I. Please bear with me here as it's time to brood Spenglerian:
TORONTO: The Toronto stock market closed deep in the red Wednesday as commodities sold off on renewed worries that a planned bailout for Greece will fail and lead to a government debt default. A default by Greece or another country would send shock waves through the global economy, particularly in Europe, and wreak havoc on the continent's banking sector... stocks lost early momentum after German Chancellor Angela Merkel hinted that the second Greek bailout package might have to be renegotiated. Merkel didn't rule out altering the terms to the euro109 billion package, saying the decision must be based on how Greece's debt inspectors, the so-called troika, judge Athens' recent austerity efforts... There are also signs of divisions among leaders with reports of heavy resistance to a proposal to ask private holders of Greek debt take on bigger losses. A report in the Financial Times claimed as many as seven of the eurozone's 17 members want the banks to take a bigger hit on their Greek bond holdings. The newspaper said Germany and the Netherlands are at the forefront of the calls for the private sector to take a bigger hit. France and the European Central Bank are said to be fiercely resisting the move.Let's go transatlantic and continue down the rabbit hole:
ATHENS: Greece's lenders are sending a team to Athens to inspect a government austerity plan they want implemented in exchange for aid, while Germany suggested a new bailout may have to be renegotiated. Facing a wave of strikes and protests, Greece's Socialist government is accelerating its debt strategy to meet the terms of an International Monetary Fund and European Union rescue deal so it can receive a new loan next month and avoid bankruptcy... a plan demanded by lenders to deepen budget cuts and raise taxes, which has set off protests not seen since June when riot police fought running battles with activists. Several hundred activists affiliated with the Greek Communists planned to burn bills for a new one-off income tax introduced this summer, while Athens and other parts of the country were hit by transport strikes... leaders from around the world have urged euro zone capitals to end a tortuous debate and create a safety net big enough to prevent Greece's problems from spreading to other euro members and triggering a fresh global downturn.Those two items pertained to the main story in global economic news on Wednesday September 28. As it turned out, on the next day - like something approaching clockwork, Chancellor Merkel of the CDU and her coalition passed measures approving another bailout for Greece. With only little opposition, the Bundestag gave its A-OK to 440 billion euros to fund banks, provide loans and buy bonds. "With fewer conservative renegades than feared", said Der Spiegel, "Merkel can breathe a sigh of relief". Interesting that DS failed to mention the a good part of the German populace are opposed to the bailouts. Guess they're renegades too.
II. Disaster averted or disaster delayed? Obviously, Eurozone is opting for the former. By contrast (sort of), the financial markets desire the latter as they're expecting Greece to default. They want strenuous measures to prevent the Greek economic crisis from going global. Presently, the troika overlords (that is, officials from the ECB, IMF and EU) are in Athens to make sure conditions are met after the government brought in new austerity measures, like it just did by introductions of a new property surtax, diminishing the tax-free ceiling, lowering retirement age and opening up truck transport to competition. In the last couple of years you've likely heard the word "austerity" used frequently in the news. Recall broadcasts on the causes of recent protests in France. Think of 2010 news headlines in England, Ireland, Italy, Portugal and Spain. Technically, "austerity" means government imposed reductions in public services, tax increases and excising the civil service payroll. Simplistically, it means cutting deficits. Really, it is a euphemism used by West European politicians to mean that the government is running out of money and near bankruptcy. In a meta-political context, it is a siren warning that the multi-decadal pan-European experiment of democratic socialism (i.e. entitlements galore) is breaking apart and about to yield its progeny of street riots, vandalism and all manner of misery because self-accommodation has become the rule of the day.
III. Well, in fact Greece will be unable to pay pensions and salaries this month (October) unless it gets its next 8 billion euro installment. Agreement for emergency fund figures in 2012 were settled via telephone, according to Finance Minister Evangelos Venizelos. However, allotments for 2013 and 2014 are still under review, as reported by the Athens News Agency (ANA/MPA really should put date identifiers for online stories, it's quite annoying). Anyhow, the anti-austerity protests have restarted. In late September remonstrations occurred at the entrances of various ministries. Echoing the May 5, 2010 strike and riots, last week there was violence on Athens streets with tear gas and the works. Air traffic controllers also went on strike. This week public transit workers plan industrial action. Accordingly, if you fancy Mediterranean travel, authentic gyros or feta cheese, it is advised that you stay away from Greece for the time being, unless you're willing to tolerate delays and disruptions.
