Guest
06-02-2012, 10:50 PM
In a little more than two weeks, the world should know what kind of future Greece will choose for itself.
On June 17 there will be a runoff general election to choose a new Greek president, who will dictate the direction their government takes. The leading candidate appears to be the 28-year old Socialist candidate whose main campaign platform has been essentially one of extorting the European Union and the European Central Bank with threats that if the EU continues to demand significant austerity measures from Greek citizens, Greece will withdraw from he EU and default on the repayment of it's debts to the ECB and other European banks.
While the game of chicken between sovereign powers continues, Greek citizens and companies are voting their expectations with a full scale run on Greek banks. There is so little liquidity in the banks that it's doubtful they can pay depositors when withdrawals are demanded next week. The banks have requested short-term liquidity loans from the ECB, but it does not appear the loans will be made. The EU country with the greatest financial resources, Germany, has made no indication of acceding to Greek demands. In fact, there is widespread domestic political pressure on German chancellor Angela Merkel to refuse Greek demands and let the country fail.
Economists have projected the results of Greek withdrawal from the EU and default on its loans. The almost immediate void in Greek bank and government liquidity will result in the immediate inability of Greece to meet its obligations to pay government workers and pensioners as well as healthcare obligations. The Greek banking system will at least temporarily cease to exist. Their economy will essentially stop. Experts predict that household income in Greece will be cut by 55%.
It's apparent that most Greek citizens do not appreciate the serious threat facing them in only a matter of days. The Socialist candidate is running on a popular platform of refusal to accept the austerity measures demanded by lenders to the country. He promises that their six-week mandatory vacations, retirement with full pay at age 50 and more than a dozen holidays a year are benefits he will protect. In fact, the candidate is actually proposing a cut to the work week in Greece to 35 hours a week. His campaigning is receiving widespread popular support. Naturally. What's not to like about those promises?
It should be interesting to see this train wreck play out. It's pretty clear that Greek citizens do not understand how their lives are going to change in the very short term. With no one to lend them money and their refusal to pay taxes (lots of Greeks refuse to pay even the taxes now required by law), the country is bankrupt.
As in many political campaigns, few citizens have studied the actual issues, choosing to simply embrace popular campaign promises.
While all this plays out in Greece, Spain, Italy and Portugal watch with interest. And the EU countries with the money know they're watching. Their fiscal condition is at least as bad as Greece.
In my opinion, the U.S. should probably be watching closely as well. We could be looking at our future.
On June 17 there will be a runoff general election to choose a new Greek president, who will dictate the direction their government takes. The leading candidate appears to be the 28-year old Socialist candidate whose main campaign platform has been essentially one of extorting the European Union and the European Central Bank with threats that if the EU continues to demand significant austerity measures from Greek citizens, Greece will withdraw from he EU and default on the repayment of it's debts to the ECB and other European banks.
While the game of chicken between sovereign powers continues, Greek citizens and companies are voting their expectations with a full scale run on Greek banks. There is so little liquidity in the banks that it's doubtful they can pay depositors when withdrawals are demanded next week. The banks have requested short-term liquidity loans from the ECB, but it does not appear the loans will be made. The EU country with the greatest financial resources, Germany, has made no indication of acceding to Greek demands. In fact, there is widespread domestic political pressure on German chancellor Angela Merkel to refuse Greek demands and let the country fail.
Economists have projected the results of Greek withdrawal from the EU and default on its loans. The almost immediate void in Greek bank and government liquidity will result in the immediate inability of Greece to meet its obligations to pay government workers and pensioners as well as healthcare obligations. The Greek banking system will at least temporarily cease to exist. Their economy will essentially stop. Experts predict that household income in Greece will be cut by 55%.
It's apparent that most Greek citizens do not appreciate the serious threat facing them in only a matter of days. The Socialist candidate is running on a popular platform of refusal to accept the austerity measures demanded by lenders to the country. He promises that their six-week mandatory vacations, retirement with full pay at age 50 and more than a dozen holidays a year are benefits he will protect. In fact, the candidate is actually proposing a cut to the work week in Greece to 35 hours a week. His campaigning is receiving widespread popular support. Naturally. What's not to like about those promises?
It should be interesting to see this train wreck play out. It's pretty clear that Greek citizens do not understand how their lives are going to change in the very short term. With no one to lend them money and their refusal to pay taxes (lots of Greeks refuse to pay even the taxes now required by law), the country is bankrupt.
As in many political campaigns, few citizens have studied the actual issues, choosing to simply embrace popular campaign promises.
While all this plays out in Greece, Spain, Italy and Portugal watch with interest. And the EU countries with the money know they're watching. Their fiscal condition is at least as bad as Greece.
In my opinion, the U.S. should probably be watching closely as well. We could be looking at our future.