👉Greece Economic Report -- Did The Euro Destroy The Greek Economy ?

Greece should never have adopted the Euro. The ability to devalue its currency to dig itself out of economic trouble is a tool it no longer has. Another aspect of Greece’s problems is there is a culture of paying tax is seen as optional. Tax rates are now so high that many businesses have to avoid paying the tax to remain in business. Example: most restaurants only accept cash payments - doesn’t have to go through the books, so the tax they cannot afford to pay can be avoided. The EU did not proactively ruin Greece’s economy, Greece was just not compatible with the Euro - lacks the required government culture and economy - although general EU membership might not have been a problem. Greece never had any large economy to start with. It was always a country in perpetual debt. It has its own small industries, textiles, food, and always tourism. It also has certain valuable minerals, petro, and endless solar and thermo, from its many volcanoes, possible energy. It had good potential to develop its own industry. EU was a sudden hallucination that they had become an advanced country overnight. EU encouraged that pseudo-euphoria by loaning Greece billions of euros for four decades, without any demand for accountability. Then the EU regulations were put in effect, and Greece had to import lemons or red mullets fish. The hundreds of thousands of small industries had to close. And hundreds of thousands of Greeks were instead looking after European subsidies to finance programs, which were supposed to be supervised by EU, but never were. Which actually never happened, and the recipients of that money used it in building homes with pools. The enormous amount of money dumped on Greece contributed to the creation of enormous corruption in an already corrupt country. The national economy of Greece was destroyed, first of all, by its lack of competitiveness, just like all the other South European Economies. There was a double hit delivered in the ‘90s. One was a globalization that lowered duties to the point that it was much more profitable to import from China than produce, and the second was the introduction of the Euro that took away the possibility to devalue the currency to stay competitive. Greece was not alone. Italy, Spain, Portugal and several manufacturing areas in Central and Northern Europe have been similarly hit. Welcome to The Atlantis Report. After the devastation of WWII and the subsequent Civil War, where GDP collapsed and Greeks emigrated in droves, the Greek miracle happened as the GDP grew by almost 10% per annum, second only to Japan. From 1950 until the 2008 economic crisis, with the exception of the relative economic stagnation of the 1980s, Greece consistently outperformed most European nations in terms of annual economic growth. Growth initially widened the economic gap between rich and poor, intensifying political divisions, which were exacerbated by the post Civil War political clamp down and its severe repression. The post-military dictatorship period after 1974, brought political normality and the left’s inclusion in decision making. Entered charismatic orator Andreas Papandreou. His successive premierships saw the arrival of statism and wholesale clientelism where GDP growth and demographics declined. Nationalizations of key industries literally buried that sector while public sector hirings and inflation soared. Public debt, which had mainly concentrated on industrial and infrastructure investment, became vital to sustaining an economy that was becoming consumer and service-oriented. Greece was basically de-industrialized during that period. The EEC and later the EU kept pumping significant amounts of subsidies into the Greek economy, which amounted to a total some 110 Billion Euro today. At times these subsidies reached almost 3,5% of GDP. Unfortunately, most of this generous funding was, in general, misused apart some exceptions, such as the agro-alimentary industries of Crete and the fish farming sector. Typical of poor planning and kickbacks, the latest three motorways cost 1.2 billion euros more than it should. Furthermore, the projects were poorly planned and significantly delayed. A report by the European Court of Auditors on public-private partnerships (PPPs) has found. In total, the cost of the three road projects increased by up to 69 percent, while their objective was reduced by 55 percent. While a significant amount of the budget is earmarked for social protection, the administrative costs for managing welfare distribution swallows most of the expenditure. So did the EU ruin the Greek economy? It is doubtful. Under the disastrous economic policies of Andreas Papandreou alone and without EEC/EU funding, the Greek economy would have collapsed much earlier. Likewise, keeping their Drachma, Greeks would have used the Euro currency for all important transactions, like they did use Pound Sterling, USD, and DMark from 1950 to 2000. So why did economically wobbly and politically immature Greece became part of the EEC, the EU, and the Eurozone? Political reasons mainly as both Kostantinos Karamanlis and Andreas Papandreou were best friends with the European political elite; historical; cultural; and sentimental reasons as a European structure would be unthinkable without Greece. Finally, economics was the last worry, as Greece’s GDP corresponded at under 1% of Eurozone’s. The EU has enforced a 25 percent contraction in the size of the Greek economy during the last eight years (more severe than the great American depression of the 1930s), and its fiscal punishments have caused youth unemployment to reach a staggering 44 percent. Greece is not only seemingly ‘collateral damage’ within the EuroZone, but politically it has also proved to be highly useful collateral damage, to encourage the others within the EU as well . To all intents and purposes, Greece is no longer an independent, sovereign state, now merely a vassal of the EU. The EU itself estimates that one in three Greeks currently lives ‘in a situation at risk of poverty or social exclusion. And it is estimated that around 80% of its €290bn rescue package after eight years has actually gone to service its debt, i.e., European banks, mainly German and French; thereby mostly bypassing the Greek state. Remember, in order to have an irresponsible borrower; you must first have an irresponsible lender. Even the IMF, that banking bastion of neoliberalism, and as part of the EU Troïka imposing these crippling debt conditions on Greece has attempted to distance itself from them. And now severely questions this prevailing wisdom. In order to receive the dreaded Troika’s financial bailout, Greece has been forced to undergo a massive transfer of public assets to private interests, with 14 major regional airports sold to Germany’s Fraport, the Port of Piraeus, one of the largest ports in Europe sold to China’s Cosco, the Port of Thessaloniki sold to a German consortium, and privatization funds created, under Germany’s direction, for water utility transfers into private hands. In short, the EU is a de facto vehicle of a Franco-German 'political’ hegemony. More precisely