Is Greece Bankrupt? Guess What… It’s Not !

Contributed To hellasfrappe by Protesilaos Stavrou
PS Protesilaos Stavrou

Greece has been at the epicenter of the global economic crisis for all the wrong reasons. Greece has been mired in recession for more than 2 years, while it has been under international support ever since May 2010 (the troika programme). The reasons that brought the country to that position are quite a few, some which are based on reality, others on propaganda and stereotypes that verge on being racist.

One of them is of course the fact that the country was the first domino to fall in the eurozone, once the shock waves coming from the other side of the Atlantic hit the Euro edifice (that has been unraveling ever since).

A second is the infamous story about those “Greek statistics”, i.e. the implementation of various exercises in fraudulent accounting so as to present different public finances than the actual ones in order to comply with the Maastricht criteria for the euro. Towards that end Goldman Sachs played the dirty role of being the crack dealer to the borrowing-junkies that governed the country back then.

A third reason is political and has nothing to do with Greece, but with the manner in which European politics take form. More precisely the case of Greece resembles in many ways that of the much bigger economy of Italy, suggesting that any policies that could create moral hazard, any easy way out, would induce the Italians to follow a similar path in order to reduce their debt burdens, which would be very ill news for all the rest of Europe. In other words the treatment of Greece ought to be stricter than what was necessary to create the necessary deterring effect, while also not violate all that lovely, “appropriate” rhetoric that characterizes EU parlance. Clearly – and well expectedly for me at least – the programme in Greece has been a massive failure succeeding only in increasing the pressures on the real economy of the country by bringing it to the worst recession of its history. With respect to the last point Cypriot economist, Dr. Alexander Apostolides wrote among others the following in his article titled “What Great Depression? Greece is suffering the greatest economic recession in its history.”:

One of the reasons I have been so upset with the powers that be in Europe is the fact that publicly there is great emphasis that they are trying to prevent a great depression, while their actions seem to mathematically send us into that direction. A crisis needs flexibility, and yet all the EU 26 (- UK) are proposing is more and more rigidity and bureaucratisation.

Greece can be seen as a test bed for their proposals since it has been under supervision since 2010. While new bureaucrats appointed with the Blessings of Brussels, such as the new head of ELSTAT, Mr. Andreas Georgiou, is being prosecuted for correctly calculating the Greek sovereign debt, it good to see what the IMF/EU measures did to the Greek Economy.

My purpose here is not to deconstruct all the myths that surround the topic, nor to engage in a moral debate over who is responsible, why and to what extend. The sole purpose here is to raise one question which I am sure many across the globe have “Is Greece bankrupt?”. The answer is two-fold: yes and no.

Currently the state is indeed insolvent, meaning that it will never be able to cope with its responsibilities nor will it be competent in laboring under the mountains of debt it has accumulated, or the growing deficits it has to deal with. In short the state will sooner or later have to declare default on its debt obligations, thus we can say that indeed the country is bankrupt.

But on the other side is bankruptcy of the state equivalent to the bankruptcy of a nation? Not at all. Even if the country declares default, it will not cease to exist, the history of Greece will not vanish, nor will its people be wiped off the face of earth. Greece has a very rich cultural heritage, which alone is enough to push the country out of the mire of recession. In addition the country has a significant concentration of human capital, i.e. of well-educated, high quality labor that can always be attractive to investors, who will be eager to exploit the profit opportunities that are opening up.

This impressive labor force can be used to make Greece a higher education center with top-quality private universities leading the way, or to attract pensioners by providing excellent retirement resorts. In addition the country is endowed with many riches. It is wealthy in natural resources, with one of them being renewable energy sources, such as solar and wind energy. Greece enjoys sunshine all year round making it ideal to produce great amounts of solar energy that can well suffice the domestic needs and even be exported abroad. Similar story for wind energy, with the islands of the Aegean providing a natural network of land masses that can function as a network for producing wind energy. As if those were not enough the country can provide all sorts of tourist services, it is great for cultural tourism, religious tourism, it has magnificent beaches and extraordinary mountain sites, filled with picturesque villages, while the Greek islands are known world-wide for their beauty.

With all this said and many others left behind, it would be false to say that Greece is a bankrupt nation. The country has infinite potential for real economic growth and cultural prosperity provided that the set of attitudes, policies and practices that led it into the current smoldering mess, are forever abandoned. Towards that end there are many adept Greeks that can hold up to the task, leading the country into a much better future. One such individual is branding strategist Peter Economides who recently delivered a truly inspiring speech titled “Rebranding Greece” (see here on my notebook).

The year 2011 has been a very tough year for everyone, but especially for the Greek people. As Peter Economides says this is “a small moment in a long and glorious history”. Though the country might indeed default on its debt obligations, no one can say that the nation is bankrupt, because it is not.


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