EU & Greek crisis

Dear co-Europeans and to whom it may concern.

                We all read too many things about the European crisis and Greece in particular. It may seem that Greeks are the eye of this turmoil, or at least the brute force behind the Aeolus vents that go wild in this desolated from money continent of ours. You’ve heard of all the Greek demerits, of the frivolous lifestyle and of the rightness of the biblical punishment masterfully inflicted on them. That’s all very theatrically dramatic and very easy reading -novel style served for someone not to be suspicious. Can a nation of ten million all be blind to their downhill path? Was Greece saved from their unavoidable disaster by their Euro partners and their helpful hand?

Talking about Greece without talking about history is like a man just out of prison that doesn’t think about women.  But write about it and it’s like having to read the telephone book of Mexico City. To make a long story short we’ll focus on their economy. It’s obvious to anyone that some of each nation’s most intelligent people are their ambassadors put in duty in other countries. As a consequence every country that has an ambassador in Greece has a very good knowledge of the modus operandi of the Greek government, the state servants and the most important entrepreneurs. So there was no mystery about how things were in Greece, who was in command and if he slept face down or on the back. The way the Greek economy went on those last decades is easily described. It was based on the tourism, shipping and export of raw materials, either agricultural or minerals. In the later decades the agricultural sector was in decline and the services sector was in rise. But the later was oriented exclusively in the Greek market. So the exports were in decline and the imports in rise. Bad recipe for a healthy economy, but nothing the world hasn’t seen before.

Furthermore the state operated in a theological way, meaning it believes that it is eternal, and it tries to establish the one and only universal truth in everything it does. The politicians wanted it to keep this way and reinforced that attitude, because it produced more state job positions (more control, less product) and since those were distributed to partisan favorites those were vote producing jobs. Nothing new under the sun again. Nothing the world hasn’t seen before. The main thing that was wrong with the Greek economy is that it’s counterproductive. The state borrowed money instead of the entrepreneurs  and was buying votes by selling state assignments or elevated national economy champions that monopolized the Greek market or created oligarchies, usually with EU money from development programs. The public servants took part in this corruptive operation due to lucrative illegal payments. They also acted as a surveillance force of those markets counteracting via bureaucracy any market opponents of the chosen ones. Foreign operators in the Greek market used local entrepreneurs associated with the local politics to overcome those bureaucratic barriers and take part of the local market and assignments. Usually all the competitions for a state work have as participants conglomerates of some local company with a foreign one. Those connections between locals and strangers were held and promoted, or at least acknowledged by the local ambassadors.

So at the starting point of the Greek drama we have an indebted public sector, not the private and the homes. Even the Greek banks were less exposed than the e.g. German ones with lower dumping, but, unfortunately for them, were tied with the Greek state bonds.  So when it flopped, they did too. We had a market in almost complete state control, with few exports and many imports. Not a good base for recovery. The country had lost credibility due to the last idiots Finance Ministers before and at the beginning of the crisis, Alogoskoufis and Papakonstantinou (add Papandreou the prime minister). Those made stupid confessions of Greek statistics alterations in the data provided to the EU before and after the Greek entrance in the EU mostly for internal political vindictiveness. Those statistics later proved unworthy and insignificant, and last but not least, nothing different than what other countries have done. We always must remember during the Eurocrisis that statistics is a half true and so it’s also a half lie.  And nothing of the abovementioned wasn’t crystal clear to any other state on earth and most importantly to France and Germany.

The plan five years ago was to struggle the Greek economy by cutting the imports, lower the cost of workmanship, cut public spending and improve the productivity and the exports of the Greek market. As any good General knows good intentions aren’t enough. The main thing in a battle apart of the target is how and when and with how many loses. So the first thing that went wrong was the competitive pumping of the Greek economy by lowering the local demand and the local work cost. In a bleeding wound you first want to stop the bleeding. But in Greece they cut the cost in the private sector and resisted as much and as long they could in the public sector. They deregulated the maximum possible the work market. As a net result Greece still has a public sector overpriced and underachieving from which continues to lose money and a private sector that shrank “unexpectedly” quick because there wasn’t any public money pumping its veins any more. Now there’s unemployment of 30%, which means that in reality is 36% (there’s always a discrepancy between the official statistics and the real ones, numbers by the Greek General Confederation of Labour). The local work force saw salary cuts of more than 25% and most of the jobs are now part time. Also 30% of the active workforce suffers from salary delay payments of 3-4 months, or even worst (estimated at 1million workers). Those reforms were probably laden due to Greek bankers and the Greek hotel entrepreneurs that wanted to slush their workforce and reduce their costs, and were adopted firstly by the Greek government and then by the Troica. It’s difficult to be sure about who makes the first move on those things, who brings the ideas on the table, because there’s too much propaganda and organized misinformation in the media, either Greeks either global. We must take note that the economy crisis of 2008 was held in the USA and we haven’t completely overcome it yet. So the interest in the Greek and Euro crisis is global. But most of what is written in this issue is easily accessible in the internet and if it’s the writer’s interpretation it’s based on the contradiction of the statements of the parts involved prior and after their acts, p.e. cutting of the Greek debt in the beginning of the program.

