The casual observer monitoring the imminent collapse of the Greek financial system might be thinking to himself or herself, “What a horrid way for the Euro Zone to treat one of their members.” They could really be faulted for thinking this way, as the Greek leftist government led by Prime Minister Alexis Tsipras has been portrayed in international media as a maverick combination between Gandhi and Mother Theresa.
However, the truth is starker than that “Walt Disney” depiction of Greece’s debt woes. While media and pundits focus on Tsipras’ posturing, those in the know realize the Greek government brought this on themselves.
The trouble started in 2008, the year everyone remembers the collapse of general Motors, Dodge and the beginning of the recession. North America wasn’t the only scene of hard times. The Greeks had not only a recession, l but what some financial wizards describe as a depression. You see, the Aegean nation depends to a large extent on international shipping in the Mediterranean Sea. They bet big time on hat shipping to pay the rent. When the depression hit, much of the shipping declined, some of it disappeared completely. And the bills started to pile up.
What bills, the reasonable reader might ask? Well, Greece is rather infamous for the way in which it taxes its people and the way in which Greeks retire from the workforce. Depending on the source you find, Greek retirement age can be as early as 49 years, as opposed to what many first world nations ask: 65.
Who can blame the Greeks? If your government made it possible to stop working, begin collecting your pension and enjoy life on the beaches of the Mediterranean, who would possibly say no to that? It’s really difficult to blame the rank and file Greek who only took advantage
Realistically though, having hundreds of thousands of able bodied people filing their retirement claims at 50 in order to drink champagne cocktails while floating in their dinghy is not financially sound. You’ve now got these hundreds of thousands of people, possibly a few million, no longer contributing to the financial health of the nation. They are no longer paying taxes on their income and providing much-needed revenue for the government to offer its services.
Instead, you now have this army of retirees, rather than contributing, instead drawing out money from the system, laying more pressure on the younger generations to pay even more to support the nation. On top of everything else the yo0ng have to face, including student loans, buying a home, purchasing cars and more, now they have to support able-bodied retirees who are enjoying the good life.
Now, as a member of the Euro Zone, Greece has been propped up continually since at least 2008, getting loans and other financial support from fellow European nations, primarily Germany. In essence, German citizens were paying their own bills, running, their own businesses, raising their own children, while at the same time and also paying bills, running businesses and raising children for 50 year old retirees in Greece. At last report, the German people said nein for more of the same.
It’s all come to a head this year as Tsipras’ leftist government, unwilling to make any changes to the way Greece handles its finances, instead treated brinksmanship as a virtue. The recent vote held in the Mediterranean nation asked the Greek people, “Should we reform our financial system in order to get more aid?” The Greek people voted “no.”
This week, the comedy continued. Even after the “no” vote, Tsipras backtracked and offered a number of reforms that seemed suspiciously what France, Germany and the Euro Zone were asking for in the first place, in order to get more money from its Euro Zone partners, the International Monetary Fund or some other organization that was intended to help developing nations struggling in poverty but instead aid an irresponsible European nation that is obsessed with behaving like a teenager. Further, there’s now talk of “debt relief.” They’re going to let the Greeks off the hook.
It’s a moot point talking about bailout proposals and Greek financial reform, as the Greek government already welched on a 1.6 billion Euro payment to the IMF last month. It’s happened before, and the best way to predict future behaviour is by looking at past behaviour.
The Greek government won’t learn to get its finances in order and won’t learn to govern its people properly until the global community stops bailing them out, simple as that.