A lot of financial spectators say that Greece shouldn’t have been allowed to join the Euro, but that is true for many Countries ; in any case, they had no choice as part of the European Union’s requirements is that countries ultimately join the Euro unless, like Sweden and the UK, they have an opt out clause. Iceland came back from the dead, perhaps Greece can. Also one could state that even if the figures Greece gave were dodgy, however the Eurozone should have done their job better and investigated the figures correctly.
And then we have to deal with what is, now what shouldn’t have been.
Greece doesn’t have the money to pay back the loans; its big industries are tourism and boats. Boat builders are exempt from tax under the Greek constitution, and if you tax the tourists they choose cheaper destinations such as Croatia. Greek hasn’t got many natural resources such as oil or diamonds to sell. You could argue that they should make more use of geothermal or solar. It needs investment, and they are bust.
However, if we consider Japan, their debt to GDP ratio isn’t exactly reassuring and one wonders why Greece g=has become the whipping boy scapegoat for Northern rich countries who think themselves better because they are richer; The reality is that if asked to do so, NO European country could pay off their debt straight away. Name me a country with no sovereign debt!
Greece will vote in a referendum to accept or not the terms from Europe on Sunday. But many want to stay in the EU. Greece probably needs to default and reform outside the Euro to rejoin at a later date, or do a Cyprus. Indeed, Greece asked for a 3rd bailout only hours ago. The EU parliament would have to agree to that, as well as the German one, so probably “no”. This is when countries put their own needs before that of Europe and its true of both sides; Europe needs stability, and the debt crisis in many European countries (Iceland, Ireland) was caused by bankers buying dodgy debt. But in Greece, the debt’s been there for a while.
Only Spain have defaulted more on debt (http://www.cnbc.com/id/47814564) in all the other European countries. Only Ecuador and Honduras have a worse record of meeting their debts. – (http://www.historytoday.com/matthew-lynn/greek-economics-drachmas-debt-and-dionysius#sthash.qNJZh7JJ.dpuf)
This underlines the whole problem of the Euro. The dollar is backed against oil, the pound sterling was backed against coal and the empire. The Euro has no backing other than collectivity. If we start to see this disappear, the Euro will follow the same path. The EU needs a sound fiscal policy and not just a joint currency; It needs joint taxes and social care, the same throughout the EU.
Greece needs to reform its constitution and ensure that the tax revenue it needs is forthcoming as well as reforming its social systems. Indeed Europe needs to create a social and financial model for all its countries, which works in all economies.
Germany’s posturing and figure pointing forgets that great economies become poor ones very quickly. Their refusal to aid Greece is as financially unaware as Greece’s debt. Maybe they didn’t want Greece in, but they have a duty to bail them out now they are.