Greece – Austerity Measures Can’t Fix Years Of Stupid Government Political Mistakes

It’s a simple matter of arithmetic. Greece will be the first of 5 members of the European Union to fail, forcing them to withdraw from the EU and reintroducing their former currency. Portugal, Spain, Ireland and Italy will soon follow in the foot steps of Greece’s failed attempt to fix a failed socialist style government. More vacation days, early retirements, fewer working hours, higher pension payments, liberal and wide ranging social welfare payments can no longer be funded.

Country in Crisis

The truth is these governments have long borrowed and spent their countries into bankruptcy. They owe more in government debts than they can ever repay.

Greece is broke and to borrow enough money to stay solvent, the Greek government has agreed to severe austerity measures imposed by the European Union, European Central Bank and the International Monetary Fund. This bailout money will run out next month unless another chunk of the bailout money is handed over. But the European Union members wants even more cuts in government jobs, salaries and social welfare benefits.

Public employees have already taken a 40 percent pay cut and pensions are being reduced. The private sector has also been hit and unemployment is nearing 20 percent. A staggering 40 percent of Greece’s young workers between the ages of 18 and 24 are unemployed with no prospect of finding work of any kind.

Successive Greek governments borrowed an estimated $498 billion, to bribe the Greek people into being happy. Governments who could offer cushy office jobs, fat pensions and long vacations got reelected. It made perfect political sense, but it was economic suicide.

Yiannis Varoufakis, a professor of economics at Athens University was just as blunt when he said “This is Greece’s Great Depression”. If you look at the statistics it is indeed a deeper slump than what Greece went through in the 1930s.

Greek’s have taken a 40 percent pay cut. Then suffer an increase in sales tax to 23 percent. Add on increased rates for electricity, a new tax on heating oil and the cost of a gallon of gas hitting almost $10. On top of that your pension is not secure, and your kids are forced to stay home because there aren’t enough teachers to keep schools operating.

Greece has failed it’s obligation promised to receive the previous EU bailout funds, Greece promised to cut 30,000 public sector workers, but only 1,000 have been let go. The government also promised to sell off 65 billion euros in state owned assets. So far only 2 billion have been sold.

The Greek government is trying to raise money through increased taxation. There’s a new property tax that is collected through the state owned electric company. Greece, a country going dark.} Greeks that can’t pay are being disconnected from electrical service. If you don’t pay the tax your electricity is cut off. There’s a luxury tax to hit the wealthy, a 30 percent tax on sports cars and yachts. There’s even a tax on private swimming pools.

Jobless and Hungry

All these action are pushing Greece deeper into debt. Fewer people working for much less money, causing reduced spending and falling tax revenues. More and more Greeks are becoming hungry and homeless, standing in bread and soup lines waiting for a free meal paid for by a government that has no money.

The bad news is the worst is yet to come. It will take many years or even decades before Greece is once again financially secure and stable.