The tragedy of the Greek Crisis: Economic paralysis and social unrest amid fears of implosion

2011-10-20

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Greece is practically bankrupt since May 2010 when it lost market access and came to the need of a bailout co-financed by the EU and the IMF, that has technically postponed the inevitable default ever since. For months now the Greek government which no longer serves as a sovereign authority that represents the Greek people, but as a mere group of filling clerks completely subjugated to the dictates coming from the troika’s officials (EU-IMF-ECB), has been implementing draconian austerity measures that have put the Greek people on the edge, have raised unemployment close to 20% (around a million people) and have led to a very deep recession in the economy. The so-called fiscal consolidation policies have only succeeded in obliterating the Greek middle and lower classes. The continuing injection of the same poisonous austerity drug in conjunction with rising inflation and falling aggregate demand has slashed into pieces the productive forces of the Greek economy and has effectively guaranteed that not even supply-led growth will be possible in the short-to-medium term.

The Greek economy remains stagnant for many months now. One tax is incremented on top of the other every few weeks. The rising costs of taxation combined with continuous work strikes in important sectors of the economy, the reluctance of private banks to supply liquidity (if and wherever possible), plus the increasing fears of the state defaulting on its debt obligations have all played their part in bringing down whatever barriers to bankruptcy might have existed before. Meanwhile the society is forced to endure the excruciating pain of the shock therapy treatment that is being implemented by the troika and its assignees. The people’s reaction to the harsh austerity has been decisive and incessant. Currently there is an ongoing general 48-hour strike that started on October 19. The continuing demands for tightening the belts have only been producing adverse effects since neither the economy can readjust to the ongoing reforms and “reforms”, nor the society can survive the transition. The market is totally paralyzed and the society is falling into chaos and anarchy. An implosion with unpredictably destructive consequences is quite possible.

It is true that Greece was badly regulated, highly corrupted and very ineffective. The politicians, the citizens can – and must – be blamed for all the malignancies of their economy-society-state that have made the internalization of the systemic crisis of the euro so severe. However the mere acceptance of the truth is fundamentally different from accepting and resorting to the sort of self-defeating front-loaded austerity that does not take into account human costs. The sort of measures that are being implemented in Greece go far beyond the scope of making reforms and addressing structural rigidities. They are a cruel form of punishment rather than a treatment that would above all guarantee the survival of the Greek ‘patient’.

Greece must change and the Greek people must understand that ongoing strikes that ask for money, as if the state is a big cornucopia, a big source of wealth that remains to be exploited, only lead to a dead-end. All that continuous strikes achieve is to worsen the position of the country, both because the economy loses a considerable amount of income and because European partners see no reason to keep supporting Greece, since they witness their money being wasted. As a sentimental agent I fully understand the Greek people, I myself am experiencing the effects of this economic agony, yet as a rational agent I know that default and exit from the euro and the EU will literally destroy the country and will bring its people in front of a far greater nightmare. This should not imply however that the troika should ask for just about anything by exploiting the ghost of bankruptcy. They too must understand that many of their demands go against any economic reasoning. The troika or any other should not abuse its power to make an example of Greece, of how it is to disobey the rules. Now the troika is going too far and thus is partially responsible for the situation in the Greek interior.

What I wish to say to my fellow Greeks and to my fellow Europeans is that there is no point to search for scapegoats now. These hours require unity and solidarity. It will be disastrous for the Greeks to put all the blame of their misfortunes on the “cruel” Germans and ignore their own responsibilities, just as it is foolish for the Germans to blame the “lazy” Greeks for causing the crisis as if the euro architecture was stable and Europe’s private banks were healthy. Moreover it is objectionable to use Greece as a means to achieve political ends. In Europe we are facing a crisis of the euro, a systemic crisis that will only be solved with system-wide measures (see Full Analysis of the Euro Crisis). If the upcoming EU summit on October 23 does not provide such measures and if those who hold the fates of Europe do not realize the severity of the moments and the weight of their decisions then I am afraid of the worst…