Letter to the Greeks

June 29, 2011

By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dear Greeks,
The anger you feel about your plight is understandable. You are staring at several unpalatable alternatives, all of which will involve big cuts in living standards for years to come. But the options you face are not all equally bad. You must avoid an emotional reaction that leaves you in an even worse state — and you must ostracise those who resort to violence.

One option is to persuade your politicians to say “no” (or “ohi”) to the euro zone/International Monetary Fund austerity plan. The scheme is not perfect. But rejecting it out of hand would be childish. If there is no agreed plan, you will get no money. The consequence isn’t just that the government would default on the loans it took out on your behalf. There would be a run on your banks and an even deeper recession. You would probably also lose your remaining friends in Europe who would consider you spoiled brats.

That’s not to say you should repay all your debts. Even with Herculean efforts, that won’t be possible. But you can probably negotiate an orderly default some time in the next year. An orderly default would be one where your debts were cut, say in half, but in the context of an agreed euro zone/IMF programme which provided you with enough money to survive until you are healthier.

You might ask why you can’t have an “orderly” default now. Wouldn’t that be better than waiting? The answer would be “yes” if an orderly default could be agreed now. Unfortunately, the rest of Europe isn’t yet ready for your default. So they won’t agree on one; and that, by definition, means a default now would be disorderly.

Fast forward a few months, though, and the rest of Europe might be in a better shape to withstand a Greek debt restructuring, particularly if they’ve used the time well and shored up their banks. You, too, might be in a better position to negotiate a new package — provided you recapitalise your own banks and squeeze your budget deficit so you are less dependent on external money.

There’s no denying this course of action would be painful. Your challenge isn’t just to cut the deficit but also to restore your economic competitiveness. That means further cuts in living standards.

Is there a short-cut that avoids this pain: bringing back the drachma? Wouldn’t that restore competitiveness? The answer is probably no. It’s true that you should never have joined the euro. But nobody has yet come up with a way of putting this particular toothpaste back in the tube without creating a giant mess. Again, the weak link is your banks. If your compatriots thought the drachma was about to come back (at what would be a much lower rate), they would be crazy to keep their money in a Greek bank. There would be a panic before the new drachmas were even minted.

All this may seem terribly unfair — and to an extent it is. Politicians of both major parties have let the people down for decades. They presided over a monstrously inefficient public sector, often staffed by friends and clients. They spent too much money, and then cheated on the figures so Greece could get into the euro. Corruption and tax evasion have been rampant — and gone largely unpunished.

You can also blame foreigners for your plight. Foreign banks were among those that lent you all that money. Some also helped you fiddle your figures. And the rest of the euro zone turned a blind eye when you ran up astronomical debts. But remember: your creditors (both banks and governments) won’t get off scot free. When you default, they will pay a hefty price.

You should also realize that you are not blameless. Many of you were evading taxes; many of you were enjoying those highly-paid public-sector jobs; most of you were consuming more than you produced and retiring too early. You also voted for your useless politicians. Actions have consequences. By all means, protest. But focus on the right goals, don’t cut off your nose to spite your face by turning away foreign help — and, what’s more, keep it peaceful.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

The same can be said for Americans. Our standard of living is declining and we need to be ready.

Posted by wj329230 | Report as abusive

Very well written, Mr. Dixon. Now, if only they could actually comprehend the significance behind the points you make and accept that their complacency and ignorance has followed them to this juncture in their history.

Posted by Matrona | Report as abusive

This is the beginning of global revolution against the disguised global corporate/financial/militarist EMPIRE — which poses behind its captured US, UK, European, Israeli governments, and calls itself “globalization” to cover the FACT that it is really just “global EMPIRE”!

Alan MacDonald
Sanford, Maine

Liberty & democracy

New America People’s Party 2012 (our last chance)

Posted by amacd | Report as abusive

I agree with all the above but as you said we have useless politicians… I’m 17 I’ve never voted so I’m not trying to not take responsibility because I haven’t any… But there is nobody and when I say nobody I MEAN nobody that can actually save this country… We are hoping that some great minds will come up with the idea that they should create a new party that could do something about Greece…. Sorry for the mistakes ….

