Greece’s Two Real Problems
are her Pseudo-Politicians and her Pseudo-Currency
Dr. Ioannis N. Kallianiotis
University of Scranton
Scranton, PA 18510-4602, U.S.A.
At the beginning of the debt crisis, I thought that the Euro-zone is responsible for the socio-politico-economic chaos of Greece; but, the problem of Greece is not only economic, political or social, it is cultural, it is spiritual, it is sovereign, it is a loss of Greece’s identity. And all these evils have started happening since her change in the political regime (1974), her introduction to the European Union (1981), and not only from her adoption of the euro (2002). Then, Greece has to leave not only the Euro-zone, but the EU and all those past failed politicians, if she wants to survive after her latest destructive experience. As the time is passing, this hardship on Hellenic civilization becomes obvious not only to Eurosceptics, but to any prudent person Greek of non-Greek. These politicians, who betrayed Greece, must go to jail and the money that they stole must be confiscated. Troika’s memoranda must be knocked down because their objective is the destruction of Greece. Greek voters, after a cruel terrorism for one month, elected on June 17, 2012, the same parties that created the crisis and signed the memoranda. This deadly mistake will lead Greece to deeper recession, to backwardness, to worse dependency, and to a complete loss of her historic national pride and traditional achievements.
Greek history with its unique direction because the country occupies an incomparable position in the South-East Europe, connecting three continents, with its people, who have transferred the Hellenic civilization and paideia to the East (Ancient Greek colonies, Alexander the Great, and Byzantine Empire) and to the West (Greek colonies, contribution to European Renaissance by Greeks, who survived from the conquest of Constantinople, and up to now with Greeks’ international mobility), and always with one particular objective, to offer some possibilities to all humans to become persons (perfect personalities). This country civilized Europe and gave even the Greek name “Ευρωπη” for the entire Continent.1 A few years ago, some “Greek” pseudo-politicians, without referendum, decided to join the European Union, which is not so disastrous for a small country like Greece and because of her exclusiveness, as the founder of European civilization. But, putting Greece, with a completely different socio-economic structure, compared with the industrial nations of North Europe to Euro-zone is anti-economic, anti-democratic, unethical, and against the Greek citizens’ decisions and their future welfare. Greece does not deserve these problems and these pseudo-politicians do not deserve to be in power because the Greek identity and the country are in danger with them and their politics.
Countries abandoned the gold exchange standard in 1973 because a fixed exchange rate does not work for all nations. Even a large economy, like the U.S. one, suffered because it lost almost its entire gold reserves. Instead of keeping the EU member-nations independent with their domestic currencies, their fiscal, momentary, and trade policies, depending on the domestic social needs of the countries; they imposed on these nations and their citizens a common pseudo-currency and are in control of the countries, their governments, and their sovereignty. Then, it came the planned American financial crisis (2007) and the European debt crisis (2009). Greece led by its indescribable politicians, after 1974 to a very severe debt problem, to increases of the inefficient public sector, to the Euro-zone without referendum,2 and unfortunately, to a lot of corruption. Politicians, who do not know their history, culture, civilization, paideia, language, uniqueness of their people, cannot run for office, as it was proven, lately; they can cause enormous social cost, not only for the current generation, but to the future generations and to the future politicians, too. And these failed politicians had the impudence to claim the vote from the downtrodden misinformed and terrorized Greek proud citizens. Thus, Greece has two problems, her pseudo-politicians and her pseudo-currency.
Ascent and Descent of Greece’s Socio-economic Structure
After World War II, the nation and its citizens enjoyed a huge growth, zero unemployment, a stable development, a thriving country-side, a multiple improvement, and a preservation of their traditional social values and their true faith. Lately, the European integration has destroyed the sovereign nation-states and it is ruling undemocratically an entire continent and unfortunately, Greece, due to her weak pseudo-politicians. European Union’s economic and social policies cannot satisfy any welfare function for the Europeans, like justice, fairness, allocation, equity, stability, distribution, efficiency, growth, full employment, homogeneity, security, sovereignty, independence, self-sufficiency, certainty, and democracy. Unfortunately, it became an oppressor for the poor Greeks and most of the Europeans. Greece has to leave the Euro-zone; otherwise the country is in serious danger. The entire Europe would be better off without the euro. But, Greece with her membership in EU has lost completely her culture and her tradition. Then, exit from EMU is necessary, but not sufficient condition for Greece to survive and achieve great things again, as it is known globally with her identity, as a unique historic entity. Greeks have to ostracize all these pseudo-politicians, who signed the memoranda.