the single currency itself is the main vehicle of German economic hegemony and has been the monetary means by which it has not only been able to beggar many of its neighbors, arguably even France ; but also allowed it. A global industrial powerhouse, unrivaled within the EuroZone, to keep its manufactured exports so consistently competitive. The downsides and benefits of this are very much open to interpretation and are arguably a moveable feast, particularly when seen in the context of the relatively limited lifetime of the Euro, but certainly in the past, in political terms, the populations of some of these relatively young, fragile, European democracies, and in some cases not always pleasant erstwhile military dictatorships, maybe understandably would still far rather put their trust in the politicians and technocrats of 'Europe’ than their very own supposedly democratically accountable ones, perhaps coming to see them as a further check and balance on their own not always entirely trustworthy political elites. In economic terms, I would presume that a similar mindset also applied with these populations long used to (and tired of) wild currency fluctuations, periodic damaging devaluations and constant inflation eroding the value of precious savings and increasing the cost of day to day living. The ECB's stated principle aim is price stability at any cost after all. Who then in their right mind wouldn't far rather subscribe to the idea of a fine, upstanding, conscientious, thrifty northern European banker being in control of the European purse strings than an indolent, profligate, venal Club Med one...I know, I know Draghi blah blah, but remember, he's passed THE crucial major central banker test, i.e., he worked at Goldman Sachs, the bank which played an ‘interesting’ highly profitable role in massaging Greek debt. And it's worth remembering that the Euro effectively came into general use on 1st January 2002 which also happened to coincide with the end of the dotcom crash. FED Chairman Greenspan's consistently low (and as it turned out catastrophically reckless) interest policy and an accompanying massive global credit expansion ending in the inevitable Great Financial Crash toward the end of 2008. So once the punchbowl was taken away, and the party was over the answer, for a good many of these countries, once previously with their own currencies, is debt. Heaps more of it than they had before, in fact. Interest bearing, cross-generational, politically useful, and in some cases, particularly Greece’s, unsustainable debt. Debt that crucially can no longer be addressed by tinkering with interest rates or defaulted on without potentially devastating political and economic consequences or inflated away by creating more currency because these countries political and financial elites have not only long since surrendered their means to do so. Most of them have long since buggered off, no doubt for a life largely insulated from the consequences of their own prior political and economic expediency. Since around 2008 Portugal is now sitting on twice as much debt in relation to its GDP before its adoption of the Euro . And Greece saw its ratio rise from around 100% to a proportionally more 'modest’ 180%, from a historical low of around 22% in 1980, all whilst under the ‘risible’ drachma incidentally. Just by way of a contrast, EEA/EFTA member Iceland, a country that probably flew even closer to the sun than any of the EuroZone Icaruses during the boom, but still remained and remains resolutely outside the EuroZone.Wisely choosing to maintain its own currency and seemingly a respectable distance from the EU itself . Regrettably, the Greeks did it all by themselves. They were carried along, like most EU nations, on a tidal wave of optimism during the economic bubble in the ‘noughties’ and over-borrowed cheap money lent by the greedy (mostly German) banks. The crash came in 2005, and austerity followed. It had been agreed at Maastricht in 1992 that to join the currency union, no country should have a budget deficit of greater than 3% of GDP, and borrowing of no greater than 60% of GDP. Greece, like some others, did not respect that rule, although they were the worst offenders. They concealed their weak economic condition even before joining the Euro. They wiped out their hopelessly over-staffed and inefficient railways’ debts by issuing shares that the government bought, thus treating the transaction as expenditure rather than borrowing. It did not appear on the budget borrowing statement. That and other deceptions under-stated the Greek Budget deficit by about 7% of GDP. The budget said the deficit was 1.5%. The real shortfall was 8.3%. When a new Government was elected in 2004, its Budget Minister discovered the deception but was warned off reacting to it because the Olympics were due to be held that year, and austerity measures would have caused rampant strikes. The actual cause of Greece’s problems was its refusal to face up to its economic instability and out-of-control public spending. Of course, its options would have been few, particularly budget austerity and widespread unemployment and poverty. But it was seduced by the boom years to think it could borrow its way out of its crisis. In that, it was not alone. A contributory factor to Greece’s problems was the EU’s big mistake of creating a Eurozone currency in the image of Teutonic pragmatic economic management principles. It was that titanic mistake that frightened off the UK, for instance. It was unrealistic to expect other nations to follow the German principles of frugality and financial discipline (borrowing no more than 60% of GDP). In fact, the Euro system was so hopelessly poorly designed that even Germany cheated on it, over-borrowing to the extent of 181% by 2010. Why did Germany over-borrow? It was fuelling its economic boom, selling goods successfully to everyone else, and earning profits and currency, which was lent back to the other borrowers. That proved that the German economic model (i.e., Maastricht) does not work, because, in times of healthy economic growth, it puts a brake on investment and depresses an economy. In a nutshell, borrowing to invest is vital to healthy growth. It also explains why the Eurozone is under-performing now. Germany forced austerity on all the weak Eurozone economies after the 2005 bust. Not because it wanted to encourage Spain, Italy, Ireland, and Greece, to repair their economies; but to protect its banks which had grown fat on unwise lending and faced collapse and ruin if countries were allowed to renege on their debts. Other nations’ future prospects were sacrificed on the bonfire of homage to German banks. So, ultimately, Greece was its own worst enemy. It cheated throughout and has had to suffer the consequences. But the EU was also largely the culprit . The Franco-German power axis created an economic model that is hopelessly austere and monochrome. The UK was right all along about that, but has been pilloried almost since its accession to the EU as being a ‘bad European.’ This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.











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