IV. The hard situation is that Greece is way down deep in the red. Catch-22: it keeps borrowing in a futile attempt to stay on top of debts yet this in itself puts a damper on economic growth. Resultantly, the debt-to-GDP ratio increases drastically. The ratio for 2011 is 162 percent, projected to hit 173 percent by 2012. In 2010 the IMF predicted the ratio would peak at 149 percent. To evidence that the IMF has no real grasp of the circumstance, last July it predicted Greece's economy would grow by a marginal but acceptable 0.6 percent, yet just 2+ months later, upon watching it decline by 2.5 percent, it subsequently projected a 5.5 percent decline for 2012. Greece has no solution to escape from this maelstrom that would otherwise lift the country to what EU officials call "sustainable growth" - and creditors are frustrated to the n'th degree.
V. Here are more numbers to top everything off: 50,000 businesses went bankrupt in 2010. Greece's productivity is 30 percent lower than the Eurozone average. From at least the beginning of 2007 until the about late 2010 the interest rate on a two-year government bond was less than approximately 5 percent, ascending precipitously afterward, peaking at nearly 77 percent last September 13. When it joined the currency union in 2001, Greece's debt was 152 billion euros. By 2010 it reached 328.6 billion euros. That same year S&P downgraded Greece's debt to BB+ status, or "junk" as market experts nickname it. Other economic indicators paint the same bleak picture. And all of this swirls in a climate where the ECB creates money ex nihilo, where there is runway inflation, bureaucracy with its attendant corruption, not to exclude those endless unproductive "discussions" over bottles of Pellegrino. So, for Greece, the answer to the question in the first sentence in Paragraph II is disaster delayed. Amongst the European elites, there has got to be a kind of disquieting, inward knowingness in all of this as they "kick the can" down the cobblestone street.
VI. So, then, the next question is: default or devaluation? Effectively, the latter cannot be done simply because, with the euro's introduction as a common currency, the European Central Bank, alias Comptroller maximus, is producer of the show. No member EU country can really devaluate. Thus Greece must beg, borrow and (roundaboutly) steal. Thus the only option appears to be declare default on debt. One commentator justifies the result this way:
Greece is going to have humble itself and formally admit that it cannot pay off its debt.Foreign investors will run for cover, austerity measures will come by themselves, but this makes more sense than the Greek handing over more control to EU, ECB and IMF. Further, it would constitute a warning to Portugal, Italy and Spain to get their houses in order, and to investors that lending money to government may not be the wisest thing to do. Thus, drop the bailouts, let Greece default.
VII. Now let's take a glance at the political parties. In these seemingly latter days of the Third Hellenic Republic there is Prime Minister George Papandreou of the Panhellenic Socialist Movement (PASOK), currently having 154 seats in Parliament. Note well Papandreou comes from a family of political elites. Both his grandfather, George Sr., and father, Andreas, were PMs. The main opposition, now with 85 seats, is the centre-right New Democracy (ND) party, led by Harvard-educated economist Antonis Samaras. The Communist Party of Greece (KKE) hold 21 seats. Oldest of the political parties, it was formed in November 1918, soonafter the Russian Revolution, and just a week before World War I ended. The Popular Orthodox Rally (LAOS), with a "right-wing populist" or "extreme right" orientation (depends on who you read), have 16 seats. It is Euroskeptic. The remaining 17 MPs are from three parties: Coalition of the Radical Left (SYRIZA), the Democratic Alliance (DISI) and the Democratic Left (DL), obviously all inclined to socialism. There are a multitude of minor parties that operate in the backdrop. Their philosophies are mainly leftist, constituted of Greens and whatever flavour of Communism, be it Marxist, Trotskyist, Stalinist or Maoist. Greece the democratic republic has had 10 PMs after the monarchy was abolished in 1974. All have belonged to the PASOK or ND, meaning alternations between socialist and (supposedly) centre-right governments.
