Stop, Start, Repeat: Greece and the European Debt Crisis

Image Courtesy of: guardian.co.uk

On the flip-side, the politicians in Greece are doing extremely well for themselves. They’ve delayed and passed the Lagarde List—a list including prominent lawmakers, actors and their families who have Greek funds stored in Swiss accounts—among each other so many times that nobody really knows who was originally on that list in the first place. At the same time, 600 million euros earmarked for a Greek employment agency have vanished and no parliamentarian can explain exactly where that money went. To add insult to injury, Greek Finance Ministry general secretary Giorgos Mergos went on record stating that the “minimum wage is too high.” All the while Greek lawmakers have 65-75% of their income declared tax-free. You couldn’t make this up if you tried.

The crown jewel of this insanity is ex-Prime Minister George Papandreou, scion of the Papandreou political dynasty which founded the Greek political party PASOK that dominated Greek Politics since 1981. As a ‘reward’ for being an integral part of the family that played a key role in running Greece into the ground, he now enjoys a cushy teaching job at Columbia University, while living in an upscale New York penthouse with neighbours like Lady Gaga. He is also paid upwards of 55 thousand dollars for a single appearance on the speaking circuit. Oh, and his mother has also been linked to a 550 million euro account in Switzerland, though reports have yet to be fully verified.

While it all seems so very Greek, the conditions that precluded this crisis are all present in Spain, Italy and Portugal. Political corruption, nepotism and general inefficiency plague the governments of said countries, though they do have the ‘small’ advantage of having larger economies, which slows their inevitable collapse.[pullquote]Political corruption, nepotism and general inefficiency plague the governments of said countries, though they do have the ‘small’ advantage of having larger economies, which slows their inevitable collapse.[/pullquote]

Regardless of size, Greece is an example of what’s to come. Though the governments of Spain, Italy and Portugal— along with the EU—will scream and shout that they are not like Greece, the result will be the same, as evidenced by the current situation in Greece: mass unemployment, grinding poverty and rampant embezzlement.

If Spain is any recent indication, this may be happening sooner rather than later. Spain has requested a 39 billion euro bailout for its troubled banks with the Prime Minister not ruling out a bailout for the state.

If such a state bailout were to occur, expect a situation similar to Greece’s, complete with the same ‘cyclical’ medicine that jumpstarted the insanity described above. The only difference will be that the EU, the banks and the lenders won’t be able to buy themselves time and the ‘great European experiment’ will go straight down the tubes, dragging the global economy along with it.

This cycle must stop and dialogue must start to better grasp the context of this crisis and to address it properly. If this vicious cycle continues to Spain in the same form as it is in Greece, expect investor confidence to quickly progress from ‘shook’ to ‘shattered’ with a mass exodus of investment from Europe. If this happens, the concept of an integrated Europe suffers; the people who live in these ailing countries suffer and things slowly get worse until the bubble finally goes bust.

Konstantine Roccas is an observer of international affairs and governance, both local and international, but also writes about anything else that piques his ire. He enjoys a half kilo of Greek yogurt daily.

More of his work can be found at myriadtruths.blogspot.ca and he can be followed on Twitter @KosteeRoccas.