How Greece was destroyed

 

Angela Merkel watching Manuel Barroso lecturing George Papandreou

 

Right from the beginning, the scenario of the Greek financial tragedy was criticised as fake. Towards the end of 2009, the newly elected government of George Papandreou, son and grandson of prime ministers, found out that his PASOK socialist party had won the election on populist promises that could not be fulfilled. Papandreou himself had told the Greeks, “there is money”, despite the then on going credit crunch. It was an old trick of the opposition parties to win elections in Greece and elsewhere, but this time everything was different.

The world was deep in an unseen before financial crisis, which culminated with the bankruptcy of Lehman Brothers in September 2008. Banks had stopped not only to lend to governments and businesses, they didn’t even lend to each other.

In such an environment Papandreou couldn’t follow the good old Greek government tradition of borrowing to fulfil electoral promises. Judging Papandreou in retrospect, he must be a very clumsy politician, because he could have won the November 2009 general election without making costly promises. He also underestimated the credit crisis which was developing uncontrollable, tearing apart huge multinational groups and countries. Even his predecessor, Constantine Karamanlis, a bon viveur and opportunist politician, had seen the incoming calamity and swiftly handed out the steering wheel to Papandreou, by holding early elections with no constitutionally sound reason.

It was a deplorable spectacle to watch those two sorcerer’s apprentices to succeed each other in Greece’s top job. Karamanlis had borrowed more than €50 billion earlier in 2009 and Papandreou didn’t understand that it was impossible to repeat that. At that time, the global financial environment was deteriorating fast with lenders one day giving out €50 billion in new loans and the next snivelling over their empty coffers.

In short, the old Greek tradition of recruiting thousands of party militants in the public sector and handing out hefty wage increases to civil servants was not any more available to Papandreou. Without those traditional governing ‘tools’ he panicked and asked his minister of Finance, George Papaconstantinou, to politically justify that to voters. This last ‘brilliant’ economist didn’t give it much thought. He had the solution ready-made from his predecessor in the Ministry, George Alogoskoufis, also an economist.

What Alogoskousfis did back in 2004 had shaken the Eurozone and the financial world, as he declared that Greece had joined the Eurozone on faked statistics, concerning state debt and government deficits. Blaming the previous government for everything was another Greek political ‘tool’. The country’s political life at that time was reminiscent of the joke with the three envelops, every outgoing prime minster must deliver hand by hand to the next top guy and tell him to open them one by one at times of difficulties.

The first envelop contains a letter with two words:  “blame me”. The second one says “blame everybody else” and the third one contains an advice, “prepare three envelops”. So Papaconstantinou didn’t think for a second. He also denounced the previous government of falsifying state debt statistics, insisting that the real government budget deficit for 2009 was no around 6.5% of the Gross Domestic Product as Aloghoskoufis had estimated but more than the double. In this way, he thought to block internal demands for more state jobs and wage increases. At the same time, however, the other Eurozone governments and all and every financial market were shocked. Unfortunately, this time the world credit crunch had changed everything and Papaconstantinou in 2009 didn’t have the option Alogoskoufis had in 2004, to continue borrowing.

To cut a long story short, Papandreou turned the 2009 state budget deficit problem into a creditworthiness one for the entire country. Then cold political winds start blowing and destroyed the Papandreou administration, sending Greece and the Eurozone to the hands of the troika of International Monetary Fund, the European Central Bank and the European Commission. The IMF got mixed up in this exclusively European problem on the insistence of Berlin, because the Fund reputedly had the expertise to help reshape the over borrowed countries and cut down their fiscal deficits. It turned out that it was not like that.

The IMF’s chief economist acknowledged from the Tokyo general Assembly of the World Bank and IMF that the Fund made wrong predictions for the Greek economy. He also accepted that the programme applied had to be drastically changed. In the meantime (2010-2012) Greece lost almost a quarter of its Gross Domestic Product and income, unemployment surpassed 25% and the government debt from 115% of the GDP at the end of 2009 is today 165%. All that despite the fact, that the country applies almost to the letter whatever troika says, and after Athens have agreed a haircut of 53.5% of the privately held Greek government debt.

