Thursday, 22 September 2011

08:17 – Greece is shut down by strikes today, in response to the announcement yesterday by the Greek government that it intended to make some trivially small spending cuts. The problem is that Greece has been living far, far above its means for many years now, partying on borrowed money that it never had any hope of repaying. Now that lenders are no longer willing to continue subsidizing the party, Greece is going to have to admit belatedly that it is poor. Not just poor, but dirt poor. Living standards will plummet to third-world levels, and all the strikes and riots in the world can’t change that. Greece is a basket case, and is likely to remain so for decades.

Greece, about the size of North Carolina and with a population of only about 10.7 million, has about 800,000 government employees. (Just to put this in perspective, if the city of Winston-Salem was in Greece, our share of that would be about 18,000 government employees.) About 800,000 Greek government employees, all of whom are paid what would be considered a good salary in the United States, let alone a third-world country, and all of whom can retire young with excellent pensions. Is it any wonder that Greece is bankrupt? And, despite its repeated promises to the EU and IMF, Greece has done essentially nothing to cut government employment and spending. It’s no surprise that Germany and the other wealthier northern-tier nations have had about enough.

Work on the biology book continues.

12:07 – Someone asked me what I’d do if I were the Greek government. First, I’d continue lying, as the Greek government has been doing for more than 10 years now. I’d promise the EU/IMF authorities anything to get my hands on that next $10 billion tranche of aid, and I’d ask for it in small bills with non-consecutive serial numbers. As soon as I had my hands on that money, I’d announce immediately that Greece is defaulting on all foreign debts, whether owed by the government or by Greek companies or persons, and that it plans to pay zero cents on the euro. Instead, it will pay off in new drachmas, with those new drachmas valued at one drachma per euro, and only if the debt holders agree that that payment constitutes full and complete payment. The new drachma would quickly lose a bit of value, of course, probably from 1:1 drachma:euro to something in the 100:1 range and falling in the first day or so. I’d also announce an 80% cut in government employee headcount, and that henceforth all salaries and pensions will be paid at their former levels at one new drachma per euro. Oh, and I’d confiscate all real property and financial assets held by the church, which has been a leech on Greece for far too long.

That done, I’d immediately apply to the UN for emergency humanitarian aid to feed the starving people of Greece, which is to say nearly all of them. And I’d plan for a slow recovery that will probably take literally decades. Meanwhile, I’d run ads to let Americans and Brits know that they could enjoy a fantastic Greek vacation for only a few dollars (or a few million new drachma) per day. Because tourism is going to be about the only way that Greece will be able to earn foreign currencies for the foreseeable future.