Greece is in a severe recession (actually, depression)3 the last five years with an unemployment over 22% and in some regions over 40%. These conditions are disastrous for the country, its citizens, its future, and a proof that this system and this union do not work. Its debt is large (165% of GDP) and its deficit (9.1% of GDP), too; but, during periods of recession you do not use anti-growth measures to reduce deficits, as Troika has imposed on Greece because the results will be the opposite. You use expansionary public policies to stimulate growth and reduce unemployment. After the recession, you start, gradually, reducing the inefficient public sector and correcting all the other past deficiencies. Greece experienced many difficulties, conflicts, and invasions by barbarians and other neighboring or even non-neighboring countries, but she resisted with all her means and has to do the same, during the current economico-political “invasion” from the controlled EU.
European Union tried to equalize 27 heterogeneous countries, with different value systems, work ethics, factor endowments, economic abilities, cost of production, incomes, dogmas, languages, and objective in life. Of course, nothing of this has happened and the cost of integration has exceeded the benefits for the Europeans. Citizens have lost their jobs (the suicide rate has exceeded any historic records)4 and businesses have gone bankrupt, due to competition from the other country-members and from other foreign nations (Asians), with which EU has signed a foolish free trade agreement and the lately imposed austerities. Prices have increased because of the common market, goods are moving to markets with higher income and higher prices, and to attract them you have to pay the same high prices, which is impossible for Greece because her income is lower compared to the wealthy manufacturing EU members of the North. An overvalued euro has equalized prices (upward), but not incomes. A coffee from 100 Drs. (€0.293) has reached €5.5 (1,874.125 Drs.), an increase by 1,774.125% of its price since the introduction of euro (or 177.4% per annum).
Further, this overvalued common currency (the euro) has destroyed exports, foreign investments, tourism, shipping, and many other activities. The worst social problems are illegal immigrants, drug dealers, terrorists, anarchists, international mafia, every corrupted person and every kind of criminality moves freely from one nation to the other because borders have been abolished and Greek borders are extensive and the country’s islands are in thousands and are remaining unprotected for more than two decades.5 Their criminality in Greece has exceeded every limit and are we talking about Euro-zone or EU? The current imposed “structural changes” [increases in taxes, raise of the value-added tax, reductions in wages, salaries, and pensions, weakening of the power of labor unions, reductions of EU subsidies, shifting some of the burden of health insurance from employers to households, increasing the number of years in work, privatization of state owned enterprises (SOEs), and layoffs of public workers], the tremendous austerity, and many other measures that are coming soon (after the second ineffective elections on June 17, 2012), are against the “poor” Greek (and the other European) citizens. Then, the answer for the inheritance from the euro is obvious. We cannot insist for a mistake that EU did in 2002 and imposed it to Europeans.
In fall 2008, the Greek government gave to the Greek banks €28 billion (taxpayers’ money) for their economic support, to increase the liquidity in the financial institutions and to increase their lending towards businesses, but it received back a big nothing (banks do not share their benefits, they share only their bailout cost). Now, they want an extra amount of over €25 billion. This is a serious problem with financial institutions after 30 years of deregulations. It seems that all the big political parties in Greece became neo-liberals (market oriented and acting against the social interest of the country and its citizens) and very corrupted, some of them. The worst for Greece were the two inhumane memoranda (“μνημονια”) that Troika imposed on Greeks (two political parties, PASOK and N.D., ratified them with their signatures in absentia of the citizens) and because the county has no independent public policy to stimulate her economy and improve growth through an expansionary monetary and fiscal policy and through devaluation of her currency (trade policy), it has been led to a serious economic distress (a social collapse).
Greece has suffered since 1824 (during the War of Independence from Turks) with her Western creditors (actually, usurers). Greece lives for 188 years with foreign loans,6 extreme exploitations by her lenders, and has experienced bankruptcies, too. But, the past politicians were acting in favor of Greeks and not in favor of their unfair lenders. In 2010, Greece received a conditional loan of €110 billion ($161 billion) in installments to be able to pay the previous loans and the enormous interest cost, with an interest rate on her bonds of over 30%. European leaders (actually, Germany and France; it seems the new President of France, Francois Hollande, will follow Angela Merkel) tried to bailout Greece with wrong means and an infinite cost for Greeks,7 believing that they can prevent the Euro-area’s first sovereign default, which might cause a series of bankruptcies to the peripheral members and a serious strike on euro. In March 2012, a new bailout loan of €173 billion ($220 billion) was announced, which will be offered in installments again, if Greece keeps her obligations towards the lenders (memoranda); also, an insignificant cut of some of Greece debt by 53.5%, which affected negatively mostly the Greek public pension system (social security) and her banks, and this second new memorandum with 20 new mandates is changing everything in labor market and in the daily life of Greek citizens. Of course, one major fiscal problem of the country is the tax evasion by the wealthy people, professionals, and businesses. And because of this low government revenue, the minister of finance imposed unexpectedly and unfairly property taxes on homes, for the first time in Greece’s economic history. Thus, Greeks are losing ownership of their homes. An American friend said to me a few years ago that “communism and capitalism are the other side of the same coin”, but I did not believe him at that time.