Posted by VasilisGr | Report as abusive

Perhaps, since you are giving away advice, you should point out that another alternative is possible that might suit the Greek people, not the bankers, better.

I suggest the Greeks check out what economist Michael Hudson has to say about their situation in his “Whither Greece” article, dated June 24th, on his website http://michael-hudson.com/

Posted by Gordon2352 | Report as abusive

Is there a short-cut that avoids this pain: bringing back the drachma? Wouldn’t that restore competitiveness?http://www.inkatrailtoma chupicchu.com

Posted by incatrailavai | Report as abusive

This is what happens when you give up the single and most important feature of a sovereign nation: its currency. You get thrown into a pool with sharks.

Posted by Soothsayer | Report as abusive

I sincerely hope they read this.

Posted by FutilityofTed | Report as abusive

It is idiotic to thing that GREECEE is going to change do to EUROCRATY.
The BAVAROCRATY did not work.

Posted by derdiedas | Report as abusive

Dear Dixon, i live in Greece. I have to agree with your position that this situation has been formed by all of us (politicians, citizens, european banks and european institutions). But, the real problem can be found on the incapacity that this government displays, regarding the implementation of all these measures. Furthermore, the memorandum that Greece signed on May 2010 with EU, ECB and IMF, has totally failed, because the policy proposed was not effective and was aiming on these social teams that couldn’t bear the burden of taxes’ raises. So, we need another policy, more palatable, in order that the crisis will really be overcome; a policy of economic development and privatizations which this totally useless government unfortunately cannot materialize.

Posted by GeorgeGreek | Report as abusive

Regardless of the government system, corruption and waste need to be kept in check at all times. Greece suffers from decades of both corruption and inefficiently ran state enterprises. Their wealthy pay little to no taxes. The status quo is not sustainable.

Likewise, America’s situation is not sustainable. Republicans go off and provide huge tax cuts for the wealthy, launch simultaneous wars that cost trillions of dollars. This is a fiscal nightmare. Moreover, they deregulate banks which fostered the worst financial corruption in our nations history.

This goes to show the wealthy people of the world are the true causes of many of our global problems. They should be held to account.

Posted by DuneSurf | Report as abusive

Never tell your problems to anyone…20% don’t care and the other 80% are glad you have them.

– Lou Holtz

Posted by thekitesurfer | Report as abusive

We were many greeks, politicians also, seeing our country going directly towards a disaster.
We knew everything but all our efforts to change the situation was vain. Talking, about that, with our friends we were receiving the same answer.
What about all these institutions, European, Finacial,who evaluate the country, banks who lend their money? They dont know what they are doing? Is it possible for them to risk their money?
There are, all over the world, many serious looking people, who are responsible for this crisis and they will not pay for this.
It is the easy way to see, in this case, the responsability of the “people”. Simply you will be the next victim.
There are many things that have to be changed in our country. Young people in Greece think that continuity preserves the same political structures. The reactions that you see in your tv are mostly a desperate cry for change.
And it is only the beginning. It is a matter of time to see the same situation all over the western world. In order to assure the continuity of our societies we have to change.

Posted by Aias | Report as abusive

I’m afraid Mr Dixon that your admonishments are a bit problematic. While they reasonably summarize the options the Greek people have at the moment, it fails to see the missing part. Nothing less than the people themselves. It’s pretty easy to look at things from the top down and list the solutions according to economic orthodoxy, but in the meantime thousands of people will have to live with 500 euro per month (that’s way below the poverty line), face the difficulties of unemployment (official and unofficial combined almost 20%) and go through hardships in all levels of life. And while part of the problem is Greek politicians as you rightly mention, there is something even greater about this crisis that expresses today in Greece. The structural problems of a weak European union, the failures of the monetary union and the weaknesses of modern democracies towards capital and the markets. So as a Greek but also as a European worker from the lower classes of Society I can’t buy into your argument. Not only because my life is changing drastically now, but because I cannot accept the context you place the solutions in, itself. Not for me nor for other Europeans like the Spanish, the Portuguese, the Irish and to a lesser extend the Brittish who will be demonstrating tommorow for similar reasons. But, since you directly refer to the Greeks and in the name of at least some of them, I’d like to Thank you for your kind suggestions but I hope that your next note will be directed to the Banks, the markets and that small fraction of the wealthy that have caused this Crisis by accumulating a lot more capital than they should; A capital that should be returned to the “real” economy, to society in order to put things back in motion. And if it were so, I’m sure that Greece would not be a problem anymore

