The Greek Mystique

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I’m not an economist. I may have gotten my figures wrong. I may have gotten my economic history wrong. But it seems to me that Greece, population 11 million, has defaulted on about $100 billion worth of emergency loans that were made to cover its inability to pay off even larger loans. It also seems to me that the money that was loaned went to sustain a pension system that enabled people — almost half of them government employees — to retire at an absurdly early age, and at a still more absurd age if they worked at hundreds of “hazardous” occupations, such as beautician and radio announcer. And it now appears that while taking emergency loans to enable it to get through a “tough” period of “austerity” mandated by its fiendish creditors, Greece actually added 70,000 workers to the government payroll.

In response to the awful suffering imposed on them from beyond, Greeks went to the polls on Sunday and passed a referendum encouraging their government to demand yet more money from their creditors, with the stipulation that Greeks themselves would do nothing “further” to economize. The referendum won by a landslide. The human pebbles who slid down the electoral hill apparently believed that the people who loaned them money were exploiting them by expecting them to honor some part of their agreements.

The Greek government will now demand that a large portion of its debt be “written down”; in other words, that Greece be licensed simply to keep the money it was loaned and now refuses to pay back. In support of this idealistic notion, many of the pebbles took to the streets, indignantly proclaiming that “Greeks are not beggars!” They are right; there are other words for what they are — or, more properly, for how they’re acting. It’s a fine illustration of the way in which normal, decent people turn into ne’er-do-wells and conmen at the polls. The first victims of the conmen are themselves. They convince themselves that they are acting decently — indeed, that they are impelled by a righteous cause.

hile taking emergency loans to enable it to get through a “tough” period of “austerity” mandated by its fiendish creditors, Greece actually added 70,000 workers to the government payroll.

We’ll see whether Greece will continue to find European financial agencies that are silly enough to provide more money, on the Greeks’ own terms. Maybe it will. In Europe, there are two suckers born every minute.

Others besides me have commented on these matters, and I’ve read a lot of their comments. But so far I haven’t encountered a certain kind of comment. It seems to me an obvious one to make, but it isn’t being made. So I’ll make it.

When we talk about “European” loans to “Greece,” we must remember that we are talking about money that governments and government-sponsored banks have arranged to cover the debts of Greek official institutions. No private individual would make loans like this, unless he was figuring on some government covering his ass. In Greece itself, no private individual would do that.It’s like the California “bullet train”: it’s supposed to be a wonderful investment, but somehow, not a penny of private money has ever been invested in it.

If there is a better argument against centralized economic decisions, I can’t think of one. Here we have enormously ridiculous, enormously expensive losses, engendered by a class of government-sponsored experts who thought they knew better than every other individual on the planet. And by the way, these experts were working with other people’s money, with money that is taken, not requested. That kind of money is always easy to spend. And here is the financial system that is supposed to give the world security.

No private individual would make loans like this, unless he was figuring on some government covering his ass.

The Greeks aren’t the only people who think that “investment” means extracting money from productive individuals and giving it to the government to spend on projects that can’t possibly turn a profit. That’s the modern system of political economy. As for the ability of the United States, or the now-sainted China, to stimulate its economy by increasing its debts, the comment of Ray Gaines in Monday’s Wall Street Journal says it all: the system is not working. Meanwhile, the culture of entitlement that is inseparably linked to borrowing without repaying spreads inexorably from the seminar room to the legislative chamber to the chamber of commerce and the welfare mob. Too confused to argue, it asserts its positions; too proud to beg, it demands.




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Comments

Visitor

I share your pessimism about the Greek resolve to address any of their overwhelming budgetary concerns. No pension cuts are likely to be negotiated, and no spending cut.

However, the Greek populace was fully correct in voting "No" on the referendum and rejecting the patronizing control of the EU over its own economy. As with the US banks, any bailout that is negotiated will go directly to the bankers and speculators who made incredibly stupid bets on the EU's ability to continue drawing blood from a turnip.

For more and better analysis (from a largely Austrian perspective, no less) than I can possibly offer in this space, I urge readers to check out the coverage of Mish Shedlock at his blog, for instance: http://globaleconomicanalysis.blogspot.com/2015/07/overwhelming-no-vote-way-forward.html

Jacques Delacroix

Very good essay, well put. The world needs more clear talk like this. See the comment on this very essay by "Visitor" : ..."rejecting the patronizing control of the EU...."

I don't see why the EU shouldn't be patronizing. If it were more patronizing, it might inspire more Greeks to man up and understand the obvious, that they have put themselves where they are. After all, the Eu (and the IMF) did not go to Greece hat in hand begging the Greeks to accept loan after loan. More patronizing would do no conceivable harm and it might do some good.

My judgment would not be nearly so harsh and my indignation would be flatter if Greece were not a democracy. Unfortunately, it's the real thing where government after government strives to implement whatever it perceives to be the popular will.

David

Visitor states in entering an objection to an article correct in every particular that "The Greek populace was fully correct in voting 'No' on the referendum and rejecting the patronizing control of the EU over its own economy." Well, that all depends on the motives and what it is they're objecting to in the "patronizing control." Is the motive of at least many of the No-sayers the desire to keep getting something for nothing, as seems very likely? If then, how can they be "fully correct" in that vote? A vote in itself doesn't tell you the reasons for the vote. We can get some idea of the ideas of the Greeks by listening to what they say. They differ, of course, just as we do. Many but not all Americans are handout-demanders; many but not all Greeks are handout-demanders.

Johnimo

Excellent editorial! If Richard Milhous was still around, I'm sure he'd say, "Now, we're all Greeks." This time, save precious few, he'd be right.

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