A Greek Tragedy
What is this greek financial crisis all about, Greece borrowed a lot of money, more than it could pay back, now it is asking the rest of the world to step in and help out.
First let us address who is at fault here, I believe there are two principal offenders.
Number 1: Greece, its government, its people its financial institutions, the greek dog, eagle an cat. What right did they have to borrow money way beyond their means, its stupid really, you know your salary (GDP) is X, how can you go ahead and borrow more than X, it smacks of irresponsibility, so the greek people have to suffer, fiscal tightning, lower salaries, work harder, no benefits, over time,less flaming cheese, less fish....... until the debt situation normalises. This is one thing I am in agreement with the german people, the people who enjoyed the debt should pay for it, you enjoyed the money, now pay for it. You might say, the ordinary people had nothing to do with it why make them suffer, well the people are the country, they elected their leaders, they wanted the higher wages, lower work hours, earlier retirement, they never questioned their government policies, hence they are also culpable.
Number 2: The people who lent the money in the first place, again, which idiot will lend money to somebody without understanding their financial status and means to pay back that loan, hence they should suffer too, i.e. the banks and other financial institutions which lent the money to the loan defaulter should be made to either restructure the debt or accept a default and write off their losses. You cant lend money to a person who cannot pay you back and then expect the people around you to pay for your foolishness.
So how would this have worked if I borrowed money and refused to pay, the money lender would send somebody to my house, either break my legs and take his loss, or have me turn over some of my house / valuables to make up for my payments. I would have to pay more interest for future loans and work my ass off to get back to respectability. Why cant we apply the same principle to Greece, either she uses up her gold to pay countries back, sells of her land, or loans it out to its debtors, sells them the pantheon or other monuments, sells of their defence equipment to some other country etc etc until they pay back their debt. Why cant the country just accept moral responsibility for its demeanors and just pay up.
But there are other considerations as well, the euro, the euro zone the pride of Europe, Europe's desperate attempt to mean something in the world. That is where things get complicated, the focus shifts away from the actual problem, thereby creating new problems. First of all the euro is the pride of Europe, Europe's answer to the Dollar, Europe's feeble attempt to regain some sort of standing in the changing world political landscape. The Euro and Euro Zone was formed to bring some sort of respectability to Europe which was fast losing prominence due to the increasing power of America and the rise of Asia, and emergence of Russia. To increase their clout, they accepted ineligible countries like Greece, formed a bigger economy to have a better say, it worked for a while, they realized they were stronger united, and now they have to do what it takes to keep the union running or risk having the world derisively doom them to an afternote in the 21st century. Thus they will do what ever it takes to keep the Eurozone running, which means pouring money into Greece, even at the expense of the greek people and their own people.
Another big reason Greece was bailed out by the euro zone is that the banks that lent money to Greece are the Euro Zone Banks, hence if Greece defaults the rest of Europe suffers. This would cause even more problems to the european economy, hence the best solution for them would be to loan money to Greece to pay them back and then take payment from Greece at a higher interest rate, this is kind of like re-structuring the loans by punishing only the greeks. Imagine what would happen if greece defaults, the european banks are going to go bust, they are then going to ask their governments to bail them out and the european governments would have to loan their own banks money, here they are loaning greece the money, thereby making life easier for themselves. The greeks would have to suffer more and will take longer to repay everything but the european countries will get their pound of flesh.
The best solution for Greece would be to exit the Euro, devalue their currency, restructure / default on some of the loans, buckle up, tighten their finance, focus on exports / tourism, work hard and just lay low for a while, but the rest of Europe wont let them, they would rather, give Greece more loans, keep them indebted longer, make them work harderer, go through a deeper recession, and spend longer time under the thumbs of the other European powers.
Who suffers, well right now, the greek people suffer, european people suffer due to higher taxes and austerity measures, the rest of the world plays its part, but whats important is who does not suffer, the banks and big financial institutions that lent the money, the ceo and cfo who okayed the poor loans, goldman sachs who started the cheating, you get the drift, just like the sub prime crisis its the people who end up paying for the mistakes of these financial institutions.
All in all, just like everything else, its another cluster screwep where the people who screwed up go free while the burden is borne by the common people. That is the true Greek Tragedy.
