Greece, I'm here and feeling for them

What can I say? I am in Greece for a 6 week vacation. I am in Crete, a proud but rather poor island. Dependant almost entirely on summer tourism.


Rethimnon Old Harbour

On the TV there are pictures and pictures of violent riots in Athens, with people attacking the police while the politicians continue to debate the EU bail out deal in the parliament behind them.

But what are the issues I am hearing here?

First they realise they have been sold down the river by corrupt politicians for many years, which resulted in accepting massive loans from banks, and inflows of capital grants from the EU, mostly spent on quite unnecessary projects just to let local businesses cream off profits. You can see the half finished public works everywhere…roads going nowhere, marinas with no services…

Many Greeks believe this corruption continues among politicians, they believe they have not yet accepted that it is all over.

Second they object to being treated in the way they are, for two reasons. The crisis grew over 10-20 years, the EU knew about it for sure, but they continued to pour money in. Next there is no recognition of the very great differences in culture and economic approach between Germany, who is driving the bail out actions, and the Greeks. Most Greeks are honest, they work hard, they just want to lead their lives.

So what do I see as the solution?

If the EU wanted Greece inside the euro then it must accept the consequences, not just let Greece get into trouble then drive impossible solutions. If the euro is a common currency, there has to be common share of ups and downs. But there clearly has not been. Even France knows this as their balance of payments is (€39bn) while Germany's is €98bn! Imagine how much worse it is for Greece. The German economy is driven by exporting, sure they are good at making things, but their domestic consumption is restrained in favour of dominating other counties with their exports. They have to accept a better balance.

So the solution is more equity.

And second it is not a short term shock that Greece needs, it is long term cooperation. The euro group has to make special arrangements to control the financial markets (not the other way round) so that over 20 years Greece and all the others can harmonise.


And lastly I must mention the banks, the real cause of the problem, can anyone tell me why the banks loaned so much money to Greece? I know that they misjudged the ability to get their money back, thinking that Greece was in the euro and giving interest rates the same as Germany… but they should have known better! So now they too have to give back, and accept the 70% hair-cut that is under negotiation. A poor, foolish investment is a poor, foolish investment, and that is what they have made, no matter how they try to dress it up...