I happen to be in Athens these days and having just walked through the war torn streets of the capital, I can not help but wondering if the current crisis is the final straw that brings down the very social fabric of the country. There are reports of people burned alive after a Molotov attack at the offices of a bank and numerous fires burning in different parts of the city.
Forget financial contagion, judging from what is unfolding in Greece, Europe is in the jaws of social chaos. Can the EU survive such unrest especially if the Greek drama is only the harbinger of things to come in Spain, Portugal and Italy? No population will be willing to accept the draconian measures as dictated by the IMF and the EU when at the same time we all bear witness to a gregarious socialization of private losses.
I read these days articles that attack the Greeks collectively claiming falsely that they lived beyond their means thus they are the culprits of their current woes. Greeks can only be accused of one thing and that is their passive acceptance of a corrupt system which has over the last 30 or so years managed to siphon the wealth of the country into the hands of an elite few.
Why that happened in the cradle of democracy? Lets be honest, there is no democracy nowdays anywhere, last time there was such a thing Athenians were asked to cast a vote for every major issue concerning their city. But forgive me, I am diverging. Modern Greeks never had a choice, when the public sector is 75% of GDP and by far the largest employer, the citizens had to bow their heads and vote for any party or politician who could secure them such employment. The alternative in many cases was life on the dole.
A lot of other bloggers have exemplified their well put arguments with numbers so I don't feel the need to repeat that feat, I have to argue though that current economic measures are only going to make the situation worse. Absence of currency devaluation and default Greece and most likely the other PIIGS are not going to be able to survive for too long. Financial packages only address the liquidity problem and not the solvency issue.
The Euro, which was sought by many in the PIIGS, having lived through the volatility of their drachmas, pesos etc. is now a straight jacket leading them to destruction. What a tragic outcome for such a glorious (practically unworkable) idea.
Disclosure: No positions