Figure 1.-- |
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Greece was a poor county by European sandards and dependent on imports, specially food imports. The country was devetated by World war II and the subsequent Civil War. Greece joined the European Union (1981). Membership in the European Union aided Greece in many ways. It could have greatly benefitted the shipping and other industries. Greece's small manufacturing sector actually declined. Governmnt policies and popular attituds strongly influenced by socilist thinking pevented any substantial economic growth. Unions made unrealistic demands. The Government passed work rules that made it virtually impossible to fire workers. Rather than protect workers, business activity decreased. Businesses were increasingly reluctant to hire workers. Government employees became an increasingly important part of the work force. And began to finance the social welfare program desired by the public through the expedient of borrowing money. Until the creation of the Euro, however, there were limits on what creditors would lend as wella rising interest rates ht Greece could not afford. Real prosperity uddenly appeared after the country joined the Euro Zone. The Euro was founded (1991) and Greece soon signed on (2001). This was possible only because the country' Socialist Government falisfied financial statements which hid just how deeply enbedlted the country was. And once in the Euro-Zone Greek Governments were able to borrow money for ahile on the same terms of the financially responsible German government. The result was even greater borrowing, As Prime Minister Thatcher explained in the 1980s, Socialist ecomomies fail when they run out of other people's money to give away. Nothing so illustraes this dictim as the Greek financial disaster. This finally occurred in Greece in 2010. The problen was delayed for many years because as a member of the Euro zone, Greece could for many years could borrow money at rates similar to more finncially responsible countries like Germany. The statistics are staggering. The Greek defecit was 13 percent of GDP and the overall national debt waa 115 percent of GDP. About 60 percent of employment is in the non-productive public sector who have generous benefits. Lenders realizing that the current situation is unsustainable stopped lending to Greece and interest rates available to the Government increased to a prohibitive 17 percent. With the Euro in freefall, the Europeans with IMF assistance came up with a $0.95 trillion bailout program. It is unclear if even this huge intervention will solve the problem and it looks increasingly like the debt will have to be restructers, essentialy meaning Greece will default on part of the debt. It will also mean that Greece will have to make substantial cuts in its welfare system. The EU-IMP is now working on a bailout. This only addresses the country's huge debt and based on past experience will only postpone addressing the mountain of debt. And there is no indication that Greece has the slighest inclination to change policies depressing the private sector. The Greek people rather than blaming socialist politiczns turned to castigating the people that lent them the money and now the people who bailed them out. And to 'save' them elected a radical left-wing governent --Syriza (January 2015).
Greece was a poor county by European sandards and dependent on imports, specially food imports. The country was devetated by World war II and the subsequent Civil War.
Greece joined the European Community (EEC/EU) (1981). Membership in the European Union aided Greece in many ways. It could have greatly benefitted the shipping an other industries. Greece's small manufacturing sector actually declined. Governmnt policies and popular attituds strongly influenced by socilist thinking pevented any substantial economic growth. Unions made unrealistic demands. The Government passed work rules that made it virtually impossible to fire workers. Rather than protect workers, business activity decreased. Businesses were increasingly reluctant to hire workers. Government employees became an increasingly important part of the work force. And began to finance the social welfare program desired by the public through the expedient of borrowing money. Until the creation of the Euro, however, there were limits on what creditors would lend as wella rising interest rates that Greece could not afford.
Real prosperity suddenly appeared after the country joined the Euro Zone. The Euro was founded (1991) and Greece soon signed on (2001). This was possible only because the country' Socialist Government falisfied financial statements which hid just how deeply enbedlted the country was. And once in the Euro-Zone Greek Governments were able to borrow money for ahile on the same terms of the financially responsible German government. The result was even greater borrowing, As Prime Minister Thatcher explained in the 1980s, Socialist ecomomies fail when they run out of other people's money to give away. Nothing so illustraes this dictim as the Greek financial disaster. This finally occurred in Greece in 2010. The problen was delayed for many years because as a member of the Euro zone, Greece could for many years could borrow money at rates similar to more finncially responsible countries like Germany. The statistics are staggering. The Greek defecit was 13 percent of GDP and the overall national debt waa 115 percent of GDP. About 60 percent of employment is in the non-productive public sector who have generous benefits. Lenders realizing that the current situation is unsustainable stopped lending to Greece and interest rates available to the Government increased to a prohibitive 17 percent. With the Euro in freefall, the Europeans with IMF assistance came up with a $0.95 trillion bailout program. It is unclear if even this huge intervention will solve the problem and it looks increasingly like the debt will have to be restructers, essentialy meaning Greece will default on part of the debt. It will also mean that Greece will have to make substantial cuts in its welfare system. The EU-IMP is now working on a bailout. This only addresses the country's huge debt and based on past experience will only postpone addressing the mountain of debt. And there is no indication that Greece has the slighest inclination to change policies depressing the private sector. The Greek people rather than blaming socialist politiczns turned to ctigating the people that lent them mny and now the people who bailed them out. And to 'save' them elected a radical left-wing governent --Syriza (January 2015). Not only doe Syriza accuse their the lendrs of being criminals for lending the money and extoonists and imperilists for expecting repatment, but then in the same breath accuses them of being heartless for refusing to lending more without making reforms.
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