Greece was borrowing and was rolling over her maturing debt obligations without any problem, as the rest of the West is doing; and of course, a lot of these loans were spending to buy weapons and other military “goods” from Germany, France, England, Russia, and the U.S. During this crisis, Greece was unable to roll over her maturing debt obligations (bonds) and it is closed to default. Domestically, the country has suffered from ignorant pseudo-leaders, enormous government spending and inefficiency, over-consumption, low savings, huge borrowing, destruction of agriculture, abandonment of villages and country sides, non-use of domestic natural resources (oil, gas, many minerals, etc.), tax evasion, corruption, and other evils. Greek industry (manufacturing) is suffering from abandonment by the government, from low productivity, and from declining in its competitiveness. Its exports were declining and imports were growing very fast. Greek industry and shipyards need protection from the government because of the unfair competition that faces from the surrounding countries and China. In the past, tourism and the shipping industry (the Greek maritime fleet is the largest in the world, it has approximately 18% of the world’s maritime fleet) have been the Greek economy’s stronger sectors; now, are suffering from the global recession and the overvalued euro. Greece has no monetary policy because it is pursued by the ECB, she has no fiscal policy because of Troika’s constraints, and she has no trade policy because she cannot devaluate the common pseudo-currency; but she has to pursue “internal devaluation” only by reducing the cost of production (salaries and wages, which are relatively low, compared with the other EMU members) and the citizens welfare fell to zero. These destructive politics for this historic nation should have been stopped by the citizens on June 17, 2012; but, unfortunately, it did not happen. Social justice was not satisfied.
If Greek politicians had taken some measures earlier, since late 1970s, there would be no need for the current austerity measures and the anti-social reforms or the sale off of Greece’s public wealth by putting it as collateral to foreign lenders. A nation has to give the first priority to its citizens’ welfare and not to its creditors’ excessive return. Lenders know that there is always risk in our free-market economies, for this reason they charge a risk premium of over 30%. This is the reason that citizens voted against the big parties (PASOK and N.D., who had signed the second memorandum in March 2012), during the recent elections on May 6, 2012 and it was impossible for them to have a democratic elected government in their country. The country finally elected them during the new elections in June 17, 2012 because people were deceived from all this propaganda; so the outcome from them is not expected to be beneficial at all for the country because the same bad politicians of the past are the “new” leaders, but these people should never be in power again. This anti-democratic propaganda from EU was and still is absurd.8 Politicians have to anticipate and prevent crises and not to correct them because it is too late and the disaster has been accomplished to the current and future generations of the country. The G-8 leaders met at a weekend summit at Camp David on May 19, 2012 and urged Greece to stay within the euro area and momentum gathered for the idea of issuing euro bonds to ease Europe’s debt crisis. The economies of the EU are being gripped by political confusion, as policy makers failed to develop solutions to address Greece’s and the rest of the peripheral nations’ financial crises. The euro has lost 6.56% against the U.S. dollar in May 2012 (4/27/2012: 1.3229 $/€ and 5/31/2012: 1.2361 $/€) and $4 trillion have been wiped from equity markets, due to fear that this turmoil in Greece might spread to other members of the Euro-zone. The G-20 meeting in Los Cabos (Mexico) on June 19, 2012, did not bring any solutions, too.9
Unfortunately, the measures imposed by Troika will deteriorate the economy further; the deficit will increase, the unemployment will go up, the recession will become deeper, and the country will face other internal (safety) and external (security) issues. Troika forces Greece to privatize the entire public sector; now, that the prices have fallen so much, it is selling them for free. Those sale offs of the national wealth is a crime against the nation and its citizens and Greek politicians have to say “NO” or to go home (some or maybe many of them must go to jail). But, these politicians, instead of going home, they form a coalition government including the three “new age” following parties (N.D., PASOK, and DIMAR). During periods of economic crises, the government has to nationalize private firms to improve confidence among citizens and stability for the country (a temporary nationalization of the big private banks at the moment will help them and will reduce the run on banks). The “old” (with bad past) politicians cannot lead with the same politics this kind of historic country. These austerity measures are absolutely wrong and the Greek politicians are responsible for signing the referenda, for this reason, they have no place in the Greek Parliament.