VIII. Yet whether governments were left or centre-right seemed not to matter after Greece dropped the drachma and allowed to adopt the euro in 2001. Both PASOK and ND had governments since then, and last year it came to light that both, in complicity with Goldman Sachs, purposely fudged economic statistics so as to abide by monetary union rules. Then why was Greece allowed to switch to the euro in the first place? Sarcasm on: Was it because of stellar economic performance? Sarcasm off. Much of Greece's economy is based on agriculture and, more recently, tourism. But renown comes from its maritime industry, a very long history of shipping in fact, going all the way back to the island of Crete under King Minos circa 1450 BC. Presently Greece has the world's largest merchant navy, a status achieved largely with help from the unsavory character Aristotle Onassis. Based on 2001 transportation statistics, Greek ship owners made up approximately 18 percent of the total world fleet capacity. The merchant navy accounts for anywhere from 5 to 10 percent of the GDP. Despite these it was common knowledge, in 2001, that politics in Greece was notoriously corrupt, with an economic history of devaluation and big time deficits. So the answer to the question posed just above is that Greece should not have been admitted into fiscal union. The Stability and Growth Pact (SGP) states that "Member states shall avoid excessive government deficits", which is a joke when modern Greece is considered. Why? Because the purpose of borrowing at low interest rates is to make debt easier to manage, not to rationalize and perpetuate more government spending. The often sung tune for the euro as a common currency is that it prevents deficits from spiraling into the abyss. But that matters not when the bailouts keep on coming and are, in effect, "guaranteed", irrespective of dire economic conditions. It's just like those municipal programs that supply "clean needles" to heroin addicts - it hinders, it does not help. If Greece is permitted to flagrantly transgress the rules, what's to stop other member states from doing the same? It's a prospective ripple effect with tsunami-sized proportions.
IX. Now we can go on ceaselessly talking about shady politics being the enabler of Greece's moribund economy. Go to any news agency on the internet, read whatever columnist or editorial in any newspaper, peruse those prestigious journals on world affairs, and it's all the same: politics politics politics. In reality, such an approach to Greece's economics crisis, or any country for that matter, is surface analysis. Rather, the circumstance relates directly to something much deeper. If we start digging we find the penultimate cause of the crisis to be simple and straightforward: "The level of social morality is directly linked to the performance of the economy", so penned the English historian/commentator Paul Johnson in the 1970s. It is a matter of individual human beings making decisions of right and wrong, good or evil. For instance, if the prime motivating principle of an entrepreneur at a private sector company (large or small) is profit to be acquired by valueless means, devoid of concern for its socio-economic implications to persons, then surely avarice is the sin, and a deadly one. If, as is not uncommon in Greece, a public servant makes the choice to accept a bribe (the so-called "fakelaki", meaning "little envelope"), then we have avarice again. If an entitlement mentality exists in a large sector of the populace, meaning laziness and irresponsibility if we are speak harshly, or meaning sloth in a moral context, it therefore follows that this populace cannot be satisfactorily productive in an economic sense. A travel website says this about Athens:
Most visitors will leave impressed with its vibrant street life and relaxed lifestyle, where people take time out for endless coffees and evening strolls, dine out until late and enjoy the city's nightlife, long after the rest of Europe has gone to bed. Athenians are the first to debate and lament their city's many shortcomings - but most wouldn't live anywhere else.There's certainly nothing wrong with having fun in the sun, and that quote should be taken with a grain of salt. Still, in terms of the cause of the current economic crisis, there is irony and a latent truth in that descriptor.
X. The ECB can supply euros aplenty to Greece, although this only pretendedly allows its economy to tread above the Mediterranean waters. In actuality, the ship is sinking. The bailouts matter little if material wealth is deemed the highest virtue, which is really the sin of avarice, or if its people feel a strong sense of entitlement, which is really the sins of sloth directly and envy indirectly. Transferring billions of euros to those who, lost and enraptured by a life of consumption, have no interest or sustained intention to produce useful/beneficial goods or services, is no different than burning money. It engenders poverty, not prosperity nor a inclination thereto. So, then, if "social morality" is the penultimate cause of political corruption and, consequently, an anemic economy... what is the ultimate influencing factor? In other words, what underlies morality? Answer: religion.
