Sunday 9 May 2010

This was Sparta

This isn't necessarily a rhetorical question: If stupid threw a party, how many people would come? Thankfully, we can answer this scientifically. In a new WSJ article, 33.2% of Greeks do not accept the IMF-EU designed austerity plan in exchange for loans needed to avoid a debt default this week. If you are looking for some positive spin somewhere in this, a mere 21% stated that strikes should not be kept at a rational level i.e. that people should use violence as a weapon to force the state to let them all back on the gravy train. A day after a firebomb killed four people in a bank, three employees and an unborn baby, only a fifth of Greek citizens were able to support non-rational protests, meaning more violence in an effort to avoid the obvious. I guess every cloud does have a silver lining.

While the survey does indicate that a majority of Greeks are willing to swallow a few years of bitter medicine, there is also a significant portion of the population who apparently don't understand what happens when a country runs out of money. Quite simply put, when your "outgo" exceeds your "income" habitually, eventually you will reach a point when no one will be willing to loan you money that they think they might not recoup. Call this the subprime sovereign debt crisis; the Greeks over-mortgaged their country and now they are further underwater than Atlantis. While the option of allowing the bailiff to come and repossess the Akropolis and a couple cases of Ouzo might sound tempting, what exactly are German and French banks who are on the hook for roughly 110,000,000,000 Euros of Greek debt going to do with it? Relocate it to Euro-Disney? Throw a toga party? Sell it to Andorra?

While I am usually not inclined to make predictions, this crisis was about as difficult to foresee as a very tragic ending in a very Greek tragedy. When the Greeks joined the Eurozone, they were no longer able to devalue their currency or to inflate their way out of debt as they had in the past. They were also granted the ability to borrow far more money to feed their spending habits. For an addict to suddenly inherit a lump sum of cash is incredibly dangerous and usually self-destructive. Instead of checking themselves into the wing of the Betty Ford Clinic designed for profligate entitlement-oholics, they went on a raging binge. This is the hangover. Instead of spending the morning after avoiding sunlight and promising the pantheon of deities that they'll never do it again, the instincts of a frighteningly large minority of the people are to turn their booze stained shirt inside-out, splash some cologne on to cover last night's excesses, and to keep the party going.

So, if stupid threw a party, how many people would come? In Greece, about 1/3rd.

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