A Voting Person’s Opinion on Greece

When I heard that news yesterday that Greek President George Papandreou had announced that there would be a nationwide referendum on the austerity measures required by the European bailout plan I was instantly pissed off at him. What right does the Greek government have to sink the European economy? Then I got to thinking a bit more about it and realized I had mixed opinions; I’m of two—maybe even three—minds about this.

Mind Number 1, “The Initial Reaction”:

What the hell right does the President Papandreou have to cause this sort of havoc? The European Union is bending over backward to keep Greece afloat despite the enormous and (apparently) unsustainable public debt that it has amassed. The pensions and payments that are going through (according to American news reports) to the average lazy Greek citizen are mind boggling. Get a job, people!

Mind Number 2, “The Second Thought”:

Now wait a minute. Greece is a democracy, just like us. Don’t they have the right, nay the requirement to chime in on something that will have such a serious effect on their nation for the foreseeable future? Of course, that’s why there are elected officials, brought to the head of their governments and legislative bodies to lead, rather than have the country run by popular fiat.

Mind Number 3, “My Considered Opinion”:

I think this is not an entirely bad idea, depending on how the referendum is worded. I think it’s a terrible idea if the vote is for, “Do you approve the austerity measures?” Rather, it should be something along the lines of, “Do you approve the continued membership of Greece within the European Union, tied to the Euro.” If the government can sell the idea that it’s a good thing to remain part of the Euro zone, rather than reverting to a solo, debt-wracked country, then this referendum might actually pass.

I think that if it does not pass, we’re in for a wild financial worldwide ride. If Greece removes itself, or is booted from, the European Union, it will be bad for everyone, and worse for Greece. From the news reports, I’m not sure how successful the current government will be in convincing Greek citizens to vote for the bailout.

It’s probably not a good idea to try and sell them that it’s good for the rest of the world.

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One Response to A Voting Person’s Opinion on Greece

  1. SKG says:

    Greece has way too much debt.

    Further vast cuts in public spending on top of 17+% unemployment (already) will totally crash their economy.

    The debt has to be reduced, by either forgiveness / default (debt holders eat the losses), or by inflation (all asset holders in Euros eat the losses).

    The current plans of tiny reductions in the debt (the 60% “haircut” only applies to a small portion of privately held debt), selling off Greek public assets (including revenues to public parks, etc.) , and piling up MORE debt as the economy further crashes.

    All this, to save the big French and German banks from all defaulting because they loaned Greece money. Which was used to buy German goods. Which floated up the German economy artificially. And now the German government will have to backstop their banks.

    So Greece, at any level, doesn’t have a whole lot of motivation to take this plan, as it is just going to end up auctioning off their public goods and putting them further into debt for the big default that’s been coming down the tunnel for close to 2 years now.

    (Similar logic applies to Spain, Portugal, Italy, and Ireland, who all received vast inflows of investment dollars from France and Germany, and all now have total debt, public+private, at absurd levels.)

    So this move is a combination of blackmail, to get 3 more months of bailouts without actually implementing further immediate austerity plans, and possibly preventing the Greek people from burning down all the government buildings.

    Frankly, if Europe can’t figure out how to fix their banks and let Greece default (which probably involves the ECB printing vast quantities of money and/or inflation above 2-3%), then Greece is probably better off getting out of the Euro, defaulting on everything, and then using a new Drachma’s floating exchange rate to prevent vast capital inflows and external debt.

    And then Europe has to deal with the cascade of weaker countries defaulting. And/or Germany backing out of the Euro and going back to the DM.

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