I had promised myself not to write
anymore about the „Greek Affair“
I wasn't going to say anything about
the fact, that the country borrowed way above its ability to repay
and that both parties knew, or should have known this.
The recent developments, however, make
me renege on this promise.
I am not an „Economist“, nor am I
particularly well informed about lending practices between countries.
I am very well informed, however, about
lending practices in business life, where it is quite common to
borrow money, either from a bank or a private institution or
individual.
This is roughly the way it happens:
In order to complete a transaction, say
the purchase of real estate, the purchaser may use some of his/her
own money as well as some obtained from outside sources.
During negotiations between the Lender
and the Borrower, the principal amount, the interest rate and the
repayment time of the principal amount ( amortisation period) are
agreed upon.
A contract, containing all pertinent
points of the loan is signed by both parties and the ownership
transfer of the property is registered.
Borrowing between countries may have
some idiosyncrasies of its own, but I am certain that the principles
of „agreement“ are the same.
As I understand the way it happened
between Greece and the European Union (of which Greece,of course, is
a member) was not much different with one small exception:
Since the Lender knew that the Borrower
was in serious financial difficulties, it placed certain conditions
upon the modus operandi of the Borrower.
Everybody agreed, the papers signed, it
was „a done deal“.
Not so fast, buddy !
The management of the Borrower changed
and the new 'President' was of a different, political cut from the
outgoing.
To him, previous promises meant little
to nothing. He simply announced that the conditions under which the
loan was granted would be disregarded, and it would be 'spending as
before.'
In fact, he announced large increases
in minimum pay, substantial increases in pensions and other empty
unfulfillable promises which made every nonthinking Greek yell: Yeah!
Based on these fairy tale promises the
Greek Communist was elected to head a minority Government by two
seats. He promptly allied himself with an ultra right wing party,
clearly demonstrating his political and moral lack of integrity.
( I find it interesting to note that
nobody uses the noun 'Communist' anymore. The modern terminology is
'radical left wing“ and I wonder where does one end and the other
begin ?
In addition to the promised increases,
the loan amount would have to be substantially reduced and the
interest rates and amortisation period would also be changed in
favour of the borrower.
The Lender, however, suggested that 'a
deal is a deal' and there would be no reduction in principal nor in
the already very low interest rate. An extension of four month,
however, was granted.
So, the Greeks announced in their
country: „The battle has been won, but the war is far from over.“
Is this really the way to talk about
the outcome of negotiations between an impoverished country, Greece,
and the Lenders, the rest of Europe, who came to its rescue with
substantial infusions of cash and credits?
This kind of bravado, of
misrepresenting the facts shows a lack of integrity but also a large
degree of political acumen. He knows what his electorate wants to
hear and, true or not, he gives it to them.
Oh Aristotle, Plato and Socrates, where are you ?
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