Finally, Greece has to leave the EMU right now, to stop payment on any loans (Germany did not pay two of its loans after WWI and WWII; the same has been done by many other nations) until it will recover and pay only a moderate, similar to the other sovereign nations, interest rate on loans, to go back to the drachma (at an initial exchange rate 1 Dr/€) and to become an independent and autarky sovereign nation, which will use its public policies and its factors of production to exit from the recession, relatively soon. If Greece will make the mistake to stay in Euro-zone, she will have no future. Greek citizens cannot undertake the cost of adopting the euro and should not be liable for their governments’ debts, corruption, and mistakes. Greece has to leave the Euro-zone and become gradually a self-sufficient, sovereign, and advanced nation, as it was in the past, for the benefits of its own citizens and for the interest of the global civilization. Of course, in the short-run, she will experience many difficulties, but her future will be bright again. Euro’s destructive inheritance is not needed for Greece because Greece has her own thousands years old Hellenic-Orthodox inheritance, which is superior of any pseudo-integration, of any common pseudo-currency, and of any anti-democratically imposed pseudo-politician. Greece has to go back to a “nation of justice”, instead of a “nation of injustice” that some, due to inferiority complex, have imposed on this historic nation and its citizens.
1 See, some of Greece civilization in this video: Η Ελλάδα από ψηλά (Υψηλή Ανάλυση).
2 The acceptance of Greece to Euro-zone was on June 19, 2000. (TV News ERT, June 19, 2012). I recommend this specific date to be remembered as a day of mourning for our nation. (I.N.K.)
3 Average GDP growth in Greece by era was as following: (1) Before EU integration: 1961-1970 it was 8.44%, 1971-1980 it was 4.70%. (2) After the EU integration: 1981-1990 it was 0.70%, 1991-2000 (period of enormous borrowing) it was 2.36%, 2001-2007 (again period of large borrowing) it was 4.11%, 2008-2011 it was -3.45%, (3) In 2011:Q4, it was -7.5% and 2012:Q1 the growth was -6.2%.
4 So far, more than 2,000 people have committed suicide in Greece, due to the financial crisis, the imposed austerities, and the recession that the country faces the last three years. (TV News ALPHA, May 30, 2012).
5 The first five months of 2012, there were 32 homicides of innocent people in Athens by illegal immigrants during robberies. (TV News ALPHA, June 6, 2012). See also, http://www.hellasontheweb.org/2009-05-25-15-24-30/2009-07-11-08-19-41/12361-2012-06-07-07-12-54
6 In 1936, Prime Minister, Ioannis Metaxas, refused to serve a loan, which had been contracted with the Belgian Bank Societe Commerciale de Belgique. The Belgian government turned to the International Court, which had been established by the League of Nations. The Greek government gave a memorandum saying among the others: “…It is impossible for a government to pay its debt and at the same time to offer to her people the necessary administration and the guarantee conditions for an ethical, social, and economic development… the objective of the nation is to preserve the good operation of the basic public services, which are superior of the payment of its debt.” The International Court justified Greece. (Yearbook of the International Law Commission 1980, Vol. II, Issue A, pp. 25-26). On this court decision, Argentina’s President based his case in 2003 and he canceled the most of his country’s debt and saved his country from the IMF. See, Voanerges, No. 59, January-February 2012, pp. 83-84.
7 The Austrian ex-minister of Finance, Hannes Androsch, said that the reunification of Germany cost too much for all Europeans because the exchange rate between the West German mark and East German ostmark was determine arbitrarily at “one to one” (1 DM/ DDM), which increased the interest rates in the entire Europe. If the European had behaved against the reunification of Germany, as Germans are doing now, with the euro crisis, there would never be their reunification. Also, he said about the loans that Greece is receiving, the largest amount never reaches Greece, it is withheld and returned to German and French banks. See, Dailynews24.gr, June 11, 2012.
9 See, James G. Neuger, “Greece for Bailout Reward as EU Sees Tweaked Aid Terms”, Bloomberg.com, June 19, 2012.