Greeks must get back to work!
The weekend election has brought much-needed certainty.
In handling victory by a narrow margin to the centre right, pro-bailout New Democracy led by Andonis Samaras, Greek voters have avoided the worst-case scenario and gained a much-needed reprieve for their country, the euro zone and the global economy. It is no more than that.
Whatever coalition is cobbled together should be under no illusion about the challengers ahead if the outcome is to be more than a brief respite in Greece’s slide towards economic collapse.
As New Democracy ended up 2.8% points ahead of the radical-left anti-bailout Syriza party, it is no surprise Mr Samaras, in proclaiming a victory for Europe and pledging Athens would honour its bailout commitments, indicated he would seek a softening in loan terms from the EU and International Monetary Fund.
But it is imperative to make it plain to the new Greek government that the country can no longer live high on the hog as it has for decades, surviving on the savings of workers in Germany, Japan and China whose endeavours have provided the loans to keep Greece’s welfare state afloat.
The ludicrous situation of Greece’s national railway, for instance, which earns 100 million euro in revenue and has a wages bill of 400 million euro, with the average railway employee receiving 65,000 euro a year, is untenable. So is a retirement system that permits those with “arduous” jobs to retire at 55 for men and 50 for women. Nothing better exemplifies the Greek malaise. In contrast, workers in Germany, the benefactor so outrageously abused by Syriza, is considering lifting its retirement age to 69.
Among Mr Samaras’s immediate challengers will be the bailout’s requirement that 150,000 members of the bloated and overpaid public service be dismissed. Despite the narrowness of his victory and inevitable fragility of the coalition he forms – most likely with PASOK, the socialists who bear much responsibility for the present mess ( Pasok, borrowed and spent recklessly many billions of euro’s whilst in government)– he must not back away from what NEEDS TO BE DONE.
The election’s consequence will be discussed at a meeting of eurozone leaders in Brussels on June 28 when German Chancellor Angela Merkel will be under pressure from French President Francois Hollande, buoyed by his big win in parliamentary elections, to soften her commitment to austerity. She needs to take into account the political mood in Europe. But there can be no going back on the basic requirement that countries such as Greece live within their means and bring about the market reforms needed to promote productivity.
It is to be seen whether the euro is viable long – term for nations such as Greece, Portugal and Ireland, which would benefit from power – valued currencies, but the reform path Greece must follow is clear.
IS GREECE DEPENDANT ON THE GERMAN TAXPAYERS?
So the world breathes a sigh of relief that Greece has elected a government committed to the bailout program. This means that European authorities will finance the restructure of Greek debt and keep Greece in the euro for now.
But that only buys time. If Greece is going to continue to access finance and, more importantly, pay the interest cost on its borrowing, it will have to make its real economy a whole lot more competitive.
Greeks have been paying themselves pensions and wages that they can’t afford. Tax collection is hopelessly corrupt and inefficient. And business is well below international competitiveness.
In the old days, when Greece got into this situation it would devalue its currency. As a result, the Greek people would reduce their standard of living against international standards and industry would become more competitive. But after it went into the euro,(when the corrupt Pasok goverment of Kostas Simitis lied to get the country into the euro zone currency) Greece lost the ability to use the currency to adjust its economy. What’s more, once inside the euro it found that lenders asked for lower interest rates since they thought there was now no currency risk on government bonds, and they assumed that if Greece got into trouble Europe would bail it out and look after the lenders. Which it has. So money became plentiful and cheap, and Greece borrowed more, up until the point that lenders began to lose confidence and turned off the tap.
Devaluation would be the fastest way foe Greece to restructure its economy. Without it the path to competitiveness is going to be a whole lot harder. The bailout package requires the government to cut pensions, reduce the number of public servants and get costs under control. This is known as the “austerity” option.
There are some who say there is an easier way. They say that there should be a program to stimulate growth and boost revenue, which might even involve more spending. This is known as the “growth” option. German Chancellor Angela Merkel is in the austerity camp and French President Francois Hollande wants the “growth” option.
In this debate only the Germans really count because they are the ones that are going to provide the money. They can afford to help because, unlike most of Europe, they practice austerity har work and “thrift”. And if German taxpayers are going to have to pay higher taxes, they think their European brothers and sisters should share some of the pain.
The proponents of austerity and growth have different temperaments and different time frames, too. A boost in spending might help in the short term, but in the longer term getting costs down and productivity up will be the only way to succeed. The question is whether the Greek voters will wait that long.
Short – term decision – making is how Greece got into this problem in the first place. All through the 1990s and 2000s Greece continued to run large budget deficits in the name of stimulation and expansion, and in particular irresponsible consumption expansion. They found it was always a good time to spend. They never seemed to think it was the right time to cut spending and get dept under control.
Which brings us to the present difficult situation!
CAN TODAYS GREEKS COME TOGETHER IN A SPIRIT OF NATIONAL SALVATION?
To solve all the problems and challenges ahead, so as to take the path of restoring economic prosperity, the politicians, the business people, the trade unions and all the people will have to come together, work together and make many sacrifices, so that at least the next generation will have jobs and a stable future!
If not TOTAL DESTRUCTION IS JUST AROUND THE CORNER!
