Rod Dreher

Greece is exploding over the harsh austerity plan they’re going to have to accept as a condition of their bailout.

The general strike marks the broadest challenge to date to the government of Mr. Papandreou, which is pressed to pass the austerity legislation to unlock bailout funds to meet a debt payment later this month that it otherwise couldn’t meet.
The protests also brought out many Greeks who were resigned to belt-tightening. Their unhappiness at the cuts was matched with rancor toward a generation of politicians who they say spurred the crisis with decades of corruption, kickbacks and accounting legerdemain aimed at obscuring to the EU the true level of Greece’s annual deficits.
“For 30 years the Greek people have been held hostage,” said Periandros Athanassakis, 48, a garbage collector in Piraeus, the port near Athens. “Those who stole the money should pay.”
Some officials saw in Wednesday’s protests the seeds of broader discontent. “We may have an uprising in the making,” one senior Greek official said.

We’ll see what happens now that Greece’s parliament has passed the austerity plan — this, only two weeks before the Greek government is on track to default on part of its debt.
On the one hand, I don’t feel sorry for the Greeks, who have been living way beyond their means with an unsustainable economic arrangement (including widespread tax evasion) for years. The people on strike, especially those committing violence — just what do they hope to accomplish? Do they think the international bond market is going to be fazed by their tantrum? The whole nation’s back is against the wall, and what’s needed now is social solidarity to get through the coming lean years, and make the necessary governmental and cultural reforms.
On the other hand, one of the only things that separates Greece from the US is time. We too have been politically unwilling to make the hard choices (e.g., tax increases, spending cuts) to live within our means. The loans aren’t going to be rolled over forever. What then? Granted, the US has far more flexibility in the face of a similar crisis than Greece, for a variety of reasons. But our day of reckoning is surely coming. Greece’s civil society is being badly stressed by all this, with one Greek liberal broadsheet saying that the country is headed for self-destruction at this rate. Are we Americans so confident we wouldn’t face the same unrest? That we won’t?
Anyway, the more immediate problem is not just Greece; it’s the future of the European Union project. Excerpt from a NYT analysis:

They suggest that the European Central Bank buy back billions of euros of unwanted Greek, Portuguese and Spanish debt and that the I.M.F. offer a large bailout for Spain.
Such a broad stroke would surely cost more than the $700 billion that the United States pledged to back up its failing banks in late 2008. Therein lies the rub: not only is it an enormous sum, but it requires a degree of flexibility, political courage and teamwork that the European Union and the I.M.F. have not yet begun to show.
“It is not really about money,” said Timothy Congdon, an economist and professed euro skeptic who foresees an exodus of savings from banks on Europe’s periphery to Germany as doubts build about these countries’ staying power in the Eurozone. “It is about how much pain the people in periphery can stand in order to keep this thing going. Once the confidence is gone, and Greeks and Spaniards move their deposits to Frankfurt, it becomes a self-fulfilling prophecy, and the whole thing implodes.”

Talk about social unrest: what will the publics in northern Europe have to say when they grasp the kind of trap their political elites have ensnared their national economies in, for the sake of European unification? This could get real ugly.
UPDATE: Think what’s wrong with Greece stays in Greece? The Dow Jones plummeted 1,000 points today, though made back 600 points — this, on European debt fears.
UPDATE.2: FrumForum sees parallels too:

Greece is bankrupt. Their debt is 108% of GDP and will climb to almost 150% by 2013 when the bailout loans would come due. 25% of Greek taxes will go to service its debt — to mostly foreign investors. Currently that nation’s government spending amounts to 50% of its GDP.
Consider then that in 2009 US debt was 86% of GDP and climbing. It will go past 100% by 2012. 20% of U.S. federal taxes go to service the interest on the national debt. That number too will rise. Our major social entitlement programs of Social Security, Medicare and Medicaid, are bankrupt. We are waging foreign wars almost entirely on our own–so that Europe doesn’t have to. And now we have just enacted the mother of all entitlements that only the most wishful of thinkers (or a cynical Democratic Congress and White House) would argue is anything but a multi-trillion dollar debt dog pile on top of an already strained budget.
Of course our gargantuan economy is much more vibrant, diverse and robust than Greece’s. But we are already seeing within our borders mini-Greeces popping up at the state level. 41 states currently face budget shortfalls and the effects are already being felt. …
What is currently unfolding on the chaotic streets of Athens is an immovable force of a deep-seeded entitlement culture which is unwilling to give up its government goodies standing up to the irresistible force of brutal mathematics. Care to bet on what side will ultimately prevail?

Join the Discussion
comments powered by Disqus