First let us address who is at fault here, I believe there are two principal offenders.
Number 1: Greece, its government, its people its financial institutions, the greek dog, eagle an cat. What right did they have to borrow money way beyond their means, its stupid really, you know your salary (GDP) is X, how can you go ahead and borrow more than X, it smacks of irresponsibility, so the greek people have to suffer, fiscal tightning, lower salaries, work harder, no benefits, over time,less flaming cheese, less fish....... until the debt situation normalises. This is one thing I am in agreement with the german people, the people who enjoyed the debt should pay for it, you enjoyed the money, now pay for it. You might say, the ordinary people had nothing to do with it why make them suffer, well the people are the country, they elected their leaders, they wanted the higher wages, lower work hours, earlier retirement, they never questioned their government policies, hence they are also culpable.
Number 2: The people who lent the money in the first place, again, which idiot will lend money to somebody without understanding their financial status and means to pay back that loan, hence they should suffer too, i.e. the banks and other financial institutions which lent the money to the loan defaulter should be made to either restructure the debt or accept a default and write off their losses. You cant lend money to a person who cannot pay you back and then expect the people around you to pay for your foolishness.
So how would this have worked if I borrowed money and refused to pay, the money lender would send somebody to my house, either break my legs and take his loss, or have me turn over some of my house / valuables to make up for my payments. I would have to pay more interest for future loans and work my ass off to get back to respectability. Why cant we apply the same principle to Greece, either she uses up her gold to pay countries back, sells of her land, or loans it out to its debtors, sells them the pantheon or other monuments, sells of their defence equipment to some other country etc etc until they pay back their debt. Why cant the country just accept moral responsibility for its demeanors and just pay up.
But there are other considerations as well, the euro, the euro zone the pride of Europe, Europe's desperate attempt to mean something in the world. That is where things get complicated, the focus shifts away from the actual problem, thereby creating new problems. First of all the euro is the pride of Europe, Europe's answer to the Dollar, Europe's feeble attempt to regain some sort of standing in the changing world political landscape. The Euro and Euro Zone was formed to bring some sort of respectability to Europe which was fast losing prominence due to the increasing power of America and the rise of Asia, and emergence of Russia. To increase their clout, they accepted ineligible countries like Greece, formed a bigger economy to have a better say, it worked for a while, they realized they were stronger united, and now they have to do what it takes to keep the union running or risk having the world derisively doom them to an afternote in the 21st century. Thus they will do what ever it takes to keep the Eurozone running, which means pouring money into Greece, even at the expense of the greek people and their own people.
Another big reason Greece was bailed out by the euro zone is that the banks that lent money to Greece are the Euro Zone Banks, hence if Greece defaults the rest of Europe suffers. This would cause even more problems to the european economy, hence the best solution for them would be to loan money to Greece to pay them back and then take payment from Greece at a higher interest rate, this is kind of like re-structuring the loans by punishing only the greeks. Imagine what would happen if greece defaults, the european banks are going to go bust, they are then going to ask their governments to bail them out and the european governments would have to loan their own banks money, here they are loaning greece the money, thereby making life easier for themselves. The greeks would have to suffer more and will take longer to repay everything but the european countries will get their pound of flesh.
The best solution for Greece would be to exit the Euro, devalue their currency, restructure / default on some of the loans, buckle up, tighten their finance, focus on exports / tourism, work hard and just lay low for a while, but the rest of Europe wont let them, they would rather, give Greece more loans, keep them indebted longer, make them work harderer, go through a deeper recession, and spend longer time under the thumbs of the other European powers.
Who suffers, well right now, the greek people suffer, european people suffer due to higher taxes and austerity measures, the rest of the world plays its part, but whats important is who does not suffer, the banks and big financial institutions that lent the money, the ceo and cfo who okayed the poor loans, goldman sachs who started the cheating, you get the drift, just like the sub prime crisis its the people who end up paying for the mistakes of these financial institutions.
All in all, just like everything else, its another cluster screwep where the people who screwed up go free while the burden is borne by the common people. That is the true Greek Tragedy.
posted by adarsh adarsh at 4:14 PM
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