There is a widespread opinion in Germany that Greece itself is to blame for the problems it now finds itself in. According to a report that was published by Stephan Kaufmann, many of our German and foreign friends actually believe that Greeks are lazy, we were living above our means, we are not capable of being competitive on the international market and that we are totally corrupt as a nation. What they do not realize, is that nationalistic patters of interpretation of this kind have been nourished by German politicians and the media, who have no end of proposals for how to really “solve” the crisis. For example, the Greeks should save more, work more and sell their public property – and if all of these measures do not help, then Greece will just have to leave the Eurozone or declare itself bankrupt. The stupid thing is, neither are the causes of the crisis that have been named actually correct, nor will the proposed ways out of the crisis achieve their goal.
This is an incredible report and should be read by all.Hellasfrappe has only featured certain sections and we aspire that our Omogeneia in Germany (and friends of Hellas) will take the time and read it, so as to get a better understanding of what is really going on. We also hope our friends in Canada, the US and Australia also show the same interest as well as all of those who continue to maintain that Greece had it coming! Too many lies have been published for too long. Luckily for us, there are still competent analysts and academicians that always debunk the lies with truths.
A link for the full report (in .pdf format) is included at the bottom of this article.
What is the crisis? False descriptions of the situation
- 1. «Greece has too many debts»
- 2. «The financial markets are scared that Greece will go bankrupt»
FOCUS – 1. «Greece has too many debts»
The facts: Because of the financial crisis, Greece’s national debt grew between 2007 and the end of 2010 from 115 % to 143 % of economic performance (Gross Domestic Product, GDP). This so-called debt ratio will probably climb above the 150 % mark in 2011. By way of comparison: Germany’s debt ratio is about 85 %.
Context: The high debt ratio alone does not explain Greece’s problems. «There is no adequate debt ratio, neither in theory nor in practice.»1 Italy has a debt ratio of 120 %, Japan has even reached 200 % of its GDP. Neither of these is seen to be «broke», while Greece is. Why? Because the financial markets are speculating on Greece becoming bankrupt. This has driven the interest rate for new debts to such high levels, that Athens cannot borrow any new money
By comparison: Athens must pay 25 % interest on two year government bonds, Italy only 3 % and Japan a mere 0.2 % (as per end of May 2011). The problem therefore lies with the interest rate that has been forced upwards by finance market speculations. The Macroeconomic Policy Institute (IMK) has calculated that, if the average rate of interest for Greek state loans would fall to 3 %, then the country’s debt ratio would fall to 110 % of GDP by the year 2015.
However, if the interest rate remains as high as it is, Athens will not be able to borrow any money on the markets. Whether or not it is then «broke» depends on the willingness of the other Euro-states to help it out by providing loans. Therefore, the question of «bankruptcy» is a question of political decisions by governments
How did the crisis come about? Inaccurate research into the causes
- 3. «The Greeks are lazy»
- 4. «The Greeks are constantly on holiday»
- 5. «We are paying luxury pensions to the Greeks»
- 6. «The Greeks have been feathering their own nest well»
- 7. «The Greeks have been living above their means»
- 8. «The Greek state is over-inflated»
- 9. «Greece is not capable of competing»
- 10. «The Greeks are corrupt»
FOCUS – 3. The Greeks are lazy
The facts: The Greeks work a great deal. The actual weekly working hours – minus lunch breaks – before the crisis were 44.3 hours according to Eurostat. In Germany, this figure was 41 hours and the EU average was 41.7 hours.5 The French bank Natixis arrived at total average working hours per annum in Germany of 1,390 hours, while the Greeks work an average of 2,119 hours per annum.
Context: Apart from the fact that the Greeks work a lot and apart from the fact that leisure time is not necessarily something bad and work is not necessarily something good – it is fundamentally wrong to seek the causes of a crisis in a country by citing the lack of hard work among its population. The Greeks do not have the option of just working longer hours to end the crisis. The opposite is true – because of the crisis, many Greeks have been forced to not work at all. The official unemployment rate was 16.5 % in April 2011, and a third of young people were without a paid job at the end of 2010. The number of civil servants has been reduced by 83,000 in the last months. And so it is clear, it is not «laziness» that creates crises, but crises destroy jobs. This mechanism worked the other way around in Germany: The upswing reduced the unemployment rate to 6,0 % in April 2011
The way forward? False solutions
- 11. «The Greeks should start saving before we help them again»
- 12. «Sell your islands, you bankrupt Greeks!»
- 13. «The creditors should foot the bill!»
- 14. «Greece should get out of the Eurozone»
- 15. «Greece has to win back the trust of the financial markets»
FOCUS – 12. Sell your islands you bankrupt Greeks!
The facts: The Greek state owns property with an estimated value of 270 to 300 billion euros. These are mainly real estate properties, also on the islands.
Context: The government in Athens is not just sitting on its fortune. It has already started off a broad programme of privatisation, with telecommunications companies, electricity suppliers, ports and a large
quantity of real estate properties on offer. By doing this, Athens aims to bring in 50 billion euros by the year 2015. However, there are many snags in this program. As Greece is being forced to sell, it will only receive bad prices for its property. The buyers – international corporations – will try to exploit the emergency situation in Greece. Secondly, if the state sells profitable companies, then the income from these will be gone. The result: «The experience gained by the International Monetary Fund (IMF) in countless stabilization programs has shown that (privatization) is an extremely risky strategy … It takes a very long time to make sure that such procedures are carried out in an orderly fashion, and time is something that Greece does not have at present. Privatizations are therefore not very well suited as emergency measures.
The role of the Germans: False friends
- 16. «We want to be friends with the Greeks»
- 17. «You should help your friends – but not bail them out»
- 18. «No German tax euros for Greece!»
- 19. «We are the paymasters of Europe»
FOCUS – 18. «No German tax euros for Greece!»
The facts: The first aid package for Greece from the year 2010 contained a German share of around 22 billion euros.
Context: It is not the much-quoted taxpayer who is «helping» Greece. The German government does not take the money for Athens from the national budget or from tax income, but borrows this money at interest rates of 1 % to 3 % and lends it further to countries in a state of crisis – including penalty interest. Athens must pay 4.2 % for this «aid», while Ireland pays 5.8 % and Portugal between 5.5 % and 6 %. This is a good business proposition for the German «taxpayer». The difference in interest means that an estimated 500 million euros will flow into the country.
One last comment
20. «Greece cheated its way into the Eurozone – ‹We are now paying the price for our indulgence›»