Go Greek for a Week?

Greece is on the verge of going bankrupt, no thanks to the political shenanigans being played 

out by the two major parties, but they have been exposed:

In fact, opinion polls suggest that if elections were held tomorrow – as some parties would like – there would be no clear winner, a coalition would have to be formed. Greek voters are displaying the consistency and maturity their politicians have failed to. Their message is that this crisis cannot be tackled through the compromised politics of the past but through at least some degree of cooperation. Even at this 11th hour, their leaders might yet absorb the message but their future has been sealed. They have been exposed as yesterday’s men, counting their political beans while the runaway wagon headed for the cliff. ...

Perhaps more by luck than design, Papandreou’s leftfield proposal to hold a referendum on the impending eurozone debt deal set in motion a chain of events that led to this denouement. Suddenly, politicians were stirred by the prospect that Greece’s membership of the eurozone and the European Union was coming to an end and that their next task would be to rebuild the country from the ashes of a bankruptcy. Samaras dropped his resistance to the new bailout, albeit with some caveats, while Cabinet ministers and PASOK MPs threatened to topple Papandreou if he carried through with a referendum that he seemed destined to lose.

Papandreou, the joker in Greece’s dog-eared political pack, was not done, though. Despite the pressure from his party, he attempted to dodge the commitment to initiate coalition talks and then stand aside. This was an act of self-interest and self-preservation too far. Even those within the crumbling system realized it and it now looks as if Papandreou is on his way out. His wavering was matched by Samaras’s petulant reaction before and after Friday’s confidence vote. New Democracy’s boycotting of the debate and its leader’s curt statement demanding elections afterwards were hardly the maturity demanded by the critical circumstances. Saturday’s exchange of pointless statements between the two, confirmed to the watching world and desperate Greek public that these were just two boys unwilling to let go of their toys.

The one blessing of this frantic week has been that the pathogeny of Greek politics has been laid bare. Until recently, for many people abroad this crisis was caused by the lazy Greeks, the corrupt Greeks, the Greeks who don’t pay their taxes and the Greeks who retire at 50. The Greek people are not blameless but perhaps now the world has a better idea of where to locate the roots of this country’s problems: in the backyards of decision makers who shirked their responsibilities, who ruled for their own benefit and who always took the easy options. How ironic that these men and women now have to make the toughest decision they could have imagined, one which will decide if Greece stumbles toward salvation or if it will tumble into oblivion.

Ironic indeed! And kudos to James Meadway, senior economist at the New Economics Foundation, for writing an article blasting John Humphrys on being wrong about Greece:

A fresh arrival in austerity-stricken Athens over the weekend, as John Humphrys joins the ranks of IMF inspectors and faceless ECB technocrats currently descending on Greece. He’s in town to present Radio 4’s flagship Today programme, where the “glorious weather” stands in stark contrast to grey November London. Lucky Mr Humphrys.

Unlucky Greece. In a series of interviews, Greeks are told they were “foolish”. Their pensions are “staggeringly generous”. Greece “spent too much for too long”.

This is drivel. Humphrys repeats almost every Greek myth in the Bild handbook. The facts speak for themselves. Greeks are neither profligate, nor lazy.

1. Greece spends less on its public sector, as a share of GDP, than the EU average.
2. Greeks work amongst the longest hours in Europe, and retire later, on average, than Germans.
3. Greek public pensions account for roughly 11 per cent of GDP, around the same as Germany and France.

This is not a Greek crisis. It’s a European crisis, imposed on Greece. At its heart is the paradoxical weakness of the major European economies. Productivity growth in Germany, powerhouse of the European economy, has been sluggish for a decade or more. Greece, like other southern European countries, has seen productivity improve rapidly over the same period.

But the German economy is a vast exporter, both across Europe and into the rest of the world. To maintain this position in the face of sharpening competition, two things happened. First, real incomes in Germany were hammered, with social benefits removed and wages stagnating. Second, the creation of the euro fixed relative exchange rates across member countries. Germany entered at a low rate. Greece, like Portugal and Spain, entered at a high rate. German exports became cheap for southern Europe. Germany and other northern European economies began exporting more and more into southern Europe, creating huge surpluses.

You cannot have a surplus in one country without there being a deficit elsewhere. The two, by definition, balance. So surpluses in northern Europe were matched by deficits in the south. Blaming the debt crisis on Greek deficits makes no more sense than blaming it on German surpluses.

European financial institutions, notably those in France and Germany, recycled surpluses earned in the north as cheap credit for the south, who could, in turn carry on purchasing northern exports. Indebtedness, public and private, rose steadily. This flow of debt southwards kept the system running – right up until the financial crisis of 2007-8.

That crisis burst the whole set up wide open. Debts and deficits everywhere shot upwards as governments struggled to cope with a severe recession and collapsing financial systems. Inside the Eurozone, banks loaned huge sums to national governments – apparently in the belief that they could not default.

Default has now become an inevitability for Greece. Its national debt is unpayable. And as the economy shrinks, the relative burden of debt grows, dragging the economy further down. The EU deal, struck on 27 October, recognises this much in proposing a 50 per cent “voluntary” write-off for Greek debt – in exchange for worsening austerity. If approved, however, this reduction is unlikely to be enough to halt the death-spiral of debt and recession. The EU/IMF/ECB Troika, in a confidential report leaked ahead of the deal, suggest “at least” a 60 per cent default would be necessary. The true figure may be far higher; but a sharper default threatens banks across Europe, and will not be countenanced by its officials.

The hardships now being visited on ordinary Greeks are not punishments for past sins, despite Humphrys’ moralising. They are carrying the burden of a European economic system that is fatally flawed. It remains to be seen how long they will tolerate being made its scapegoats.

Greeks are not blameless in all of this but Mr. Meadway is right, they're being made scapegoats and carrying the burden of a European economic system that is fatally flawed.
Finally, in a whacky and ironic twist, there is a new reality TV show from the Britain's Channel 4, Go Greek for a Week, which will allow three British families to experience the "tax, pensions and work practices" that has completely destroyed the Greek economy.
Got to love those Brits. As their economy is going through the austerity wringer, killing their pensions, they decide to poke fun at Greeks, perpetuating every Greek myth in the book. Greeks are hardly amused and have come up with their own version of the trailer, mocking this new reality TV show depicting life in Greece (see both trailers below). And if you really want to laugh, watch this.

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