Wednesday, 4 April 2012

The Breaking Point of Greece (Odyssey Modern)

Greece is between a rock and a hard place. Years of mindless consumption based growth and the complete lack of any economic/strategic policy objective have led to the gradual disinvestment from any manufacturing/industrial activity and/or value adding service sector. The lost competitiveness (in the Economy) was not the outcome of wage increases in the private sector but of the loss of any value adding production base both in manufacturing and in the service sector.

Greece being a small market and a rather isolated one (by sea and mountains) rarely justified economies of scale in industrial production, unless export driven. In the cheap euro Era, it was easier and more economically rewarding to borrow and buy potatoes from Egypt or Bulgaria than produce them ourselves, unless subsidized (Common Agriculture Policy). Now, combine all these with an archaic central government and the electioneering and populist mentality of modern politics/politicians (not just in Greece) and you get the recipe for tragedy. The State has become the biggest employer but even worse the biggest consumer of goods and services produced locally. All the others, we have been consuming imported goods and services, leveraged by our new found strength. The IKEAs, the ZARAs, the BMWs, the Siemens of this world had a party thrown here.

Now all these are over. Greece went bust.
This undoubtedly is going to be a new turning point in the 191 year old national history of modern Greece. Like Ulysses (Odysseus) in Homer’s epic poem Odyssey, modern Greeks have displeased the Gods of the Eurozone. First with their “Trojan horse”, the trick that fooled everybody allowing them to enter the “EZ” and then if that was not blasphemous enough they tricked the Gods once more with their “Greek Statistics”, blinding the Cyclops Polyphemus (Eurostat) and foolishly revealing their tricks.
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The Mykonos vase, with one of the
earliest redintions of the Trojan Horse

The story could have started at the moment they entered Troy (acceptance in the Euro club). After 10 years of hurdles they devised the infamous “wooden horse” with the help of Goldman Sachs that enabled them to conquer Euro membership. Then, as they have embarked for that Euro-adventure they first consumed the Lotuses (billions of euros in structural support packages and EU subsidies) that made them forget that their economy was weak and would be further weakened by a strong currency, the fate of which they no longer controlled. Almost captured by the one eyed Cyclops, Polyphemous (the Eurostat) they escaped by blinding the monster. Complacent they have managed to outwit the beast they foolishly revealed their tricks (erroneous deficits, etc). Poseidon (Merkozy) the father of Polyphemous “then curses Odysseus to wander the sea for ten years, during which he would lose all his crew and return home through the aid of others” (the troika-ECB,EC,IMF).

I could go on and on describing the tails and ordeals of noble Odysseus and what he had to go through before reaching Ithaca.

Between you and me, buy the book!  

But before we, Greeks, reach our modern Ithaca, we have to navigate the treturous waters between Scylla and Charybdis, the two immortal and irresistible monsters that beset the narrow waters. According to Homer, Odysseus was forced to choose which monster to confront while passing through the straits; he opted to pass by Scylla and lose only a few sailors, rather than risk the loss of his entire ship in the whirlpool (Charybdis). Like him, the next Greek Prime Minister will have to make the same choice. Lose a few (in the public sector/administration) or risk the loss of the entire “ship and crew” in the whirlpool of a recessionary vicious circle. That may very well be Greece’s breaking point; the moment of truth.

PS. In Homer’s poem, Odysseus returns home alone! The general hope here on the ground is that there will be some of us as well!

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