With bank lending inexistent, consuming reduced to the minimum, with no public spending, only cutting; there was the last big hit to the Greek economy from the IMF agenda, to raise taxes. So in a private market with too many companies of under 500 employers and too many self employed that only meant the closure of many of them. In this stage of the plan those unemployed and   with the reforms that should have accompanied those cuts should have created the spring on which the Greek economy should have rebounded almost immediately. There were only two reforms of any significant interest apart from the deregulation of the jobs. One was the freeing of the transports and the other of the milk market. How they went? If you can see any positive effect or you are on drugs or your oculist and neurologist haven’t seen you for too long. And this thing of Greek paradoxes is all over those five years. So there is no spring, no launch. There’s only stagnation and sinking. Even if the salvation program stipulated on economics had rough edges, then came the politicians and blurred the things. The targets where there, but the timing was always wrong. Its common believes nowadays that the rhythm of the debts payoff from the Greeks is out of reach by any government apart from a Hercules and Midas crossover. Germany insists that this rhythm must be maintained, and so does the rest of their band. But German politicians made a promise to their voters that knew from the beginning it was outlandish to fulfill, that they’ll move their bank-private debt (who lend to south Europeans) to the German taxpayers, but this new loans will be absolutely repaid back. Further this austerity south stream was obviously creating a counter vent of money from South Europe to Germany that counterbalanced many of the woes of German banks that are too big to fail. Also there was a stream of young and highly educated South Europeans immigrating in Germany and the north of Europe in generally. So from one hand we have an impoverished South Europe that is losing youngsters to the north Europe and out of the Continent and from the other hand we have a North Europe that is widening its competitive gap with the weak south neighbors. Why stop this?

Troica only cared that the stream of recovered debt was held steady. Reforms, development, toxic effects of the program interested them as much as someone who gets big bonus for the first and nothing for the rest. Now everybody agrees that there should have cut a big part of the Greek debt in the beginning of the program, that the cut in the second program was too small and too late… Except the Germans of course:  “Why mess with a toy that’s not rotten and in any way suits you too”. Good mechanics thinking. If you are from another continent you may think but why the hell don’t guarantee their debts as one economic entity they want us to consider them and find their way between them without risking the global economy? Because the euro has to stay down, so the German export keeps raising. As one politician sometime mentioned “it’s the economy stupid”. So we keep the fear that Greece will blow first, and then EU will blow until Germany and its band members start losing money from the situation, or lose politic credibility (which is also money) and in the meantime they find a way to convince their voters that they’ll have to take more debt on their back. The problem is that those voters have made and are still doing economic sacrifices to keep the German economy competitive, but the retribution of those sacrifices was received from the German economic aristocracy and then was loaned to the South Euro partners and afterwards they have gambled with those loans and when they lost their gambling and had to pay achieved the nationalization of their debt. How many times can you fool a voter and how many promises can you break?

If you are a Greek politician the answer is many. Goldfish and Greek voters are close related cousins. Now in Greece there’s a new government, the fourth in five years. It was elected by promising the impossible. To make the Germans change route. What a promise you may think, but think again. In a country that doesn’t want to change it was the right publicity to get elected. “I’ll change the others”. And this is the common thing in Europe. It’s always the others. So now Europe has two parts that are trying to do the wrong thing and between so many political lies and so many economic mistakes time is clicking away. In the meantime Greek citizens (and Spanish, Italians, etc.) are watching their life passing away meaningless, struggling to keep up with the raise of the cost of life and the taxes inflicted.

So all this politic who benefits? Is this a ephemeral sacrifice for a better future. The South of Europe asks when, the north answers when the time is right. Go figure. In economics the base is addiction and subtraction. The rest is sociology. But is this Europe, democratic? Is it only a economic experiment that went wrong or was it the economic bait to make the continent a country? In the time of globalization which European country can prosper alone? Probably none. Even Germany…