Friday, July 3, 2015


I see that there is/was an anonymous article in the Royal New Zealand Herald opining that the IMF and the EU should go easy on Greece and extend them new lines of credit so as to allow the government further time to implement much needed financial reforms.

The problem with that is time has run out.   The socialist Tsipras government was elected on a promise of no more pain and an end to austerity and thought it could stare down demands for further reform.   It was never their intention to roll back pensions; implement genuine taxation reform or to take an axe to a bloated civil service.   For its part and following the Greek default on Tuesday (the first 'developed' country to default and now they join the likes of Zimbabwe and the Sudan) the financial community has said enough is enough and no more good money after bad.

Consider this.   Civil servants were being paid bonuses just for turning up to work.   At Christmas time they received, as of right, two months additional pay.   Up until recently you could retire at age 53 on 80% of your wage/salary inflation adjusted and governments of the left, centre and right were happy to go along with the charade that there was an unlimited amount of foreign money available to help them not balance the books.

And now it's all turned to custard.   Perhaps Tsipras' friends in Russia will come galloping to the rescue but I think not.   Meaningful reform has to happen and, just like when Roger Douglas led the way and rescued the NZ economy from the worst excesses of Muldoonism, there will be pain and hardship.   But would anyone today seriously argue that we should go back to 1984 ... well, I guess Winston might.


pdm said...

.......well I guess Winston might - and his new best buddy Ron!

JC said...

The Greeks are good at this. This is the fifth time since 1830 Greece has gone bust.. only two Sth American countries can equal that record.


gravedodger said...

Greece is a prize no-one should want to win, they consume around twice their income and that income has little potential for real growth. Just lookup what the second prize is.

Austerity is in the too hard basket because so many Greeks income is in the miniscule territory and tax seems to be voluntary.
70% of the GDP is services and that will include the bloated Public service.
If austerity becomes lawfully enforced expect the shipping industry to move to Liberia or some other Tax haven. How attractive will those beautiful destinations be, sharing them with millions of Russians as Mr Putin tries to collect on his "investment".

The free world expended so much to prevent the Iron Curtain descending down the Adriatic and the ungrateful bastards still haven't worked out what that actually endowed them with and so much of those freedoms were rooted in the great philosophers.
Greece is the best example of the Thatcher theory on the life cycle of socialism, the Other People' Money just ran out and who else can the Greeks extort the necessary 30/50 billion euros pa from .

Aristotle, Socrates, Alexander, Euclid, Plato, Homer, Pericles, Pythagoras, Hypocrates, and now Tsipris, what the hell happened.