Almost everything you’re being told about the Greek crisis is a load of complete nonsense.
The Greeks are in a crisis because they’re a bunch of lazy deadbeats, right?
After all, they work only 10 months of the year — and get paid for 14. They retire at 25 and lounge around in cafes drinking ouzo. They live on handouts from Germany and cheat on their taxes. The troika of the European Commission, the European Central Bank and the International Monetary Fund have tried and tried and tried to help them, but they just won’t listen. And now they’ve gone full moonbat and are refusing to pay back even a scrap of the money they’ve borrowed.
Right?
Rubbish.
Almost everything you’re being told about the Greek crisis is a load of complete nonsense.
Here’s why.
1. The Greeks have already tightened their belts even more than they were asked to. Since the bailout agreement five years ago, the Greek government has slashed spending, raised taxes and turned a primary government deficit (before debt interest) of 24 billion euros into a surplus of 3 billion euros. It has actually cut its debts even more than the bailout demand. No wonder the IMF itself called the austerity measures “exceptional by any standard” and hailed their “important progress” on reforms.
2. The real problem is that the Troika’s medicine has failed. The IMF initially predicted that austerity would spark a “V-shaped” economic recovery in Greece starting in 2011, thanks to “confidence effects (and) regained market access.” No, really. Those are actual quotes from the 2010 bailout document. The IMF predicted that, by 2014, the economy would be growing by more than 3% a year. “Unemployment is projected to peak at nearly 15 percent by 2012,” it said. Oopsie. So while the Greek government has slashed its debt, the economy has simply shrunk further.
3. The “experts” being quoted are all biased. Yes, there are lots of smart people on TV and the Internet are wagging their fingers at the Greeks right now. The problem? They pretty much all work in finance. So their focus is on things like stocks, bonds and other financial assets, not on bread-and-butter things like jobs and household incomes in places like Athens and Thessaloniki. Finance may indeed be important, but it’s certainly not everything.
4. Greece is already in a catastrophe. My jaw drops every time another expert claims that the Greeks face economic “disaster” if they stop paying money to the troika or leave the euro. Um, what? Gross domestic product has fallen 25% in eight years. Imports have fallen by 40%. The official unemployment rate is 25%. Disaster? That’s already happened.
5. A country cannot “generate” money by tightening its belt. Talks between the Greeks and the troika actually broke down over how far the Greek government should raise taxes or cut spending. Um, what? This is based on the fallacy of “single-entry bookkeeping.” Yet it is widely repeated, even by reputable news outlets. If a country raises taxes or cuts spending, it does not create money overall — it merely transfers it from one set of hands to another.
6. Yes, the Greeks could relaunch the drachma quite easily. The jeremiads are totally bogus. This sort of thing has been done before — for example, in many Eastern European countries after the fall of the Berlin Wall. The International Monetary Fund and other international institutions helped out back then, and the transition was successful and relatively painless. If they refuse to help the Greeks, it will be a deliberate act of malice.
7. Yes, the Greeks could be just fine without the euro. The Brits are. So are the Poles. So are the Scandinavians. And so are the Icelanders, who have recovered from the 2008 financial crisis in part because they control their own currency. Indeed, the IMF has actually admitted that Greece could have avoided such a depression if it still had the drachma and could simply devalue the currency. The idea that Greece needs the euro is rubbish.
8. No, the Greeks didn’t cause this crisis alone. Blame the Davos Darlings who pushed their beloved “euro” project on everybody, including countries such as Greece, for whom it was unsuited. That helped inflate the big debt bubble last decade. Since then, the Davos Darlings have been pushing their patented debt cure of bread, water and gruel — to no effect. You notice the Davos Darlings aren’t foolish enough to try their own medicine. In Brussels, Frankfurt, London and Washington, the diet instead runs to Lobster Thermidor, Oysters Rockefeller and Chateau d’Yquem.
9. Everyone should stop panicking. This crisis should be no big deal for the rest of the world. The Greek economy is about the size of Alabama’s. Markets have already written off most Greek financial assets. And the Greek crisis will only spread “contagion” if international policymakers let it. I appreciate some people like a good panic. But they should get a grip.
10. The troika’s proposed “cures” make no sense. Should Greece reform its pension system? Should it broaden and simplify its tax base? Should it privatize the ports? Sure, OK. But none of that will help get a million people back to work, earning and spending money. You might as well try treating a gunshot wound with “diet and regular exercise.” They’re not wrong — just completely irrelevant.