Posted by Tsimitakis.M. | Report as abusive

Outstanding letter Hugo!

Posted by Intriped | Report as abusive

Greece should not have accepted the austerity measures as to do so is just delaying the inevitable and is simply serving the interests of its creditors and wealthier Northern European neighbours.
The country is insolvent. Lending more money to an insolvent simply makes the problem worse, not better.
Therefore Greece needs to restructure its loans now, and the sooner its creditors understands this, the better.
Contracting an already broken economy will cause a depression and more hardship.
Resulting in, among other things, civil unrest, mass migration from Greece of its workforce with little or no investment left in the country to stimulate regrowth.
Of course there needs to be structural reforms to the economy and the “party” days of cheap and easy credit and low taxes, nepotism etc are over.
However the price being imposed on the Greek people is untenable. There are many other economies that have the same structural problems and perhaps worse problems than the Greek economy but these economies have not suffered as has the Greek economy.
It is interesting for the author to expect the Greeks to “take it on the chin” so to speak, for the good of the west and to chastise the Greek people in a patronising tone as if they were naughty children that deserve to now suffer, however when it was the US and other western economies turn to face a similar financial crisis arising from a potential collapse from the banking system due to a corrupt regulatory regime in US banks that caused the cheap and easy credit problem to begin with and the borrowing binge of the past decade, the western world economy was very quick to announce stimulus packages for all concerned to avoid a global financial meltdown.
But because there is a risk of there being an international global banking meltdown from a Greek default, the author expects Greece to plummet their economy to a depression, sell its sovereign assets and effectively be the new financial slaves to its wealthier Northern European bankers.
Greece should default and if it means it exiting the Euro then so be it.
There are many countries such as China, Russia and Arab Emirates who are solvent with positive terms of trade, who would gladly invest in Greece, sell arms to it (at prices far less than the Europeans expect the Greeks to pay – Greece paid double for its submarines from Germany than Germany sells them to other countries such as Turkey) and aid its restructure and recovery.

Posted by billpeters | Report as abusive

Well, Hugo… Argentinian people and the Argentina former President said NO to IMF austerity plan, because they had a BETTER plan, exactly the opposite to austerity…
And then they are… doing fine, growing a little bit every year since 2006.

IMF just does not care about Countries or People, they care about MONEY and Power. I can’t trust in someone who only cares about that. Sorry.

Posted by Gotoda | Report as abusive

As a greek i’d like to say enough with the stereotypes…
I just read the last paragraph… and a little bit of vomit came to my mouth…
“many of you were enjoying those highly-paid public-sector jobs” – Where do you get your information, from Pagalos’s speeches?
“retiring too early”??? – just check the oecd data again please…
The only thing you got right in this letter is that greeks have voted for useless politicians. Something that the “indignants” have been protesting peacefully about, for 36 days now…
As for the patronizing tone in “behave yourselves” i guess it’s propably because you lost a news-van yesterday in the riots…
Maybe if your agency made an effort to cover the events more widely and truthfully, you would be considered a friend and not an enemy – like it happened in Egypt…
Instead you summarize an entire nation in these words: “the greeks”, with no regard to classes, no effort to find out who’s who and what agendas do they have…

In Egypt the foreign-media helped expose the dirty practices of the police and its corruption and authoritarianism – maybe if instead of giving “advices” you did that too for Greece, you would be more highly regarded by its people.
Everybody in Greece knows the riots are instigated by police collaborators- usually extreme right-wingers- as an excuse for the police to start breaking the peacefull crowds

