May 5, 2010

Tough Love with Greece

POLITICS - I recall once listening to a 4 year old boy getting a bath from his mother. The mother was trying to get him to tilt his head back so he wouldn't get shampoo in his eyes. The boy adamantly refused and wailed instead. Due to the boy's lack of action the shampoo, driven by gravity ended up in his eyes. Had he known better and just did what his mother had told him he wouldn't have been in this mess.

What we're seeing in Greece today is a similar problem.

Greek protestors keep stomping their feet, setting fire to cars and buildings (yesterday 3 people were burnt to death in a burning office building)... protesting government changes will no doubt mean higher taxes in the future.

The problem is a series of government bailouts as Greece has been hard hit by the global economic decline... but there is a double whammy involved.

Due to the history of protests in Greece in recent years many foreign investors have pulled out their funding. Arsonists, anarchists, people who just plain hate the government but apparently too stupid to realize their protests aren't making anything better... well that is just it, they're continuing to make things worse.

Yesterday tens of thousands of Greeks marched to parliament, testing the government’s resolve in enacting deep budget cuts in return for billions of euros in EU/IMF aid.

Why does Greece need the aid package? Because without it their high spending ways would result in a government collapse...

Here's essentially what has happened...

1. Greeks love to protest. Its arguably one of their defining traits. It doesn't matter whether they're protesting wars overseas, environmental issues, the economy... they're just good at it. Unfortunately Greece also has an above average share of anarchists and arsonists and these tend to set fire to cars, buildings, etc.

2. Unfortunately foreign investors don't like these kinds of violent fiery protests. Too many protests = money pulled out of Greece.

3. This means more unemployment, more unhappy Greek people, more protests.

4. It also means less government revenues from taxes. Less people working = Less money going into government coffers.

5. Greece's government has tried to maintain its budget and maintain social services, but the sad fact is that their government is now so ridiculously in debt that nobody will loan them money any more.

6. Therefore when they asked the EU and IMF for more money it was a bit like an unruly teenager asking its parents for more money and the parents know full well the teenager is just going to spend it on alcohol and have a party. So instead the EU/IMF has demanded strict budgetary controls which will allow Greece to gets economy working again.

7. This means huge cuts to social programs, the arts, wage freezes for teachers and other government jobs, etc. Government workers aren't happy, unions aren't happy, Greeks are unhappy.

But frankly its that or complete government collapse in the country of Greece because they won't be able to pay their workers. Anarchy and corruption will be the result as people are forced to fend for themselves.

So the Greek protestors have the right to be upset. But frankly what they really need to do is stop protesting for awhile, give the economy a chance to recover and focus on working more / protesting less.

My apologies to any Greeks offended by the analogy to the behaviour of a 4 year old, but there is times when intervening agent (whether it be mother or EU/IMF) has to show some tough love.

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