The weekend election has brought much-needed certainty.
In handling victory by a narrow margin to the centre right, pro-bailout New Democracy led by Andonis Samaras, Greek voters have avoided the worst-case scenario and gained a much-needed reprieve for their country, the euro zone and the global economy. It is no more than that.
Whatever coalition is cobbled together should be under no illusion about the challengers ahead if the outcome is to be more than a brief respite in Greece’s slide towards economic collapse.
As New Democracy ended up 2.8% points ahead of the radical-left anti-bailout Syriza party, it is no surprise Mr Samaras, in proclaiming a victory for Europe and pledging Athens would honour its bailout commitments, indicated he would seek a softening in loan terms from the EU and International Monetary Fund.
But it is imperative to make it plain to the new Greek government that the country can no longer live high on the hog as it has for decades, surviving on the savings of workers in Germany, Japan and China whose endeavours have provided the loans to keep Greece’s welfare state afloat.
The ludicrous situation of Greece’s national railway, for instance, which earns 100 million euro in revenue and has a wages bill of 400 million euro, with the average railway employee receiving 65,000 euro a year, is untenable. So is a retirement system that permits those with “arduous” jobs to retire at 55 for men and 50 for women. Nothing better exemplifies the Greek malaise. In contrast, workers in Germany, the benefactor so outrageously abused by Syriza, is considering lifting its retirement age to 69.
Among Mr Samaras’s immediate challengers will be the bailout’s requirement that 150,000 members of the bloated and overpaid public service be dismissed. Despite the narrowness of his victory and inevitable fragility of the coalition he forms – most likely with PASOK, the socialists who bear much responsibility for the present mess ( Pasok, borrowed and spent recklessly many billions of euro’s whilst in government)– he must not back away from what NEEDS TO BE DONE.
The election’s consequence will be discussed at a meeting of eurozone leaders in Brussels on June 28 when German Chancellor Angela Merkel will be under pressure from French President Francois Hollande, buoyed by his big win in parliamentary elections, to soften her commitment to austerity. She needs to take into account the political mood in Europe. But there can be no going back on the basic requirement that countries such as Greece live within their means and bring about the market reforms needed to promote productivity.
It is to be seen whether the euro is viable long – term for nations such as Greece, Portugal and Ireland, which would benefit from power – valued currencies, but the reform path Greece must follow is clear.
IS GREECE DEPENDANT ON THE GERMAN TAXPAYERS?
So the world breathes a sigh of relief that Greece has elected a government committed to the bailout program. This means that European authorities will finance the restructure of Greek debt and keep Greece in the euro for now.
But that only buys time. If Greece is going to continue to access finance and, more importantly, pay the interest cost on its borrowing, it will have to make its real economy a whole lot more competitive.
Greeks have been paying themselves pensions and wages that they can’t afford. Tax collection is hopelessly corrupt and inefficient. And business is well below international competitiveness.
In the old days, when Greece got into this situation it would devalue its currency. As a result, the Greek people would reduce their standard of living against international standards and industry would become more competitive. But after it went into the euro,(when the corrupt Pasok goverment of Kostas Simitis lied to get the country into the euro zone currency) Greece lost the ability to use the currency to adjust its economy. What’s more, once inside the euro it found that lenders asked for lower interest rates since they thought there was now no currency risk on government bonds, and they assumed that if Greece got into trouble Europe would bail it out and look after the lenders. Which it has. So money became plentiful and cheap, and Greece borrowed more, up until the point that lenders began to lose confidence and turned off the tap.
Devaluation would be the fastest way foe Greece to restructure its economy. Without it the path to competitiveness is going to be a whole lot harder. The bailout package requires the government to cut pensions, reduce the number of public servants and get costs under control. This is known as the “austerity” option.
There are some who say there is an easier way. They say that there should be a program to stimulate growth and boost revenue, which might even involve more spending. This is known as the “growth” option. German Chancellor Angela Merkel is in the austerity camp and French President Francois Hollande wants the “growth” option.
In this debate only the Germans really count because they are the ones that are going to provide the money. They can afford to help because, unlike most of Europe, they practice austerity har work and “thrift”. And if German taxpayers are going to have to pay higher taxes, they think their European brothers and sisters should share some of the pain.
The proponents of austerity and growth have different temperaments and different time frames, too. A boost in spending might help in the short term, but in the longer term getting costs down and productivity up will be the only way to succeed. The question is whether the Greek voters will wait that long.
Short – term decision – making is how Greece got into this problem in the first place. All through the 1990s and 2000s Greece continued to run large budget deficits in the name of stimulation and expansion, and in particular irresponsible consumption expansion. They found it was always a good time to spend. They never seemed to think it was the right time to cut spending and get dept under control.
Which brings us to the present difficult situation!
CAN TODAYS GREEKS COME TOGETHER IN A SPIRIT OF NATIONAL SALVATION?
To solve all the problems and challenges ahead, so as to take the path of restoring economic prosperity, the politicians, the business people, the trade unions and all the people will have to come together, work together and make many sacrifices, so that at least the next generation will have jobs and a stable future!
If not TOTAL DESTRUCTION IS JUST AROUND THE CORNER!
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