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Merkel the new Hilter?
Provocation raged during the German chancellor’s visit to Greece, Angela Merkel’s first since the eurozone crisis erupted. From the scenes on the streets, one could easily see why. It was not just the violence on the streets which were of concern, but it was the reminder of an era which many would rather forget.
Activists waiting for Ms Merkel’s arrival launched a high profile demonstration designed to stoke tensions even further and capture the world’s media attention. Dressed in Nazi uniforms, with one going as far as to resemble Hitler, they held the swastika flags aloft. The insinuations were obvious. These demonstrators felt anger, resentment and rage over the austerity imposed on them. Many hold Merkel as being personally responsible. They feel victimised for the brutal cutbacks they must face, with each new bailout package bringing on more misery as additional slashes are made to public spending.
Athens is widely considered to be the birthplace of democracy. It gave normal citizens the ability to make decisions, whereby everybody enjoyed equal rights. No single person had a larger say than another, a basic principle which still underpins the democracy that we operate today.
In recent times however, Greece face a diminishing role in world affairs. Borrowing from the IMF and ECB was the Greek government’s only option; otherwise it would have had to default on its debt and leave the euro. Had it done so, then the aftershock would have been devastating.
Being unable to borrow money, the Greek government cannot service its debts – some of which belongs to the Greek banks. Should news of this circulate, then a ‘bank run’ could be triggered, whereby ordinary people who placed their savings in these banks would remove their deposits. These banks will then face a liquidity problem and become insolvent. They would therefore go bust. This could then spread resulting in the cycle occurring with other overseas banks.
Banks act as invaluable institutions who lend money to businesses. Should they close down, then not only is investment impossible in the Greece’s economy, preventing economic growth from taking place, but also many businesses who need to borrow money to pay off their overdrafts will go bankrupt too. The cumulative loss in employment from both these banks and businesses closing would deepen the recession.
Should they leave the euro, then Greece will most likely bring back its old currency of the drachma. It is highly probable that once the drachma is reinstated, then it will rapidly depreciate in value. Greece is very reliant on imports such as medicine and food, items essential to living. A highly depreciated drachma would then make the prices of these imports extremely expensive. The public could then suffer impoverishment and face worsening illnesses which cannot be cured from medicines that cost too much.
It seems to be a no brainer to keep Greece in the euro. These measures are designed to improve the long term sustainability of Greece’s economy through reducing the public bill and raising productivity. It aims to prevent Greece from the suffering the same fate where it overspent, concealed the truth and lived lavishly.
Yet there comes a point where the harshness of these measures strikes those suffering hard enough to take extreme actions, measures which are ill though out, ill-judged and ill advised. The activists who dressed up as Nazis were insensitive, but they were not foolish enough to withold their feelings. They feel powerless, helpless and weak.
Without influence on either of these areas, it is nigh on impossible for Greece to stimulate recovery. A succession of reduced government spending and inflexible monetary policy has hampered any possibility of economic growth. Most alarming though is that the Greek citizens themselves did not choose this path. They did not seek austerity. They did not want poverty.
With the dangers of Greece exiting still looming large as they continually struggle to reduce the budget deficit in spite of the numerous funds handed to them, it appears the measures have been unsuccessful. The economy is still on its knees and Greece faces a fight to recover it. Yet it is not just the economy that they will be seeking to reclaim though, but something far more fundamental.Tweet Share3
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