The Greek Myth

An interesting and incisive view into the origins of the Greek economic crisis as well as into the current reality.

But the question remains how to deal with it?

The current ‘therapy’ does not seem to be working. Not least because the austerity measures have ‘killed’ the market. Any money that was available to be spent or invested is either going abroad (in case a controlled bankruptcy goes out of control and Greece exits the Euro) or going to the tax coffins (for those of us who are honest citizens) or is saved even under the matrass because people are afraid of what is going to come next. Hence despite a higher VAT and higher income and property taxes, the government appears unable to raise the much needed cash.

However as the country plunges deeper into austerity, the deeper the recession will become, the worse the maths will be (in terms of % of the deficit etc.). Foreign direct investment is very difficult to attract under the current circumstances – for reasons outlined in the short dossier here above (red tape, tax system etc.). The only structural changes however implemented so far are cutting wages and welfare allowances. Thus the Greek work force becomes cheaper. But is this enough? Is this what is needed for the restructuring of the Greek economy? And how can the government bend the strong trade unions that throw the country into havock to prevent this restructuing which will make them lose long established advantages.

It is understandable that the IMF, foreign governments and the European Commission or the European Central Bank cannot agree to give more money to an economy that has wasted this money more than once in the past without actually changing any of its structures or mechanisms to improve transparency, efficiency, competitiveness. However, Greece is for now simply trapped into a no way out. We need more economic and political imagination!