Today, when you hear the word ‘Greece,’ what do you think of? The
Acropolis in Athens? Romantic islands in the Aegean Sea, white stucco homes
with blue roofs? Chances are today, when you hear ‘Greece,’ you think of
economic collapse and European Union bailouts.
Too bad ... because there is more to Greece than that. Very, very
few countries in the world have had the influence that the ancient Greeks
wielded. Their ideas, philosophies, even the concept of democracy, are the
bedrock of the western world. At the age of 18, I spent a year full time at
university studying nothing else except ancient Greece and its key role in
founding western civilization. Their contribution is incalculable. So like the
ultra-Greek nationalist Gus Portokalas, father of Toula in the 2002 hit movie My Big Fat Greek Wedding (the
biggest-grossing romantic comedy of all time), I agree that the Greeks are high
up the totem pole.
It seems that today, however, they are at the bottom of the deepest
valley. After 19 hours of non-stop negotiations, the European Union agreed to
the third bailout of Greece to the
tune of 86 billion euros. That’s on
top of the two early bailouts
totally 240 billion euros.
The deal that Greek Prime Minister Alexis Tsipras agreed to is worse
than the one he and the Greek voters rejected in the July 5th snap referendum.
By winning the referendum, the Greek PM was hoping, even demanding, to have
some debt forgiveness; instead, he was offered more cuts to pensions, more
austerity, and no write-offs.
In the end, Tsipras had no choice, despite the referendum. It says
in Proverbs 22:7 ‘The rich rule over the
poor, and the borrower is servant to the lender.’ Without a deal, with
Greek banks closed and ATMs dispensing only 60 euro a day per person, the cash
would simply run dry. Greece would have exited the eurozone, hyper-inflation
would have set in, leading to social upheaval, repression, and who knows what
else. Despite the tussle, 81% of Greeks want to remain in the eurozone.
The bailout agreement is a short-term fix. The bigger issues of the
euro currency flaws and political union of 28 European Union nations have to be
addressed, sooner or later.
How did Greece get into this mess? Are there any lessons we can
learn?
First, it is unclear why Greece was allowed into the eurozone in the
first place (along with a few other nations). Accounting records were falsified
and Greece was able to borrow lots of money to which is was technically not
entitled. They misrepresented their deficit at 4% when it was closer to 14%.
Instead of investing it innovation and capital-making ventures, the money went
into luxury items. The number of public sector employees ballooned
astronomically and were promised early retirement with big fat Greek pensions.
Tax evasion is a national sport.
Twenty years ago, it became obvious to the astute observers that
Greece was borrowing and spending at a rate it could never repay. Being in the
eurozone gave Greece access to favourable loans but, on the negative side, when
they hit the wall, they could not print euros like other countries who print
their national currency (known by the euphemistic term ‘quantitative easing’).
Then came the bailouts. This was made possible by a trio: the
International Monetary Fund (IMF), the European Central Bank (ECB), and the
European Union (EU). But the lifeline came at a price: austerity. This means
taxes must be raised (if you can collect them), spending cut, and the public
sector slashed. Instead of shrinking by only 6%, the Greek economy shrunk by
25%.
In all probability, Greece’s profligancy was matched by the trio’s
heavy-handedness. This heavy duty austerity medicine has come at a frightfully
high price: an economy that shrunk by 25%, youth unemployment is 50%, a quarter
of a million public sector workers fired or retired, private wages cut, and a
growing suicide rate. Government employees saw their salaries fall by 15%, the
minimum wage cut by 22%, and a 38% decrease in state pensions. By all accounts,
the remedy of austerity was too severe to swallow, without stimulus that might
have jump-started the economy.
The previous Greek government apparently balanced the budget (though
the debt remained). Then comes Alexis Tsipras a telegenic, charismatic
firebrand from the Syriza Party, the most left-wing party in power in Europe
today. ‘No to austerity,’ said the 40 year old prime minister, and tried to
reverse the effects of auserity. To no avail.
Rugged as austerity has been on the pensioners, it is even worse on
the younger Greeks. Proverbs 13:22 says ‘A
good man leaves an inheritance to his children’s children ....’ However,
the borrowing and spending of the elders have left the younger Greeks with a
debt they cannot repay - this is very immoral, to say the least. Can the nation
that gave the world western civilization innovate and modernize in an ever
globalized world? Especially since borrowing is out of the question? Can Greece
jettison their social welfare entitlement mindset, for which it has no money to
pay, a lifestyle they clearly cannot afford, and rally around a renewed vision
and purpose?
Lessons? All nations should watch their pensions, the tax structure,
and the cost of welfare. What about individuals and families? Be honest about
your accounts; don’t live in narcissitic denial. Learn to stand on your own
feet, get your finances under control, invest in things that increase in value,
don’t borrow an amount that will cause you to lose sleep at night, and, if you
are a person of faith, be led by the Holy Spirit. Learning to live within your
means, according to your budget, yet invest in worthwhile things, gives you one
of the greatest gifts you can have: financial freedom. When you have that,
money is not a problem and you can get on with life.
In the meantime, spare a thought for Greece, offer a prayer, and get
your house in order. If you want to help the Greek economy a little, come join
us for the Book of Revelation Tour of Greece and Turkey in November!
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