Greece and austerity

16 May

Over the past few months Greece and its trials and tribulations have taken up a lot of news and current affairs programme time. It seems to be pretty well accepted that the problems with the Euro started when countries were being appraised for membership. It’s further accepted that the rules for joining were… how to put this… more flexibly applied than originally intended.

Hence there are countries in the Eurozone who can’t operate in the same economic climate as Germany and the other larger and differently structured economies. The problems are home grown then. Oh dear. Just to keep things in some sort of perspective however, have a look at the performance and debts of the UK and especially the comparison at the bottom with other countries.

Austerity is the name of the game or at least it was as far as Germany was concerned. Thon wee Sarkozy boy from France had a similar approach but he’s had to vacate his desk and his replacement has been making noises about less austerity and more economic growth. Why austerity as a first choice? Well the Germans said so and given the losses and the damage to so many economies around the world there’s a shortage of money to do any investing with. Yes I know China along with some other countries could invest but since their exports have been hit they might want to hold onto their cash until the dust settles over the Euro.

There is another example however, of how things could have been handled. Iceland. Iceland didn’t pay its overseas creditors. I’m not aware of any articles in the press or the TV news showing deprivation, starvation, lawlessness etc. in Iceland. That being the case the people must be fairly happy then?

There’s no austerity in Iceland. The Government went out to the people and a new constitution was created by the people along with the government. The new constitution was to ensure that never again could a banking collapse happen in Iceland. From what I’ve read about it, it sounds like it is pretty good, in fact so good that our own governments as in Westminster and the devolved areas should be doing the same thing.

Lets get real here. There is no way that could happen with Westminster still in the mix. Too many people with too much to lose. The establishment would never allow it. Bearing in mind that this is supposed to be a democratic country those are dreadful things to say but nonetheless that is the situation

The people in Iceland managed it. They also managed an even more startling, amazing I want one event. Almost all mortgage debt was written off. Can you imagine that? Can you imagine waking up one morning and your house was yours; you didn’t have to pay a penny more to your mortgage provider. You don’t believe me? Have a look at this.

Yes lets think of the large sums of money people would then have since they’d be paying NO mortgage! People could spend some of the money on reducing other debts, save some of it and buy some nice stuff with the rest.

Now do you think for a fraction of a second that the Double Dip Twins, Dave and George would consider this as a good idea? Of course not and if they did they’d put a tax on it so people were left with little more than before. The Double Dip Twins haven’t a clue, not just about real peoples lives but also about everything. Dave is a clever man? In a meaningful, country leading, intellectual way? Fill in your own answer.

According to those that know about such things 40% of the UKs overseas trade is with the EU although I heard a guy on TV last night say it was 50%. Whether it’s 40% or 50% the stagnation within the EU makes its likely that exports to the EU will reduce. 40%-50% of very little is still very little.

So Greece looks odds on to leave the Eurozone. The powers that be will continue to stop it from happening even if it costs us all large amounts of money. In the end Greece will leave but slowly and more gradual since that will facilitate a longer stay of execution for the remaining Eurozone.

Ultimately the Eurozone will fail. It was built to fail because they started off bending the rules, which caused the imbalances, which ultimately and inevitably came home to roost.




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