Not to say anything about the damage on the country’s social coherence and the damage to the prospects of at least two generations. If this is a salvation, then words have lost their meaning. Most irritating in now the fact that Papandreou travels around the world giving paid lectures over all that. Presumably he tells his audiences how a wealthy country can be destroyed. Who would pay a ticket to hear from him anything else than that? In any case Greece is now caught in a vicious cycle of recession and expenditure cuts.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

MWC 2016: IoT experts fret over fragmentation

What paleoecology can teach us about fires in the Amazon

3 ways to fight short-termism and relaunch Europe

EU Parliament semi worried over democratic deficit

These are the countries where most adults still don’t have a smartphone

Scoring for the environment: what Mathieu Flamini’s top-flight football career taught him about leadership

We can decide to live within the limits of our planet

Eurozone economy desperately needs internally driven growth

Guterres calls for ‘maximum restraint’ following drone assault on key Saudi oil facility

New Zealand will have a new ‘well-being budget,’ says Jacinda Ardern

The business case for investing in sustainable plastics

Deaths from far-right terrorism have more than tripled in the West

Why is Grexit again in the news? Who is to pay for Eurozone’s banking problems?

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

Turkey presents a new strategy for EU accession but foreign policy could be the lucky card

The latest emoji are more inclusive – but who approves them?

Thursday’s Daily Brief: Climate emergency, call to support breastfeeding, rising political heat and new investigation board for Syria

German banks suffer of nausea amidst rough seas

The strong version of the EU banking union gains momentum

‘No steps taken’ so far to end Israel’s illegal settlement activity on Palestinian land – UN envoy

GSMA Announces New Keynote Speakers, Event Updates for 2019 “MWC Los Angeles, in Partnership with CTIA”

Study: Trade supports over 36 million jobs across the EU

UN Security Council welcomes results of Mali’s presidential elections

Companies can help solve water scarcity. Here’s how

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

UN chief condemns suspected Boko Haram attacks targeting Eid al-Fitr celebrations in Nigeria

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

How distorted is the EU labour market by this crisis?

Monday’s Daily Brief: human rights in the Near East and a Forum for Refugees

EU finally agreed to cut roaming charges in 2017 but criticism is always there

Millions of young lives at risk due to humanitarian funding shortfall: UNICEF

This is why mountains matter more than you think

Further reforms in Japan needed to meet the challenges of population ageing and high public debt

These are the countries that eat the most meat

Advocate General ‘outlaws’ Data Retention Directive

Central African Republic: Guterres says UN mission committed to protecting civilians, helping stabilize country, as violence flares

EU Commission: Growth first then fiscal consolidation

5 ways blockchain can transform the world of impact investing

The Eurogroup offered a cold reception to IMF’s director for Europe

A Sting Exclusive: EU Commission’s Vice President Šefčovič accentuates the importance of innovation to EU’s Energy Union

WEF Davos 2016 LIVE: “European unity and cooperation is being called on question”, Vice President Joe Biden criticizes from Davos

Will the EU reconsider Frontex’s role in light of accusations about violations of migrants’ human rights?

UN condemns attack on Ebola treatment centre in DR Congo which left doctor dead, two others injured

‘No-deal’ Brexit preparedness: European Commission takes stock of preparations and provides practical guidance to ensure coordinated EU approach

The US bugged Europe: Is this news?

World Television Day celebrates an integral part of modern life

Chart of the day: This is what violence does to a nation’s GDP

Here are 3 ways venture capital can fund a better future

There are now four competing visions of the internet. How should they be governed?

The world needs a grand coalition to tackle climate change

Who cares about the unity of Ukraine?

Civilians ‘must never be a target,’ says UN in Afghanistan, amid troubling number of casualties during Ramadan

What UK and EU risk if Brexit “wins” these elections

French full-body veil ban, violated women’s freedom of religion: UN Human Rights Committee

OECD and European Commission join forces to further support structural reforms in European countries

Much more than a ‘lifeline’ for millions of households, remittances can spur global growth, says UN agency

Libya detention centre airstrike could amount to a war crime says UN, as Guterres calls for independent investigation

The Sichuan Province of China presents its cultural treasure to the EU

Terrorist content online should be removed within one hour, says EP

Wednesday’s Daily Brief: Syrian detainees, Zimbabwe hunger crisis, Kabul attack, Mexico disappearances, new tech to feed the world

More Stings?

Comments

  1. Hey! This is my 1st comment here so I just wanted to give a quick
    shout out and say I really enjoy reading through your posts.
    Can you recommend any other blogs/websites/forums that deal with the same
    subjects? Thank you!

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s