When the Syriza came to power, the public debt had reached about 177% of GDP in Greece.
The Syriza argues that it can not disappoint their voters. Strange argument! But after all, what promise was that he did to win the elections?
The state would spend even more money, but the Greeks would pay less taxes. As if this were not enough, he promised that Greece would continue to benefit from EU funds, as this was wrong to hold that those who owe have to pay.
The Syriza was an excellent choice for the Greeks, but the same can not be said for European citizens who pay taxes because these beautiful promises mean in practice that the latter would not receive soon the money that through their governments loaned to Greece. In the worst case scenario (which is even the most right, as has happened other times) would have to still send more money to restructure the Greek debt.
I recognize that then I will go into minefield, but I will try not to “blow my feet.”
In fact, the debt of a country and even from a citizen, is not to be paid, but to be managed and being paid. I know that sounds absurd what I just mentioned, but it may not be at all. A state can borrow money just like any citizen, provided they have the ability to pay. And it can only pay if it generates wealth and if the interest rates to pay for this debt are manageable, ie bearable. And here is the problem arises because Greece before debt restructuring in 2011, was to pay interests equivalent to 7.3% of GDP, obviously making debt unsustainable. With the restructuring, rates fell to 4% and the debt was forgiven by about 53%. In practice with the debt relief and low interest rates, Greece was granted a reduction of 75% of the debt. However, Greece thinks they made a bad deal. Despite the bad deal in 2012, Greece was better than Portugal, Italy, Spain, Ireland and, incredibly, Germany, which at the time were paying higher interest rates. In addition, the Greek debt maturities are even more extensive than the other Europeans, being the period of about 16 years. Portugal, France and Germany have a term debt of 7 years, Spain, Finland and Italy 6.
Probably this is not very fair, but Syriza still thinks Greece is being treated unfairly by Europe, as this argues that since there are no conditions nor to increase the term of the debt maturity and nor to reduce the average interest rates. Therefore, we can guess that what actually Syriza want is the total forgiveness of debt.
We are therefore faced with a rather ridiculous situation. On the one hand we have a Europe that does not want to grant more privileges to a country that is repeatedly in default, which has tremendous shortcomings in the tax system, problems of corruption and the highest rate of public profligacy. Public spending in Greece represents about 57% of its GDP and Syriza says it’s impossible to cut in spending.
Out of curiosity, the land of the Germans “rascals”, public spending is 44.7% of GDP; Ireland 42.9%; Spain 44.8%, and Portugal 48.7%. Worse than Greece only even Slovenia with almost 60%. The list follows with the Social States of France, Sweden and Finland with values close to the Greek, but I think are incomparable, since these countries have very high tax burdens.
Capitalism is based on a delicate system controlled by forces mostly hidden and dubious honor. But also based on a so-called “trusted system”, ie a financial institution lends money because it has confidence in its recovery. The same applies to the debt of the states and all this huge confusion has given the results we saw.
Now the question comes for € 100. So why the EU Member States, are not more intransigent with Greece?
You can say that to whom Greece owes, they must have patience and endure the consequences. This could even be a consequence of such a market game, because if an investor invested and the investment went wrong, so will have to take the loss. But in the Greek case, as I will try to show, you will see that things are not that well.
About 80% of the Greek debt is to Official bodies, ie the States or with dependent relationship with them as in the case of banks. But in fact the states have no money, simply because that money is from the citizens. This means that if your state has to receive money from another state and it does not pay, then it is to you that this state does not pay. Think about it!
I totally agree that ultimately the people and their right to dignity are more important than this thing of debts. So Syriza has every right, in the name of democracy, to say no to Europe. But do not be fooled for a single moment, because we do not live in the fantasy world. If Greece has the right to say they do not want to pay or can not pay, then face the same democratic right, the creditors have the right to refuse to further feed the public deficit of Greece. I think you agree with me.
I dare say you will also agree with me when I say that Greece is making a bad deal by refusing to pay because if they do not, then they should to prepare for real restrictions because without funding they will have to necessarily get into a lot worse than the proposed austerity.
The Greek people have every right to vote in Syriza, has the right to conduct referendums and has the right to say that they do not pay what they owe. But the bandits of lenders who are even bandits, also has the right not to borrow more money than that they will lose.
Make no mistake to think that the Greek courage is an affront to Europe or that shakes the foundations of European or loan sharks who lent them money. These will have, in one way or another, their money, even if it will be you to pay, but who will lose further from all this will be the Greeks.