Prolonging The Agony

Before I continue with the “Infidelity Series”, let me just say some words about the ongoing Greek tragedy.

For those not in the know, Greece is currently on dire straits for one simple reason: the Greek government and its people have been spending beyond their means since ditching drachma for the euro as its currency in 2002. Joining euroland enabled Greece to easily borrow money, which triggered a cascade of spending spree by the government (one concrete example was the humongous expense incurred in preparation for and during the Athens 2004 olympics). The already bloated state bureaucracy further ballooned into ridiculous proportions. Redundant and completely unnecessary government functions and offices were created. There is reportedly a committee established to admininister a dead lake. And sub-committees to such committees were also formed. To make matters worse, the wages of state employees were also increased. The Greek government coffers simply became the milking cow of politicians wanting to appease the electorate to keep their corrupt asses in office. Meanwhile, anecdotes from within Greece and Greek expats abroad reveal about the gross corruption in the citizen level. People not reporting dead relatives so that they can continue receiving the deceased pension money were not uncommon.

Worse came to worst when the country was hit by the economic downturn. In addition to widespread tax evasion, government money dwindled further, as the socialist welfare state had to provide for the hundreds of thousands of unemployed Greeks. The flow of money in the government coffer was now uni-directional, akin to a water tank with holes that get bigger and bigger. By the first quarter of 2010, the “water tank” completely dried out and there was not a euro cent left to sustain government expenses. The Greek government therefore had to be bailed out by EU and IMF to the sum of a whopping 110 billion euro.

EU and IMF agreed then to fill up Greece’s water tank with the condition that the Greek government shall patch/cover all those holes or at least decrease the size of the outflow pipe draining the tank. That means reducing public spending and saving up through a number of bitter measures directly affecting the common man.  However, apparently the holes were not sufficiently patched. It was also revealed that there have been gross mis-reporting of government finance status for a long time.

The first bail out was just roughly a year ago. Much of that money went to paying previous debts. Today Greece is again on a brink of financial bankruptcy. Thus the second appeal for new bail out money from EU and IMF. Again with more stringent conditions and demands. More cuts in public spending, more tax, lower pension, increase pension age, and other measures affecting the common man on the street.

It might sound very harsh but from where I see it, let Greece go bankrupt. This constant bailing out is just prolonging the agony of the Greeks. Most of the bail out money will anyway just be used to paying previous debts. Indeed there will be a domino effect on other weak economies in the euroland, but this is in fact what you would expect when governments and its people are spending money they do not have.

The water tank has dried out and the pool party is over. Welcome to years of misery in murky waters.