By: Jeffrey Klein
Political Buzz Examiner
Just like in the game of musical chairs, when the music stops there is one less chair at the table for the slowest mover, and national election results this past weekend indicate that it will likely be Greece that loses its chair at the Eurozone table–right before it collapses into third world country status.
‘In a deep repudiation of European austerity policies and the lawmakers forced to impose them at home, Greeks punished their ruling parties in parliamentary elections on Sunday and turned instead to an array of anti-bailout parties on the far left and right,’ according to Joanna Kakissis reporting from Athens for Time.com yesterday.
The short version is that the Greek’s reached their credit limit, after decades of overspending on continually expanding social welfare programs, which served as a mechanism for “vote buying.” Their sloppy fiscal housekeeping ignored the falling tax revenue collections from large portions of the outlying population who were avoiding tax filing at an increasing rate.
Then, the global economic downturn chopped what revenue remained to the point where they could no longer even service the debt they had accumulated, and no investors would refinance or augment their debt.
Greece has the largest merchant marine fleet in the world, however 76 percent of its ships are registered in other countries, and it creates 33% of its total trade deficit. Other than a splash of technology and communications companies, it is still predominantly tourist and agricultural based economy–unlike the manufacturing and service economies of the other European Union (EU) member states, whose exports are high value added durable goods, technology and services, especially Germany, the strongest economy in the union.
Interestingly enough, Greece does have the highest ranked universal healthcare system in the EU, ahead of both the United Kingdom and Germany–a result of the drastic overspending that has brought the country to a state of bankruptcy.
In order to preserve Greece’s membership in the EU, the other member states, along with the International Monetary Fund (IMF) designed a financial rescue package for Greece, in order to keep it from defaulting on its bonds.
Before Greece was granted its second $170 billion bailout program earlier this year, the main concern of policymakers and investors was that the Greek government would never be able to hold up its side of the bargain – a crushing austerity program that was tanking the Greek economy, and causing daily rioting in the streets.
Unfortunately, the election results from this past weekend may render the lenders concerns more probable, according to a Reuters article this afternoon.
The Greek election on Sunday failed to deliver a parliamentary majority for the two big, pro-bailout parties, plunging the country into political limbo and increasing the risk that another vote may be required to resolve the impasse.
Adding to fears, the leader of the Left Coalition party, which benefited from rising anger over austerity to take second place in Sunday’s poll, declared Greece’s [austerity] policy pledges under its EU/IMF rescue null and void.
In a stern rebuke to that notion, leading German politicians warned Greece on Tuesday that the country would not receive a cent more in aid unless it fulfills all the conditions of its international bailout.
“The agreements must be respected. I don’t think we can or should renegotiate,” said Martin Schulz, a German politician and president of the European Parliament, on a visit to Berlin.
Gerda Hasselfeldt, a senior member of the Bavarian Christian Social Union (CSU), sister party to Chancellor Angela Merkel’s Christian Democratic Union (CDU), echoed Schulz in warning Greece against any backsliding.
“Our position is unchanged. Aid can only flow if the conditions are met,” Hasselfeldt told reporters.
Greece must push a new round of spending cuts through parliament next month, in order to receive the next 11.5 billion euros aid installment and avoid bankruptcy; however, the post-election deadlock and anti-austerity sentiments are clouding the outlook for that outcome.
Should the new Greek government reject the austerity measures, it will immediately default on its debt, plunging it into the heretofore largest sovereign bankruptcy in the world–where the people would be forced to give up their sovereign rights to a court appointed receiver, and likely not have a vote on anything for a very long time.
Conversely, if the new Greek government chose to reject bankruptcy and receivership, the country will collapse, be forced out of the EU, causing the need for it to resurrect its former currency, and restate the value of every asset–and debt–in the country, virtually rendering it a third world country for quite some time as well.
Right now the United States is on a fast track down this same path with President Barack Obama continually “rejecting austerity.”
Instead, he openly uses his charisma on the innocent, ignorant and stupid in our society–aided by a compromised mainstream media–promising them super-tankers full of milk and honey (financed with stacks of borrowed money), to capture their vote for his reelection.
Syndicated columnist Charles Krauthammer said it best recently … “People can vote to repeal an [austerity] law, but they can’t vote to repeal mathematics or economics.”