GREECE AND THE EU
Sanford Pinna, M.D.
The Economist of London has an article and
a debate over the fate of Greece.
Greece, like the U.S. and other Southern
European countries, has let its debt get out of
hand. Greece now owes more than 120% of its
Gross Domestic Product to foreign lenders.
Greece, like the U.S., has a houseful of
corrupt politicians, who have bled the country
They cannot pay their debts and are trying
to sell Government bonds to stave off bankruptcy.
A government, normally, cannot go bankrupt.
All it must do, is print enough currency to cover
But, in the case of European countries,
they are faced with the dilemma that they cannot
print currency—since their currency is the Euro, and
only the E.U. can print Euros.
Here is the way The Economist presents it…
“Feb 3rd 2010 | From The Economist online
“GIVING its broad backing to GreeceÃ¢â‚¬â„¢s latest austerity package on Wednesday February 3rd, the European Commission nevertheless said the countryÃ¢â‚¬â„¢s government must do more to restore its finances, including further cuts in the public-sector pay bill. Although sounding tough in public, the EUÃ¢â‚¬â„¢s leaders have decided privately that they will have no choice but to bail out Greece if it proves unable to keep funding itself through the bond markets.
“Their main worry is that if Greece fell into bankruptcy, contagion would spread to other indebted members of the euro such as Portugal, Spain and Italy, triggering a far larger crisis. Among those urging the EU to offer aid to Greece is Joseph Stiglitz, a Nobel economics laureate, who argued in an interview published by Bloomberg News on Wednesday that a public offer of assistance was needed to scare off the Ã¢â‚¬Å“speculatorsÃ¢â‚¬Â now attacking the euro.”
THE EUROPEAN DARE
Of course, the other European nations do not
want to help Greece.
This would make a horrible precedent for
every other country with loose spending habits
and corrupt politicians.
If the EU does not help Greece, Greece
may go bankrupt. This might cause the EU
to expel Greece from The Club. Greece
would turn into an economic “basket case.”
Its creditors would call their loans and
money would not be available on the world
market. Like any bankrupt party, the present
and the future would be economically grim.
But, what would happen to the EU?
The EU would lose five percent of its GDP,
Worse yet, the giant corporations which
formed the EU to have a huge market for their
goods, (and a high profit, since others could
not compete) would be hurt badly if not only
Greece left their market, but Spain, Portugal
and Italy as well.
Thus, we have that common thing in life:
The Game of Chicken.
Who would be ChickenÃ¢â‚¬”Greece or the EU?
Questions like these are not answered
by attempting to analyze which party is bravest.
People behave in patterns. Lazy people do
not suddenly become hard working. Spendthrifts
do not suddenly become savers and change
their lifestyles in order to get out of debt.
People do not change. (Remember that
when you’re thinking of a spouse.)
The Greeks will not suddenly turn into
Japanese or Swiss and rush to the bank
with their excess money!
No, the Greeks will not change.
They will go to their Taverna and
have a fine Greek meal and fine Greek
wine and chat with their Greek friends
about philosophy and politics.
Just the way they have for the last
five thousand years.
With this in mind, I wrote the following
comment in The Economist…
The primary reason that Greece has its enormous debt,
and this reason applies to Italy, Spain and Portugal
as well, is because it belongs to a “family” of
nations called the EU.
If these Mediterranean countries were on their own,
their economies would be sparse, as they used to be
prior to joining The Club.
Now, as they sip their cappuccino and glass of wine,
they smile and say:
“Just put out your hand. They don’t
dare leave us behind. That would break up their
great scheme of One Market. What would the transnational corporations do? Go broke?”
“Non ci penso io! (I don’t think so!)”
What do you think?