Wednesday, April 28, 2010

Greece Should Default

Opening note: Apologies to readers for which Greece's problems are not interesting; they are interesting to me, so I'm blogging about them.

It's strange to me, other than as a political game, that the EU/IMF would even be considering "bailing out" Greece. For starters, it's clear that the country has economic problems, the extent of which are probably not even acknowledged to-date, and which are largely due to their unfunded social support obligations and their largely socialist system (hm... remind you of anyone else?). That's a big problem, to be sure, and will need to be addressed if the country is to recover and become financial solvent. The second problem is that the "bailout" isn't really one, it's just some money to extend and pretend; it doesn't address the structural problems directly, and although the EU is negotiating to have austerity measures attached to any handouts, these are far from a sure-thing to be implemented or stuck to, or work even if they are (without fixing the fundamental problems).

However, there's still another, stronger, reason why it makes no sense whatsoever for the EU to be giving handouts to Greece, and that's the Greek people themselves. Far from accepting their condition and being ready to commit to making the necessary changes and sacrifices to restore their badly-hurting country to financial health, they are actively protesting the to-date reductions in their [very generous] salaries and government benefits. Their actions clearly demonstrate a sense of entitlement which is common in socialist systems, and a complete lack of appreciation or consideration for their precipitous financial state. Giving them money at this point would likely only encourage this sentiment, and strengthen a system which needs to fail, for the long-term benefit of not only Greece, but other countries with similar socialist systems, and those which are rapidly moving in that direction.

Until Greece is allowed to hit rock bottom, and its people are forced to endure enough of the reality which is the natural consequence of the system and leadership they have chosen, they will not be able to recover, restructure, learn from the hard lessons, and start fresh on a solid foundation. Psychologists and drug councilors have known this for decades, it's about time nations figured it out as well.


  1. I heard the story about protests a week or two ago on NPR. It is baffling b/c they're not cutting the salaries arbitrarily: they don't have the money. What do the protesters want Greece to do?

  2. That's easy: they want the same thing in Greece that the people in the US want: public services and promised government payouts regardless of the deficit implications. They, like the majority of people in the US, don't comprehend or care about how the government funds its operations, they just want the payouts to continue, and are operating under the premise that nations simply don't ever "run out of money", cause they can always borrow more. It's not hard to see how people can develop that mindset, either; ask anyone in California if the state will eventually run out of money without substantially changing their fiscal policies, and you'll get the same answer: "it'll never happen, they'll just borrow more or get a bailout." I've heard the exact same sentiment, literally, with respect to Greece, California, and the US.

    Greece will eventually be a shining example of what happens when sovereign entities fail, whether it's now or within the next few years. At that time, hopefully, it will be contained, and other people will not have invested so heavily in the failed system that they too fail. Also, it will hopefully serve as another large and prominent reminder that socialism, as an economic system, doesn't work, and help dissuade people from the empty promises of that governmental path. Finally, and perhaps most importantly, it just might cast some doubt in the minds of the people who cannot currently fathom how unchecked spending and ignorance of fiscal consequence can, in fact, lead to literally running out of money.