Tuesday, 30 June 2015
The biggest question about Greece that nobody will ask or answer
For Greece, there are only two choices; penury under European hegemony or an exit from the Euro, with chaos and confusion before eventual renewal. Neither of these are very palatable dishes.
However, the really interesting news this week is to watch the reaction of those who know...the 'CEO' of Europe, Jean-Claude Junker, is saying Greeks will commit suicide by leaving the Euro. He is a dangerous man in his own right and it was right for the UK to oppose his Presidency - with his one-eyedness that will lead to huge future problems for the EU as it pushes up against integration issues across all states.
Further more the biggest story of all is not being covered.
Where has all the money gone? Since 2000 when the Greece was admitted to the Euro over €300 billion has been borrowed and spent. So the key question is, who borrowed it and who spent it?
We all know the Olympics 'cost' more than the London Olympics ($15B versus $14B) and resulted in a loss of $14 billion. Property developers and building contractors made huge money out of this venture - all of it now likely residing in Switzerland.
Equally, we know that few people have paid tax in Greece for a long time - so their lifestyles have been above what they have been earning. But still I doubt this would cover the loss. German exports to Greece are now €4 billion a year, down from double that in 2008 -but still its net trade is a €3 billion positive in Germany's favour. It sends over tourists and BMW's and which don't really balance each other out.
Hence German businesses, as well as French, are keen to hold onto their Greek market. Of course, behind German thinking too is that a Grexit in the long-term will enhance the value of the Euro - anathema to a Country based on a mercantilist policy.
Also, Greece has not really repaid much of its debt, payments have been made until today at a steady €7 billion a quarter, but this barley covers interest in the main and thus the total stock of debt has kept exploding upwards. More debt has been issued to cover the increasing debt repayments to avoid default - so in effect more debt is being accrued to pay the European owners of the original debt. I can see this amounts to over 60% of the total money Greece has borrowed
But I don't really know where the other money went, but it is interesting that this is not a topic of discussion at all by either side - the Europeans are refusing to admit they are in effect bailing out their own banks and taxpayers by forcing Greece to endue austerity in extremis whilst paying themselves back. The Greeks are not up for admitting the huge corruption that must underlie the initial uptick in debt to pay for the Olympics and other such projects such as the Egnatia highway and railway upgrades which have been ( and still are) both expensive and often contracted out to European major corporates.