By the time you read this, the parties to the latest, last minute talks in Brussels may very well have reached an ‘agreed’ settlement for Greece. It would be great if it amounted to:
* Writing off c€200 billion worth of Greece’s unpayable c€330 billion debt or cutting the interest rate on that debt to zero and pushing out any remaining capital repayments to at least the next century.
* Creating a radical post-World War 2 type Marshall Plan for Greece that gives them capital to expand tourism, shipping and agriculture (stuff they already do) and help build new industry.
* Helping Greece (as part of Marshall Plan 2) to build a better public administration system and judiciary; create a simple, effective, sustainable tax code and method of collection; reformed, sustainable social welfare services and to improve education and health services.
Since none of this was on the last minute agenda, it seems unlikely that a settlement has/will include any of the above.
You know better than I, reader, what the outcome has been. I filed this article before the talks ended but I’m going to guess that
the Troika stick to their course so far and put the Euro before Greece and force its government to concede most/all of the reforms they said they’d never accept.
Act 2, or is it 3, is over but it will resume some time in the future, probably where it left off.
The only reason we didn’t have a similar post-crash experience to the Greeks is because, for all of our past political failings, corruption, cronyism…our politicians and civil servants were never, ever as bad as they were in Greece. We’ve also had better judicial, administrative and education systems. It helped that we were vassals of the British, not the Ottomans.
Most Irish people tend to pay their taxes and tax collection is extremely efficient now.
Our black economy was never as widespread as their black economy and even today it doesn’t tend to spill over into the PAYE system, though PAYE, VAT and excise are the only taxes consistently collected in Greece.
They may be chronically wasteful and unaccountable, but even our socialist model state-run institutions (i.e. the health service, the transport system, utilities) have not been as badly run as their socialist, state-run institutions, and we’ve already successfully privatised some of them.
Nevertheless, we too were badly burned by the access to cheap credit that came with Eurozone membership in the 2000s.
We didn’t handle it much better than the Greeks and are now also paying the price – the loss of parliamentary sovereignty over our own finances.
That decision means that at least one more, maybe two generations of Irish people will be indebted to our EU “partners”, even if we are now (due to sucking up the pain) free(sic) again to increase our €215bn national debt (it was only €50bn in 2007) by borrowing money outside the Troika.
Whatever degree of sacrifices, privations (loss of income, savings, jobs, wealth) most Irish people have experienced, it has been nothing compared to what most Greeks have experienced.
The combination of centuries of terrible politics and then colluding with the misspending, waste and corruption by turning a collective blind-eye, has been their ruination.
Desperately electing a government (Syriza) of radical left socialist academics, economists and activists, who, albeit didn’t contribute to the previous political rot but have no experience of running any kind state or private businesses or institutions, hasn’t proved to be a very good choice either. Not that the Greeks had been left with much political choice, but to their great credit, they rejected the extreme nationalist party Golden Dawn.
The lesson I’m taking away from this Greek drama is that bad choices – decades of bad choices – come with bad outcomes. To paraphrase one of my favourite economic commentators, Bill Bonner, “the correction is always equal and opposite to the deception that preceded it.”
We all need to prepare for a long period of correction and recovery in our own country. It won’t be as long or hard as it will be in Greece, but recovery will also be helped or hindered by the political, social and financial decisions that are made going forward.
Whatever about the politicians and central bankers, given recent past experiences, I expect most Irish people will do the right thing and avoid unnecessary debt. They’ll try to live within their means, to save and invest and seek professional, impartial financial advice.
And be generous. If you can afford a holiday next year…take it in Greece.