XI. The most intriguing but overlooked aspect of Greece's economic crisis is the situation of the Orthodox Church. But before delving in let's briefly consider a few statistics to gauge religiosity, lacking a better word: Surveys done in the mid-2000s showed that, although 81 percent of Greeks believe in God, only 27 percent attended church regularly. Disturbingly, a report from 2002 indicates that greater than 250,000 abortions occur per annum, where 16 percent of these were done on girls younger than 16 years, 33 percent for married women, for "economic" reasons. Moreover, Greece's low birth rate is deemed a national crisis in some quarters. I agree. And they wonder why?! If you don't make babies, then how can you innovate and be productive economically if over time there are lesser and lesser people to innovate and produce? Numerous studies demonstrate this derivative of the anti-natalist mentality. Immigrants only account for approximately 5 or 6 percent of the population. Around 95 percent of the population are baptized into the Orthodox Church, the official religion of the State. Considering the statistics just mentioned, the premise of a Grecian "national religion" is a non sequitur in a sense since most Greeks evidently don't seriously consider Orthodox Church teaching in their day-to-day lives. This is true for all countries in the West, but for argument's sake we are specifically examining the relation between Church and State in Greece as such.
XII. The Byzantium Empire ended with the Mohammedan siege of Constantinople in 1453. The church obtained control with regard to matters of State at this time. Then came the Greek War of Independence, starting in 1821. With the assistance of Britain, France and Russia, Ottoman rule was defeated and a monarchy established. The Eastern Orthodox Church, the established religion, was subservient to this monarch. In other words, State imposition on religion. That was the beginning of the First Hellenic Republic. The Second Republic was declared in 1924 soonafter the Greco-Turkish War (1919-1922), which just intensified the antagonisms between Greece and Turkey, existent to this day. Thereafter followed decades of more strife: Axis occupation during World War II, civil war (1946-1949), the "Regime of Colonels". The Greeks are a longsuffering people and they should be respected in that context, especially when consideration is given to the Pontic genocide committed by the Ottoman Turks. Recall also the Turkish invasion of Cyprus in 1974. That same year the Third Hellenic Republic was proclaimed, a "Parliamentary Democracy with a President as Head of State", confirmed by plebiscite, with a new Constitution promulgated on June 11, 1975, written "In the name of the Holy and Consubstantial and Indivisible Trinity".
XIII. Article 3 is most important because it stipulates the "Relations between Church and State". It reads:
Debate there has been on the interpretation from "observed unwaveringly..." onward, for obvious reasons. This article also guarantees the church to be autocephalous, that is, self-governing. It is astonishing to read this aspect the Church/State relations and then come to remember that the "national religion" is subsidized directly and indirectly by the government. The Orthodox Church of Greece - bishops, clergy and laity employed therewith - receive salaries and pensions from the government, which also affords legal support and administration of church property. Moreover, the Orthodox Church (including other religions, a small minority recall) benefit from tax exemptions. But now, in this "Age of Austerity", the relationship between the State and the Orthodox Church has becoming stressed. Last year the PASOK government sought to impose taxes on Church property to cope with Greece's mountain of debt. However, this year - based on news reports from just late September to early October - it appears that the Church is going to be spared from such "austerity measures". Instead, the aforementioned finance minister Venizelos and Archbishop Hieronymos II are "discussing ways in which to merge part of the Church's real estate heritage into a joint fund, managed by the government and the religious authorities". Further: the priest responsible for the Greek Church's finances stated the "the Church contributes to the State when the State functions. Otherwise, there is no reason whatsoever to do so".The prevailing religion in Greece is that of the Eastern Orthodox Church of Christ. The Orthodox Church of Greece, acknowledging our Lord Jesus Christ as its head, is inseparably united in doctrine with the Great Church of Christ in Constantinople and with every other Church of Christ of the same doctrine, observing unwaveringly, as they do, the holy apostolic and synodal canons and sacred traditions.
XIV. Does the reader see what's happening here? The government and the Greek Church are ever so meddling into one another's affairs. It is a classic case of that wavering, unreal distinction between the Orthodox Church and the State, which leads to other problems like the confusion of faith with ethnicity. As the religion of the State, the Greek Church gets preferential treatment from the government, including political clout. Getting too cozy with the State always has been the debilitating predicament for the Orthodox Church, from the Great Schism to Russia in the twentieth century.
It's been nearly a millennium since AD 1054. Now is the time to come back home.
But, alas, I am a dreamer.
Farewell Athenia, you're about to implode and, lest you forget, the barbarian vanguard mounts for battle downrange along your eastern horizon.
