Tuesday, November 1, 2011

Taking Responsibility in Greece

I had the same reaction as fellow SLOB KT, regarding the decision by Greek PM George Papandreou to call a referendum on the euro bailout package. (By the way, I'd like to welcome KT to the SLOBs, he is a great addition, as well as a good friend.) The Greek people need to face up to their own responsibility for their future. A referendum is a good way to concentrate their attention and take the air out of their childish demands to be bailed out without making any fundamental changes to their system of government or economy.

Further, from a political perspective, the prime minister has little to lose. The New York Times is reporting that his government may collapse over the referendum question. But he was already a dead man walking, politically; new elections would give him a fresh mandate to govern or toss the problem to some other hapless sap who would have to live with the consequences of either default or austerity.

My personal opinion is that the Greeks should just default and exit the eurozone. They have proved they can't live within the rules laid down by the union, and full default, like bankruptcy would give a fresh start. The lack of foreign meddling would also concentrate the minds of the Greeks on solving their own problems, starting by re-instituting real capitalism and getting the government out of the shipping and tourism industries. Where would they get the capital to grow? They still own plenty of assets, including many islands that the wealthy or large corporations would love to lease or buy.

Here is a picture from the Greek island of Ios.

This could be the start of the Greek nation making a comeback. The first step is always taking responsibility for one's self.


  1. So what are the costs to the EU of a Greece default?

  2. Kelly,
    I think the EU would be better off, because a nation-state that didn't play by the rules was essentially given the boot. In terms of monetary cost, it doesn't matter, because the Greeks are never going to pay back those loans with an economy contracting at a double digit rate. See KT's follow up, and the comments on the original post. The Greeks are getting the shaft to save Eurozone bankers. While it's true that they lived beyond their means, the equivalency of bankruptcy is the only real option and will bring moral clarity to the situation. It also might force the Greeks to abandon socialism.