Friday, September 30, 2011

Greek economy: ease up on the blame, the prospects are not all that bad

What have the Greeks ever done for us ? I mean apart from philosophy, democracy, humanism, mathematics, geometry, literature music and culture? Not to mention Greek hospitality, seafood, bazouki, dancing, retsina, sunset, song, laughter, dancing, friendship and warmth.

Greece is in a serious economic mess, for a variety of reasons.
But all is not lost, and for the above reasons we should be happy to help them out.

Here are a few relevant facts:

It is true that the previous Greek Government indulged in shifty accounting, and that the Greeks avoided taxation, a practice that many libertarians (yes, I'm looking at you, @OldHolborn  and @Guido_Fawkes) would approve of.

However, there are other items in the equation, not least the fact that accession to the EU caused large capital inflows which were suddenly halted. So it is not just the fault of government profligacy in Greece, Portugal, Spain and Ireland, there is an EU aspect too.

German taxpayers are understandably unhappy at bailing out the care-free Greeks. However, there is a moral obligation at work here, as there is a claim that Germany has not paid war reparations to Greece.

Greece, like the rest of us, needs to staunch the flow of wealth from the national economy by taxing the rich, and closing down tax havens and loopholes on a global basis.

The hysteria about unsustainable debt is unwarranted, given that money is created through debt, so as money supply increases, so also debt must increase.

The credit rating agencies which are sitting in judgment on sovereign debt, missed the signs of the 2009 credit crunch, and one of them, Standard & Poor, is under investigation by the US financial authorities for insider trading during the US downgrade.

Finally, and most contentiously, Greece has modest reserves of oil, and undersea exploration is underway. It must be significant, because Turkey is making growling noises over exploration near Cyprus.

Clearly, from a rational point of view, all oil deposits should be left in the ground, but given that politics and economics is not yet rational, the prospects for the Greek economy are not that bad.

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