“…and the will of Zeus was moving toward its end.”
– Homer, The Iliad
The burden of being on top ultimately weighs a civilization down. Success is overreached. Advancement becomes unsustainable. Then, when everyone least expects it, something slips…and the seemingly impossible happens. The money, the military, and the people’s dignity collapse and fold in short order.
Take Athens, for instance. It lost its edge over 2,400 years ago. When the Peloponnesian War began, in 431 BC, Athens was the strongest city-state in Greece. By the time the war was over, just 27 years later, it was reduced to a state of complete devastation.
Moreover, the close of the Peloponnesian War marked the ignoble end to the golden age of Greece. Athens was never able to re-gain its pre-war prosperity or preeminence and the populations psyche was forever shattered. To this day the people of Athens still carry a chip on their shoulder over it.
For example, last week protestors lit buildings in central Athens on fire. On surface, they’re angry about austerity measures being tied to yet another Greek bailout. But we think there’s something more that’s flaming their rage.
Perhaps it’s the whole ineptitude of the European Union that has people taking to the streets…
Living In Default
The fabulous thing about the Greeks is that there’s hardly a cockamamie idea out there they haven’t gone for with gusto. Their early experiments in democracy, oligarchy, conquest and empire have laid the blueprint for all ambitious nations to come. More recently, they’ve uncovered the illuminati’s peculiar resistance to default in the 21st century.
Since achieving independence from the Ottoman Empire in 1832, the Greeks have excelled at repeatedly defaulting on their debt. In fact, Greece has spent nearly 50 percent of its modern independent rule in default. Hardly a politician has come to power that hasn’t overpromised and underdelivered.
Occasionally, after overreaching their obligations, the Greek government has stiffed their creditors or inflated the drachma, and had to start over with limited credit. Here at the Economic Prism we don’t disregard Greece’s deficient attitude toward debt and contracts. Nonetheless, we don’t favor a larger central bank bailout of private banks, who issued an endless line of credit to a government with an obvious track record of not being able to handle it.
By doing so, the central bank engenders a world of economic stagnation. The dead wood’s never cleared out…it’s propped up and prevents the sunlight from reaching and nourishing new sprouts of growth below.
Over the weekend the technocrats gathered in Brussels to put the final touches on their latest Greek rescue package. Yesterday, their masterpiece was to be revealed…but it was not to be. The weekend of dithering ended without a deal.
Without the rescue package, reports AP, “An uncontrolled bankruptcy would likely force Greece to leave the 17-country currency union and return to its old currency, the drachma, further shaking its already beaten economy and creating uncertainty across Europe.”
If only the Greeks could be so lucky…
The Hell of Technocratic Prevarication
Greece, were it not in the EU, could humbly default on their debt or simply inflate their currency. Obviously, there would be consequences for either course of action. But at least the decision would be in the hands of the Greeks and their own elected government. More importantly, they could just get on with it.
Yet, because Greece is part of the EU, that decision’s no longer theirs to make. Instead it is up to a bunch of technocrats in Brussels, who periodically come together with self-important pomp, to announce a solution to the Greek debt problem. Their solution generally consists of extending more credit in return for increased austerity.
Unfortunately, this does nothing to solve the problem. It merely pushes it out into the future and exacerbates it. Then the technocrats come together, celebrate their greatness, and do it again…and again.
Certainly, the man on the streets of Athens can’t be happy his leaders borrowed more money than they could ever pay back. Still, the fact that his Country is broke is not likely what he finds so maddening. What must be really provoking his anger is all the dithering ditherers in Brussels.
Thanks to their handiwork, Greece does not get to experience the abrupt pain of default or the disruptive ravages of inflation. Instead Greece gets to experience the hell of technocratic prevarication. In other words, Greece gets to experience a slow motion, never ending, technical default, through the dreadful and repeated combination of austerity and more debt.
Only EU elites could achieve such glory. For those in Greece trying to earn a living, they’ll be making their way in a functionally dead economy for the rest of their lives. To add additional insult, the big banks get a free pass on the dime of the European taxpayer.
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