Sunday, May 02, 2010

Greece Gets a Second Chance

When faced with the realization that you have been living beyond your means, and the gravy train has finally derailed, do you act like an adult or a spoiled child? Revolution from Greece's ruins as crisis deepens - Telegraph
The week was already going badly enough for mild-mannered Greek prime minister George Papandreou. After months of insisting that his country would be able to claw its own way out of decades of mismanagement and corruption, his belated SOS to the International Monetary Fund (IMF) ensured that Greece's world famous ruins are now financial, not archaeological.

But then things got worse.
Because instead of facing the hard choices and trying to make the best of a bad situation, the Greeks are throwing Molotov Cocktails. Well, the Communist Party is throwing them anyway. Most of Greece is trying to be an adult, but given what they are facing, probably not the easiest thing to do.

Actually, it seems there is to be a bailout - something I would have bet against.
Many take-home salaries will be effectively halved overnight by severely increased taxes, rising in some cases from less than 10 per cent to 38 per cent, and by the fact that those taxes will now have to be paid. Workers who had looked forward to a comfortable retirement in their mid-50s on up to 80 per cent of their final salaries now face the prospect of working on for more than another decade, for less at the end.
Greece must be the only country I know of that won't collect taxes even when people want to pay. (At 10 percent, I would be more than willing to pay.)
"To cut a long story short, the party is over for most Greeks", said Christos Alexopoulos, a 55-year old financial consultant who lives in the wealthy northern Athens suburb of Kifissia. "Even though I am considered to be in the upper middle class bracket and to live in a nice area, my income has dropped dramatically and we are living in real anxiety as to what the future holds. We have to think carefully now before going out to a restaurant or deciding to buy something. We have become very price sensitive and are looking for bargains, more value for money. At the lower end of the scale, what we will see is a much larger number of Greeks actually living beneath the poverty level."

National humiliation is sharpened by the fact that the chief architects of Greece's bailout, and thus of conditions attached that will shape the Mediterranean country's future way of life, are Germany and the IMF.
I still can't believe that Germany has signed up for this bailout. Even with these changes, I doubt Greece will suddenly have balanced budgets and no deficit spending so that they can pay the Germans back.

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