Vanity thought #1418. Greece

The latest act in the “Greek tragedy” has come to a close, it’s time to look at what’s going on there. Why? Because Greece is a valuable case study about everything that is wrong in the modern world. On one hand we can find plenty of other, simple and equally telling examples of Kali Yuga degradation, but Greece also allows us a look deep into the nature of the modern society and its grasp over hapless people, on the level of not just entire countries but supranational bodies like EU and IMF, and how it is all hopelessly intertwined without any room for any “free will” and hope for any escape.

I’m not going to look at it from a conspiracy theory POV that holds IMF et al as axiomatically evil members of the global cabal. They are not in charge and are slaves to their conditioning just as everyone else. They are led by people who honestly believe they are trying to do good in the world, laying out good intentions left and right on their path.

Traditional view given to everyone who wants to know anything about this crisis is that Greeks are irresponsible spenders who don’t want to pay their debts. I remember stories from a while ago how some village in Greece has the highest proportion of Porsches in the world. They also don’t pay their taxes. They have a nice, cushioned life paid for by Germans and it must come to an end, they have to pay their debts and live within their means, this abuse of German generosity must come to an end, otherwise it creates a great moral hazard.

That last point is important – no one wants to punish Greeks for no reason, they just want Greeks to be a lesson for the rest of the world – debts must be paid. Who can disagree? Śrīla Prabhupāda told us the same thing – debts are evil, they are karma that will follow us everywhere, and there’s no question of not paying them back. There’s a story with Advaita Ācārya being caught in a debt problem but let’s leave it for now. As far as ordinary souls, not incarnations of Mahā-Viṣṇu are concerned, debts must be paid.

While this reasoning is correct, this version doesn’t explain the full reality of the situation, maybe only 10% of it, and what is not said makes a perfect example of how Kali Yuga works – people moralize about trivial things as an excuse to hide a far greater evil, creating an impression of being holy and righteous, and thus attracting and taking as many followers as they can down to the hole leading nowhere but hell, righteous rhetoric notwithstanding.

It’s hard to say how far we must go with Greek crisis history, I’m not going to the days when they gave the world democracy, but let’s start in the 80s. Greece was ruled by one Andreas Papandreou, who was the son of Georgios Papandreou, who was Greek Prime Minister for several terms in the middle of the century. After Greece ended with military dictatorships Andreas returned to the country and formed a political party which won the elections just as 80s began. It was the first socialist party in power and soon people discovered the beauty of democracy – you can vote for any nonsense you want and the government will be obliged to deliver.

Andreas turned Greece into a modern socialist welfare state, increasing pensions, providing everyone with the free healthcare and so on. Everybody loved it. The problem was Greeks couldn’t afford it and Andreas borrowed like there was no tomorrow. In the decade he was in power and by the time the next government firmly took charge and stopped the spending spree, Greek debt to GDP ratio grew from 20 to 100%. Andreas paid for it by simply printing money, Greek drachma, and everything was more or less okay.

Next, conservative government, had debts under control and even saw gradual reductions. This situation lasted for another decade and, actually, until the 2008 financial crisis happened. Greece was not exposed to toxic loans but it was hit by sudden increase in interest rates. Greeks just couldn’t afford to pay installments on their loans anymore.

Just like in the US where people could keep borrowing against ever-rising values of their properties but suddenly hit the wall when these values dropped, Greek “dream” was shuttered. Debts must be paid, however, and it so happened that Andreas son became the Prime Minister and continued the family tradition of borrowing its way out of debt.

In post 2008 time financial institutions had no other choice, really, but to give out loans when asked by governments, no one else was borrowing, and they jumped on Greece like hungry piranhas, that’s what they were designed to do, and government loans has always been the safest investment. The problem for Greece was that it joined the Euro and so couldn’t print its own money to pay back the creditors. The debt ballooned, by 12% a year, and pretty soon real authorities had to step in – IMF, ECB, lots of other banking acronyms, and they were commonly referred to as Troika, even though it was clearly led by Germans.

Representing the same finance world as private banks this Troika had no other solution but to provide even more loans to Greeks to pay for the not-so-old ones. They didn’t see themselves as piranhas, though, and so they devised a way for Greece to end the cycle. They called it reform, Greeks called it austerity, and the net result of implementing it was that Greek economy shrank by 25%, meaning that the debt-to-GDP ratio shot even higher, reaching 175%.

With this latest, third bailout, it’s going to reach 200%, and by now not even IMF believes it will be the last loan. Just as Greek parliament was about to vote on this deal IMF released a widely publicized paper hat expressed serious doubt that it will ever work. I mean even under the improbably high growth of 3% it would take Greece three decades to pay off its loans. The rest of Europe, which is in far better shape, is lucky to see 1-2% growth, and three decades is such an unrealistic time frame it’s not worth talking about. In thirty years there might not be neither euro nor EU itself, and god knows how many crises will hit the world during this time. It’s incredibly foolish to project 3% uninterrupted growth over so many years for any European country, let alone Greece.

When new, leftist government came to power in Greece half a year ago there was hope that the debt producing cycle would finally end but it wasn’t to be and this latest deal is effectively a capitulation by otherwise tough talking government. Greeks reacted to it with #Thisisacoup twitter hashtag and it remains to be seen what this will do to the social contract voters made with Syriza there. Probably nothing good.

Okay, I’ve described the basic facts so far, what’s behind them, what drove Greeks to borrow, and how they came across these fountains of money, is a story for another day. This is where we will see the actual face of the modern capitalism, sans the lectures about morality.


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