Here is a good article from The Wall Street Journal written by Joe Queenan.
Everyone agrees that the Greeks triggered the economic malaise the entire planet is now experiencing. Well, everyone but the Greeks.
It was the collapse of the preposterous Greek economy that first imperiled the European banking system, and it was the Greeks' refusal to bite the bullet and fix their problems that has made things worse. Now that the virus has spread to Ireland and Spain and Portugal and Iceland and Italy, no one knows when or where it will stop. And all because the Greeks couldn't get their house in order. Thanks a lot, Greeks!
A lot of people think we should just throw the Greeks overboard and let them stew in their own juices, but I disagree. The Greeks to me are like an unbelievably annoying grandparent who once was a lovable, generous type who used to give you fantastic presents on your birthday. The Greeks, after all, gave us "The Iliad" and the Elgin Marbles and the Parthenon and democracy. The Greeks are the ones who stood against the incursions of a marauding Middle Eastern tyrant at the gates of Thermopylae; the Greeks are the ones that took the rough edge off the Romans, who were basically a bunch of slobs. If it weren't for the Greeks, we wouldn't have "Oedipus Rex" or Plato's "Republic" or all those neoclassical buildings in Washington or those brilliant theories by Aristotle or all those great diners that line the Interstate everywhere. Worse still, we wouldn't have all those fantastic comedies by Aristophanes. I know how much those fantastic comedies by Aristophanes mean to Americans. Round these parts, folks can't get enough of them. Just can't.
Mindful of the enormous cultural legacy the Greeks have bequeathed us, wouldn't it be a nice gesture if we all chipped in and wired a few bucks their way to help them out of a tight spot? I'm not saying we should pay off all their bills, but maybe if we held a benefit concert featuring George Michael or perhaps even a 50-50 raffle, we could raise enough money to take some of their underwater bonds off their hands and then wait a few decades before redeeming them.
Or maybe we could offer the Greek people one million empty houses in Florida and southern California and say, "OK, guys, we give up, see what you can do with them." At the very least, it would stir things up in our housing market.
Skinflint fussbudgets are going to protest: Hey, couldn't you make the same argument for the Irish, the Italians, the Spanish? Are we going to bail them out, too? Well, yes and no. It's true that the Irish gave us "A Portrait of the Artist as a Young Man" and The Edge and the New York City police department, but the Irish are also responsible for Riverdance and the music in "Spider-Man: Turn Off the Dark," so no, they get nothing. And while the Italians did give us the Renaissance and Giuseppe Verdi and Sophia Loren, a lot of Americans are still fuming over that unpleasant Il Duce interlude back in the day, so they're off the list, too.
The Spanish log legitimate points for "Don Quixote" and Velázquez and Andrés Segovia and those fabulous tapas bars in Barcelona, but the whole Generalissimo Franco thing has also left a bad taste in many Americans' mouths. So they get nada.
Obviously, it is very difficult to decide which menaced nations to bail out and which to stiff now that the wolf is at the door. I look at it on a cost-per-cultural-unit basis. You get more bang for your buck if you help out the Greeks, because their contributions to civilization are totally out of proportion to the size of their economy. Just on the basis of "The Odyssey," I think they're due a few billion clams.
With other countries, it's a lot trickier. Belgium? Brussels sprouts, chocolates and Rubens, sure, but anything on a par with the Acropolis? I don't think so. Portugal? Next question. As for Iceland? Well, let's see: Björk and volcanic ash? Sorry, guys, you're on your own.
But the Greeks are different. They're good friends; they're old friends; they're faithful friends, and the truth is: We owe them. Without the Greeks, we'd all still be hauling hods for the pharaohs.
Put me down for 50 bucks.
JOE QUEENAN
>Now that the virus has spread to Ireland and >Spain and Portugal and Iceland and Italy, no >one knows when or where it will stop. And all >because the Greeks couldn't get their house in >order. Thanks a lot, Greeks!
ReplyDeleteI am a Greek living in Thessaloniki, I am a enterprising in the worst time I could ever imagine and I agree with many facts in your blog. But seriously, do you believe that the 2% of the economy of eu (and less than the 0.1% of the global) can cause this chaos to the markets? and even if it is like that, you don't thing that probable something goes wrong in the system if the 2% can cause so much trouble?
Somewhere in my blog I have the following statement: "Greece is responsible for the mess she created until 2008. That this mess has now become a threat to the Eurozone, perhaps to the EU and perhaps even to the world, that is exclusively the responsibility of incompetent EU-elites".
ReplyDeleteI could not agree with you more regarding the objective threat to the Eurozone of an economy which accounts for 2-3% of it. There wouldn't have been much of a threat if the situation had been handled correctly after 2008.
The EU-elites had never had to deal with a country with external payment problems, so I don't really blame them for not knowing. I do, however, hold them totally responsible for not seeking advice from people who have a lot of experience in the field. Remember that the EU initially didn't even want to have the IMF involved because they knew everything better (so they thought). I myself had been involved in the Argentine/Chilean reschedulings during the 1980s. There, Citibank, and particularly their William R. Rhodes, delivered master pieces or rather blueprints of how one deals with external debt problems of a country successfully. I know that Bill Rhodes and other members of his then team have offered their advice at all political and economic levels of the EU (even to Papandreou!). They were politely rejected with the argument that Euroland was different from an emerging country. So much for that!
When a country which depends a lot on foreign debt faces a liquidity run from abroad, the country has had it. You cannot stop such a run through normal operations. That run on Greece began in mid-2009 when all banks cut their short-term credit lines for Greece and when Greeks started to transfer their money abroad. Should you blame them? Not really. It is the most natural thing in the world that people and institutions run for the exit door as soon as they fear a crash.
At that point, and before too much damage is done to a country’s liquidity, the country needs to call together all of its creditors and negotiate a solution. The word “rescheduling” has by now assumed the negative touch of a disease. In reality, a rescheduling of debt is the most natural thing for a country when it hits external payment problems. A haircut, on the other hand, has absolutely nothing to do with a rescheduling and that is something which should indeed be treated like a disease.
So, by mid-2009, Greece should have rescheduled her debt with existing creditors (never in the history of finance have creditors of a country been let so easily off the hook as in Greece!). And since Greece will need Fresh Money for a long time, that money would have had to come from European tax payers as their contribution to EU-solidarity (provided that the money would be used prudently).
Had they done this, Greece would be as “normal” today as California was every time after she succeeded with a rescheduling of her debt (and mind you, California is the 8th largest economy in the world). Of course, had the US government cried in panic that the future of the American union was at stake in California and the future of the US dollar as well, those, too, would have become self-fulfilling prophesies. If you keep telling the economic and financial players that Armaggeddon might be near, they will sooner or later believe it regardless of its objective merits. Why? Because they fear that everyone else may believe it.
It obvious is never too late and it is not too late now. The same thing which should have been done by mid-2009 can still be done today except that the 200+ billion EUR which so far have been transferred from the pockets of European tax payers to the pockets of private investors (not really to Greece!), well, those monies are now out of the pockets of European tax payers. Just imagine if only half that amount had been invested in the Greek economy for new production of import-substitution products!?!
PS: I spend much of my retirement in Kalamaria, where I am now, so let me know if you want to get together.