Tuesday, 18 October 2011

Greek society is on the verge of bankruptcy

Over the past 18 months, Greece is undergoing a tough austerity plan in order to bring fiscal deficit down and tackle the mountain of debt.

Is this plan proving to be successful? Unfortunately not.

The main problem with the greek economy is that, for decades, growth was based purely on spending and imports, due to the low domestic productivity rate: greek products were expensive, compared to foreign equivalents. This, combined with fresh loans from foreign institutions and a general labour trend (backed by corrupt politicians) for "civil service employment", led to soaring imports and spending: the recipe for the huge debt that Greece is now crumbling under.

Unfortunately the austerity plan, while trying to tackle the deficit, led the (admittedly non-productive) old economy to ruins, while NOT putting in place the seeds of the new economy where Greece can excel: renewable energy sources, modern agriculture, tourism, shipping.

As a result, hunderds of thousands of workers lost their jobs, and have no prospect of finding a new one for years to come.

It was a classic example of demolishing the "old" without having put in place the "new".

Greece is facing at least 3-4 years of near-poverty, before bouncing back.

In the meantime, the social fabric will deteriorate severly: unemployment will remain high, investments will stagger, cash flow will dry out.

Unknown human dramas are taking place every day, behind the closed doors of the typical greek household: money is drying out fast.

Doom and gloom? Maybe... Unless the typical greek ability to bounce back after a disaster, finds its place in the hearts and minds of the modern poverty-stricken greek citizen.

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