Greeks will be Greeks
Out of all the countries in Europe, the place that I like for summer holidays best is Greece. I went there last summer and I will be returning to sail in September.
It’s not that things work especially well in Greece. You can expect a strike or two. The lights will probably fail sometimes. There is quite a bit of rubbish about. There might be a minor earth quake. But I will take all that for the nature of the land and sea, the traditions and history and a cold glass of retsina occasionally. The Greek culture is a reflection of the nature and traditions of their country, and it’s definitely not German.
Country's economies in the end reflect their culture, so when the Greek economy is bound to the German economy by being part of the same currency, the strains will tell. Probably one symptom will be a growth of the black economy and quite possibly a partial replacement of currency with forms of barter. And it shows in the figures. German GDP is $44,000 approximately per person, and Greek GDP is about $32,500 per person, 73% of the German figure. No wonder the Greeks are having difficulty getting Government bonds away at interest rates of nearly 7%, while German bonds would be sold at under half this yield. Unemployment is expected to reach 10.4%, and it wouldn't surprise me if quite a few of these earn money on the black economy. And with the E.U. demands to reduce the budget deficit, it would be surprising if unemployment didn’t grow. Greek public debt stands at $419 bn. On a crude basis, if they had to re-finance that debt today, that would represent a bill of $2650 per man, woman and child per year, just to pay the interest!! And the budget deficit is growing. If they sought also to repay the debt over say 10 years, they would have to find nearly $4,000 per year per person, although the interest would reduce.
Whatever the E.U. mandarins in Brussels, the IMF or Mr Papandreou say about it, the culture won’t change even if Greece becomes a province of Germany. When the Turks tried to run Greece for a few hundred years they had a desperate time doing it, and the Greeks didn't change much.
Fortunately Angela Merkel is wise enough to know this and is reluctant to bail out Greece in return for German like controls on the Greek economy, that she knows wont work. Somehow the IMF and the E.U. Government have cobbled together a fix, but Greek bonds still pay twice the interest of German bonds. The package is bound to require Greeks to behave differently to the way that they have behaved while they built up this debt. If it doesn't, the debt will simply build up again. They are going to have to behave rather like Germans, and if they have to do that, they will be very unhappy. It might not be safe to go there. Far better to realise that Greece's financial position inside the Euro, is impossible. They will have to default on their debt and leave the Euro.
Then I can have a nice cheap Greek holiday, Greek cement will be cheap ( if the Cartels let it be), and the Greek economy will start to recover, as others like me are encouraged by the prices, to swap a bit of inconvenience for the vacation that only Greece can provide.
But the Greek experience is a proxy for the interface of cultures and economics across all of Europe and indeed the world. People will put up with economic controls for a period, but in the end they find a way of circumventing the controls unless the cultures of different countries merge, if they ever do. It certainly takes a long time. Despite nearly two centuries of union, the Walloons and the Dutch in Belgium nearly split apart last year. And look what happened in Yugoslavia.
People may be less well off, but they are certainly happier if they admit to being what they are. I have not heard of any gay people regretting 'coming out'. They almost always regret not doing so earlier. They can then openly behave in a way that is consistent with their nature, as long as behaving that way does not impinge on the freedoms of other people. Greece suffered great poverty as it gained independence from Turkey, but the people were happy to suffer the poverty for the freedom to be themselves.
So let Greeks have a long siesta, a good swim in the Aegean, indulge in their strikes, and smoke their heads off if they want to. It’s their business. But don't lets kid ourselves that they can be part of the same economy by sharing a currency with people with quite different cultures. It will break apart in the end. And when they return to the drachma, they will say, like the gay come outers: 'why didn’t we do this before'.
Tomorrow's thought will be: How does the Greek experience reflect on the U.K. economy.
