, the ECB and the European Union itself. The measures applied in collaboration with these institutions are not only unfair and dangerous for the Greek citizens, but are also doomed to fail from the beginning. The problem is that they are only stabilization measures to prevent Greece from proceeding to cessation of due payments and they don’t reduce the debt. Like this, only lenders and Banks are safeguarded.

To summarize, Greece has failed to solve its problems, due to a corrupt and dishonest leadership and an obliged system for which it was not ready for historical reasons. As a Greek and European citizen I hope that solutions will be found, not only on a shallow economical level, but also a deeper social one. The European Union needs to become more than just a political and economic bond.
                                                                                                          A.Visentin_MICRI V

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