Greece has given us democracy, western philosophy, mathematics, and wonderful works of art, but the modern day nation has lost its economic footing, political fortitude which appears to be sending their society into a tailspin that may take years to recover.
Greece’s economic turmoil is certainly a complicated one that many top European economists are battling. The collateral damage has been extensive and Greece’s Prime Minister George Papandreou’s government is on the verge of collapsing as once again the country is about to send the weakened Euro zone economy tumbling in financial ruin.
Greece stepping closer to default and financial disaster
As you might imagine, getting anything done – even in an emergency – requires local agreement. Greece’s parliament rejected the bailout that European leaders agreed to back in Brussels. The rejection of the bailout plan means that every day Greece is stepping closer to default on all its debt and an ejection from the Euro zone.
The plan was suppose to infuse another $11 billion immediate loan to Greece, which the country needed to avoid defaulting on its debt. It is certainly worth mentioning that Greece’s neighbor to the West, Italy, is closely watching as its much bigger economy and even bigger debt is causing political and financial chaos of its own.
Papandreou has called for a national referendum to approve the package which would then be used to pay off some of its loans to the big three known as troika – The International Monetary Fund, European Union, and the European Central Bank. But politics are getting pretty nasty and jockeying for position while the degree of the problem escalates could send all the squabbling parties down to financial collapse without actually getting anything done.
Where is Zeus when you need him?
Establishing order is certainly a key to the solution, but since the government is fracturing and picking sides, it might be too little, too late. “They were asking for a coalition government or cabinet reshuffle or some sort of cooperation that would bring broader consensus, not a referendum that would put the country in danger of blowing everything up,” Ilias Nicolacopoulos, a professor and political pollster had told the NY Times earlier this week.
Aside from the much needed changes, Greece has some definite problems of its own that it needs to settle. Their ability to collect taxes is pretty dismal. While this might be good news for some, those that actually are paying taxes are assuming much of the burden causing large scale inequity in the country.
The resentment among the Greek people is very widespread. While they support the bailout because of the impending damage, they feel like a less sovereign nation, unable to control its own destiny. Many have voiced that they feel like their government has lost all control.
If Greece is expelled from the Euro Zone
Of course, there are a lot of doomsdayers on both sides of the debate. If Greece defaults and gets expelled from the Euro zone, the government will immediately become bankrupt and 30% freefall in domestic demand with about a 10 percent drop in GDP – if true, it could take years to recover.