It seems the War of 1821 was for naught.
Take me away, Ioánna. Take me away...
NOTES / REFERENCES
1. M. Morrison, "TSX sells off, commodities slide on fresh uncertainty over Greek bailout terms", Canadian Business, September 28, 2011.
2. "Greece bailout fund will depend on its austerity implementation audit", The Economic Times, September 28, 2011. From The Times of India via Reuters.
3. "German Parliament Passes Euro Fund Expansion", Der Spiegel, September 29, 2011. Authored by "cgh" with wire reports.
4. Cf. "Three dead as Greece protest turns violent", BBC News, May 5, 2010; J. Lichfield and M. Tzafalias, "In Athens the day was calm. Then came night", The Independent (UK), May 7, 2010.
5. M. Robinson, "Bloodied but defiant: 10,000 Greek strikers and police in running battles as debt-ridden country starts a 24-hour walkout", Daily Mail, October 6, 2011.
6. "Greece Falls Into 'Death Spiral': Rising Debt, No Growth", CNBC, October 3, 2011. Via Reuters.
7. Reported in "Greece and the eurozone: Accept reality - and default", The Guardian, June 23, 2011 (editorial).
8. Source: Bloomberg
9. See K. Martin and T. Roth, "S&P downgrades Greek debt to junk", The Australian, April 28, 2010.
10. Cf. Hellenic Republic, Press Release, "Production Index in Industry: March 2011", Hellenic Statistical Authority (ELSTAT), May 10, 2011, 7 pp. Includes data pertaining to the 2010-2011 economic crisis. Between May 2010 and May 2011 the unemployment rate soared from 12.0% to 16.6%. See Press Release, "Labour Force Survey: May 2011", Hellenic Statistical Authority (ELSTAT), August 11, 2011, 4 pp.
11. H.R. Clausen, "Let Greece have its Default", The Brussels Journal, April 29, 2010.
12. L. Story, L. Thomas Jr. and N.D. Schwartz, "Wall St. Helped to Mask Debt Fueling Europe's Crisis", New York Times, February 13, 2010.
13. The UNCTAD Secretariat, Review of Maritime Transport 2010, United Nations Conference on Trade and Development, June 21, 2011, Table 2.6, p. 41.
14. See Table 1-5, "Top 20 Ranking of World Merchant Fleet by Country of Owner as of January 1, 2001" in Maritime Trade & Transportation 2002, Research and Innovative Technology Administration (RITA), Bureau of Transportation Statistics, Report No. BTS 02-01, 2002, Washington, DC.
15. "Consolidated Version of the Treaty on the Functioning of the European Union", Official Journal of the European Union, C83/47, March 30, 2010, art. 126, no. 1.
16. P. Johnson, Enemies of Society (New York: Atheneum, 1977), p. 191.
17. "Introducing Athens", The Lonely Planet, December 15, 2009.
18. See Social Values, Science and Technology, Eurobarometer 225, European Commission, June 2005, p. 9; R. Manchin, "Religion in Europe: Trust Not Filling the Pews", Gallup, September 21, 2004.
19. Reported by Professor Ioannis Bodis, gynecologist from the Aristotle University of Thessaloniki, at the 17th Northern Greece Medical Conference (sponsored by the Thessaloniki Medical Company), May 2002.
20. See The Constitution of Greece, The Fifth Revisionary Parliament of the Hellenes Resolves, June 11, 1975, pt. I, sec. II, art. 3. Article 72 ensures self-governance of the church. The Constitution was revised in 1985, 2001 and 2008.
21. "It does not unite all members of the Orthodox Church. There are five distinct ecclesiastical provinces in Greece, each with a different church. They can choose between an autocephalous or autonomous status. Autocephaly means that the church is spiritually self-sufficient and independent in administration in contrast to the autonomous status being only independent in administration", from State and Church in Greece, European Studies on Religion and State Interaction, Aristotle University of Thessaloniki, October 31, 2007.
22. "Greek Orthodox bishop denounces new taxes on church as hostile", Reuters, March 17, 2010.
23. See "Crisis-hit Greeks exhort their church to share pain, pay taxes", The China Post, September 26, 2011.
24. Quoted in G. Galeazzi, "Greece: The Orthodox Church remains untouched by the crisis", La Stampa, October 6, 2011.