I am not Greek, if I had been born in the Mediterranean paradise; the outcome would have been voting down the existing IMF austerity proposal, because no appears to be the most rational choice, both, in principle, and in practice.
There are some really solid reasons not to surrender under bullying to one’s sovereignty, and that is exactly what the Hellenic people did. Had the vote been yes to EU’s latest monetary deal it would have been a surrender to lasting economic controls of epic proportions for decades. The vote was if anything a vote of wanting change or hope to the present disastrous path.
Greece has been a punching bag for the political-economic gold fear mongers and Republican pundits ever since the beginning of the current economic crisis, what the talking heads in CNBC forget is that the great nation of the United States of America at no time chose to give up its right to print and control its currency.
The debt problem in Greece reflected negligent lending as well as socially irresponsible borrowing, kind of like the fiscal crisis in America for without tremendous flexibility; the fed would never have kept its head above water. So why do we expect a little country like Greece with a history of economic problems to handle this and in any case the Greeks have paid for their government’s sins many times over with budgetary controls over the course of the crisis.
The International Monetary fund had already concluded that without serious debt-relief Greece repaying its debts that it should not be loaned in the first place was nothing more than a dream. The sticking point has always been Greece asking for its debt relief to be a permanent solution not only another quick fix, so why would we expect these people to vote yes for decades of economic burden with absolutely no end in sight.
Only to put some of this into perspective the decline in value of Chinese’s equities in the past three weeks has reached almost $3 trillion, about 10 times Greece’s gross domestic product in 2014.
The monetary rescue would have entailed another round of heavy cuts to government and social services and over-the-top tax increases, with no debt restructuring leaving bankers to direct government how it should continue to manage its own country.
Some have suggested that the deal was engineered long-term to leave the country in even worse shape, and here’s why.
The Greek Merchant Navy is the second largest taxpayer in the nation; maritime logistics is arguably the oldest form of occupation of the Greeks and a key element of the current and ancient economy. There are at least 16% of the world’s tonnage being moved by a ship under their national flag, and the proposed taxation changes would have driven this sector full steam ahead to other countries from Cyprus to Bermuda in an effort to reduce their tax burden. However, tourism is the main non government employer and the cost of continued economic controls for years to come will do nothing to help this breadwinning sector grow.
If the nation remains part of the euro zone but starts to print and issue its own fiat currency again the opportunity for long-term investment and growth could leave the nation in a positive economic position a decade after if outside investors could be seduced with incentives and tax cuts.
There is still a chance for a worthy debt reduction deal out of the EU, but I feel the euro has more to lose long term then the people of Greece do, when setting the precedent of abandoning the euro. Once this happens, I can’t understand why some of the other countries would not follow.
So what happens long-term is anyone’s guess, but I feel watching the talking heads on CNBC makes me wonder what would they have to say if China was demanding serious economic cuts to the US government spending and banking controls. I can’t imagine Jim Cramer being willing to be supportive of such a disaster.
If your worried about this stop now, you really should be more worried about China’s economy.
On a travel hacking note, I have been researching Greek based vacation providers this week. So should you, Tourism is liquidity and the nation needs that now more than ever. Aegean is a star alliance member and its running a 20% off sale on some already low fares. Greece is beautiful!