Greece is continuing its struggle against debt that is threatening the entire eurozone economy. U.S. and European stocks fell Thursday amid concern that Greece will not be able to meet its budget deficit targets. There is also worry over whether Greece’s debt crisis will spread to other European countries with debt problems of their own.
In response to Europe’s economic woes, protests have erupted in Greece and spread across the continent.
The Economist blog, Charlemagne’s notebook, writes about the protests spreading across Europe, and notes that these strikes have been made up of people of privilege and not solely the underclass.
In Greece, the strikers have included customs officers and tax collectors: workers who not only enjoy special tax free allowances and early retirement on big pensions, but also include in their ranks some of the most notoriously corrupt officials in Greece, known for their willingness to take bribes in order to allow the wealthy to avoid paying their taxes (a big reason why Greece is broke). The public sector workers were striking, among other things, against plans to increase their retirement age from 61 to 63 (when many European countries are talking about raising it from 65 to 67). Greek taxi drivers are due to strike against plans to open their closed profession. It is symptomatic of the unhealthy power of the trade unions that the Greek deputy prime minister, Theodoros Pangalos, was forced to “clarify” what he meant when he said that in the future civil servants could not expect a job for life.
I really don’t think this was our only alternative. What made it the only alternative was the incredible inadequacy of our civilian leadership. Two parties swapping power, headed by two blatantly inadequate princely heirs, burdened by an incredible gang of graft “ideologues”. An entire army of bootlickers, mediocrities and common crooks. With the capable and selfless having been exiled from politics decades ago, because there simply isn’t any room for them.
The wretched vultures of power weren’t and aren’t capable of plotting and executing policies to steer the country out of the crisis without turning it into shambles. Fearful, incompetent, and finally shameless, they will do what the “outsiders” dictate.
Foreign Policy Blogs writer Elison Elliott discusses the impact that a Greek default would have on the 16-nation eurozone.
The paucity of detail underlines how delicate a matter aid to Greece is. The euro zone is built around the idea that each nation manages its own fiscal affairs, subject to monitoring by the EU’s executive arm. A bailout of Greece would imply that a badly behaving nation—Greece for years violated rules against overspending—can be saved from the consequences.
Neither are the saviors happy. Germany, which as the bloc’s biggest and most stable economy would have to take the brunt of any bailout, has been wary. Helping its profligate peer is unpopular in thrifty Germany. But letting Greece default has risks, too—mostly for the stability of the euro—and EU leaders are deeply reluctant to let the International Monetary Fund extend help. Many in Brussels believe that would be an embarrassing sign of weakness.
Social Europe Journal contributor, Steven Hill, however, has a surprisingly optimistic analysis.
With some $25 billion worth of loan payments coming due for which Greece will need to refinance, the bond markets became skittish that a Greek default may lead to a wave of other national defaults in Portugal and Spain, and drag down the euro itself (much like Lehman Brothers initiated the global financial industry’s collapse).
But that seems unlikely. Greece’s economy comprises only 2% of the overall European economy – about the same magnitude as Indiana’s in the United States. Greece’s deficit to GDP ratio, while high at about 12.5%, is not that much higher than that of both the US and Japan, around 10.5%. True, Greece has a sizable accumulated debt over many years, estimated at about 110 percent of its GDP, but even the US has a debt to GDP estimated at 94 percent and projected to break 100 percent by 2012.