Monday, July 6, 2015
Economy: Greece - A Pyrrhic Victory
The result of the referendum is a pyrrhic victory. The greek will have to suffer much more. Many Greek are already "sick and tired of the bloated public sector and its corruption, inefficiency and waste" (marginalrevolution) but they got overtrumped by the majority. It seems the majority followed the flawed advice of some leftwingers like Stiglitz, Krugman, Piketty & Sachs (twitter).
For years the Greek have been living from cheap loans which where financed by the taxpayers of the European community. These gifts will find an end and the Greek will be on their own. If they are not willing to cut their expenses drastically the whole nation will go bankrupt. Greek banks will close soon leaving the Greek population without cash. No more money for buying gas, food, paying rent & other obligations. Soon many companies will also go bankrupt.
There is also a high chance that Greece will get kicked out of the Euro zone. But the new Drachma will not be welcome on the international currency markets because the new Greek money will stand for a bankrupt country and an unreliable socialist government. Greece will have problems to buy oil, technology and other things from foreign countries. For years the Greek didn`t produce much - they have been living from gifts (goods financed by cheap loans). This will end soon. Maybe Greece will experience a new stone age.