These days I feel as though I’m living in a science fiction film. “Is this a joke?” I keep asking. The truth is that Greece’s public finances are indeed in a bad state, but I find it unlikely that Greece will ditch the euro so that politicians can inflate their way out of the trouble.
Even so, Greeks have a tendency to exaggerate and everywhere I go I keep hearing the same. But if we were to be level-headed we would find that the Greek debt is not that bad, comparatively speaking. Assuming that 2009 statistics are reliable (and this time they might be), the situation is indeed bad as the country has a deficit of over 12 percent of the GDP and a debt of 109 percent of the GDP. Nonetheless, this does not make Greece unique as there are other countries, too, that have even bigger deficits than this (take for instance the UK) and others that have even higher debts (take for instance Japan).
With all the austerity measures the government seems hell-bent on taking it seems unlikely that Greece will default. The only bad news is that those who are forced to cut back are not those who got us into this mess in the first place who are none other than corrupt politicians and tax evaders. Unfair, isn’t it? (Side note: This kind of reminds me of an infamous comment made by former Liberal Party Australian prime minister Malcolm Fraser who had said “Life wasn’t meant to be easy!” before getting ousted as head of the government proving yet again that brutal honesty is not what voters want).
Regardless of who will end up paying, the only thing essentially that worries me is that the Greek debt risks may end up being a self-fulfilling prophecy. All this panic is bound to get markets worrying and the more this happens the higher the yields will go in a vicious cycle.
In Australia, such economic banter wouldn’t even make its way to dinnertime conversation, but in Greece it’s all the rage. Indeed, this speculation is the stuff casual dinnertime chit chat is made of. How can one enjoy one’s pizza with all this talk of belt-tightening? How can one sleep? How can one remain smoke free?