Facts and Fiction

by Capricorner

Some people talk to impress others with the “prowess” of their thinking. The talk is: Exodus from the Euro. Return to the Drachma and not a word about what this means.

The parity of the Drachma to the Euro? Nowhere near the 340 drachmas of its entry to the Eurozone. Likely six hundred new drachmas to one Euro, as a start, with further devaluation imposed by the markets (poor country in deep recession). A small car will cost as much as a small apartment, a kilogram of Edam cheese, widely used for sandwiches, half as much as a pair of Greek made shoes. A pair of ADIDAS shoes a half month’s lower salary. Salary and wage earners will loose a great part of their purchasing power (look around and count how many of the items marketed in Greece are 100% Greek, without any imported material). The moment a decision to exit the Eurozone (voluntary or imposed) is announced everybody, people and institutions, will scramble to secure all the Euros they can. Panic and despair, as a start, social turmoil from a tricky situation, a sinking of the Economy, fraud and abuse from the fact that the Greek Banking system will have to change its computers’ programs, operative software and retrain personnel to the use of the Drachma . . . a process that will take time and impose a significant cost on the system. Greek companies with debts to foreign companies/institutions will find their debts more than doubled and of course the Greek Public Debt will more than double. Greece will have no financial help, as the exodus from the Euro will be the consequence of its consistent failure to do what it agrees to do, in return for the help it is getting and that is to restructure its Economy to make it competitive and able to stand on its own, restructure its state mechanism to make it reliable and a contributor to economic growth, privatize public assets, to bring in revenues with which to pay part of its debt.

The Government will find it hard to meet all its financial obligations. Anemic economy, unemployment, social turmoil. Who wants that and why?

In the light of these FACTS what is all the talk about leaving the Eurozone, if not an unabashedly ostentatious attempt to “differ”, or a ghastly public exhibition of distorted mental vision? Sadly the people who propagate the exodus are supposed to be distinguished in their field of endeavor, others in the pay of the Greek citizens, “serving the country” as Members of Parliament.

Ministers and other officials are, purposely, misinformed by their “people” when their people want to avert decisions they do not want, for their own personal reasons, or, because of plain graft. Add to this the times when they are unintentionally misinformed by incompetent, or ignorant people, or, the lack of reliable data and reliable information. Until recently the state did not know how many people it has on its payroll and what these people do! Greece does not know how much petroleum is exported and then smuggled back and sold, with the traders charging the import levies to the buyers and keeping them. The state thus looses half to one Billion Euros a year, but is unable (unable?) to put its finger on that game. Can this go on for so many years without the help of the appropriate people?

The above facts and a dozen more, portray the unreliability (to say the least) of the Greek Public sector, to manage the country’s fortunes. Impervious to factual thinking, there are people who claim that Greece is self-efficient and can stand on its own, provided it leaves the Euro and refuses to pay a cent on its colossal debt. They base their claims on current revenues and expenditures, excluding debt service. How valid are their figures? The Eurozone experts were horrified with the incompetence of the Greek Public sector. Their estimates are at best wishful thinking.

They claim that Greek exports will rise because they will be cheap, but excluding agriculture, which is subject to limitations of a physical nature, how many products can be produced with strictly Greek materials? The cost of the imported materials will be excessive (devalued drachma) so that their cost advantage will be minimized, for others wiped out, yet for others there will be a cost increase to uncompetitive levels.

Greece does not have a cost problem as it is widely believed (not the only erroneous misunderstanding of the troika) but a problem of business thinking. With the domestic market constantly shrinking EXPORTS jumped to unprecedented levels. If they were uncompetitive why did they? Investments to increase productivity with the current (high) cost of labor will make Greek exports even more competitive, but who will invest in the drachma?

The Public sector being what it is will be of no help. How will the country manage without foreign currency reserves? Greek Exports and Tourism will bring them in?

Why has Greece run up such a strangulating debt if it had sufficient revenues and foreign currencies in its coffers? The sudden loss of buying power and the ensuing unemployment, already in clear view of everybody, coupled with the lack or the forbidding cost of imported products and services, that people have made a part of their way of life, will stir disorder and violence, undoubtedly. The syndicates will fight to reinstate their members’ buying power, thus wasting the cheap labor cost advantages and, because this may be resented by the Government, they may resort to ever increasing pressure, even violence, as they are doing presently, believing that by making the Greek society suffer they are pressing the Government which will bend to their demands, as has always been the case. A government that “can not” is inconceivable to them and so they will ignite revolt with their actions, especially since the Greek Society is not cohesive but is the composite of groups each with its own interests and pursuits, often resented by other groups, not to mention the anger brewing under the surface. This is not all one can expect from an exodus from the Euro and refusal to pay the National debt. The International community will not take it nonchalantly. Greece will come under very strong pressure. It will probably be considered unfit to participate in a community of nations where good faith and mutual respect is a prerequisite and will be expelled from the EU, with all what this will mean to its economy. The United Nations will make an issue of the Greek “misbehavior”. . .

When one borrows, on good faith, one repays, in good faith. Greece will have no credit of any kind for a great many years. How will it obtain the weaponry needed to keep its naughty neighbor at bay? If it needs help who will help? Can Greece afford socially and psychologically to become what Albania was?

What about the lenders of Greece? Will they take it easy? They will exhaust all the legal means there are. Greece will be with its back against the wall, with no options.

The talk about exodus is, morally, debatable, but the talk about non payment of debts is, morally, poisonous. It gives the Greeks and the Youth of Greece in particular, the certainty that they can get away with anything and, which is more, it is an inducement to, a lesson in, immorality, the foundation of a catastrophic way of life. It creates a mentality of deceit. One can simply walk away from one’s obligations and be smart, while those who do not are suckers. Is this what they want of Greece? What is in their minds? Guess.

All the above are overlooked, (unintentionally?) by those who propagate the exodus from the Euro and the non payment of the Greek debt. The communists and their allies want no middle class. They think they know what an exodus from the Eurozone will bring. They are blind to the fact that a violent change of life will bring an angry reaction and this will lead to a near civil war, which they can not win because even the lower class is no longer as “low” as it used to be and stands to also loose.

Ostentatious people, ostentatious talk, for its own shake??

The so called Greek government? It refrains from explaining to the people what is in their interest, but then it refrains from exercising “Government”. There is already talk and resentment for the fact that, together with a 50% reduction of the country’s debt and the financial help Greece is getting to “stand up and go”, there will be experts from the lenders who will help the government do what it has to, given the inexperience and incompetence of the Public sector. Those who resent this, consider the Public sector competent and efficient? If it is anywhere near this why is Greece what it is? Has the public sector suddenly become competent? Knowledgeable? Experienced? Will not the presence of foreign experts inject to the Greek public sector the knowledge and experience (and morals) it currently lacks? Will, what the public sector gains from its exposure to the expertise and articulated thinking of the foreign experts, not make it a contributor to an improved quality of Greek life and endeavor?

Ostentatious government, which perceives “Government” as a game of communication, not a challenge, a duty to “perform”, to use the (last) opportunity Greece has to shape up and prosper, by restructuring and unleashing the Greek potential. If this ridiculous group of “tin heads” does not move out and let a competent group take maters in its, competent hands, the country is doomed. A “comically” ostentatious premier heading an ostentatious “government” which has been unable/unwilling to do what it had committed to do, thus bringing the country to where it is now, has zero credibility in and out of the country, yet he persists with his ostentatious, instead of pragmatic- enlightening- useful, talk. That is all what he knows, what he can do; present the repercussions of his failures as gains. Greece needs help, can have help, but he stands in the way, hopefully for a few more days, only.