As for anyone who is interested in following the events just use twitter hashtags #syntagma #25mgr and a a tweeter translator like these tools suggested here: http://goo.gl/c0Wqp

Posted by kazuper | Report as abusive

Dear Hugo,
I got your letter, thanks. To be honest when I read it, I sincerely thought that you did not intend to offend me, or any of us, Greeks, with this letter. I just thought you were another British beer lover who simply had a few more pints on a Friday night at a pub nearby his house and just felt like writing something about the Greek crisis before going to bed. That is why I was disappointed to see that you are an Eaton College and an Oxford alumnus! Oops, there goes the presumption of innocence, although from your studies it seems you have not focused on the economy too much.
You see, clichés are not always the best guide to the truth. So, seriously know, I would advise you to refresh your economy lessons from college, preferably with an emphasis on international finance, public finance, money markets, capital markets and while you are there try some macroeconomics. And to investigate before you report something. Come on now! Be honest. When was the last time you visited Greece? Even if you did what did you see there, besides Venizelos Airport, your 5 star hotel, Kolonaki Square, and the seaside restaurants?
You see, Hugo, you and I are both graduates of top UK Universities (although I admit Oxford is better than Bristol), with very good jobs (hell, I even used to advise Reuters Greece for many years, so we are practically colleagues!) and a high standard of living, so it will not really matter for both of us if 20% of our fellow citizens (in both our countries, since Britain is next, you know) will have to face a massive and violent downgrade of their every day life and if unemployment reaches 25% by the end of 2012 in both countries. I’ ll pay some more taxes, spend a few less Euros, Pounds or … Drachmas for a couple of years and we will both be fine. By the way, I bet I pay more tax than you do, because contrary to what you hear, some of us here do pay taxes, hence the Greek Government collects around 25% of the GDP on average, despite the immense tax evasion, the huge losses from extensive cross border “tax planning” of the subsidiaries of foreign companies whose income accounts for 25% of our GDP and the fact that a small ruling class of 90,000 people is reported to have snatched 600 billion Euros and saved it in Switzerland, Lichtenstein and Cyprus. Of course no British or other European is to blame for this, but why should it be otherwise for Greek pensioners and minimum wage employees?
Please spare me, the “you all partied” lecture. This isn’t so, not here, not anywhere. This is not just a Greek problem and you know it. And please, enough with the “no money” thing. You and I both know that the “bailout” money will make no difference to the Greek people. It all goes to interest (not even a decent capital repayment plan). It’s all about bonds and coupons, spreads and hedging, short and long selling, profiteering and wealth management. I guess you know already it was not just our politicians’ fault, our huge and dysfunctional public sector, our tendency for ouzo, siestas and long vacations. If it was so, why did the Irish, who did it all right, joined us on the “road to nowhere”, aka “Support Mechanism” (what a great euphemism!). I won’t bother you with conspiracy theories or conspiracy realities, we are both better than that, so let’s be honest with each other. If you find it difficult to be honest in public, I fully respect that. Just give me a call and we’ ll discuss this in private.

Last but not least, I hope you do understand that we may be crazy, unorganized, chauvinist pigs (or is it PIIGS?), lazybones, ignorant, we may all have big noses, big ears and big butts and we may even smell funny and have 4 hands (probably for stealing EU money easier), but please rest assured that we will find our way out from this mess. We’ ve been doing this for the past 5,000 years, you know.
Next time you visit Mykonos for the holidays, don’t forget to give me a call. I would love to hear some more of your benevolent and learned advice.
PS I wouldn’t sell those naked CDS, if I were you. I doubt it that AIG/Chartis will ever pay you all this money, but at least you’ ll get something. I bet you your Oxford degree that things regarding our debt restructuring will not go “as planned”. You seem smart, so I guess you know better. We are really lousy at doing things according to plan.

Posted by Christos_Greece | Report as abusive

a truthfull article. butwhat the righter has not yet realised is the real reasons why Greeks are protesting. it is why the politicians has put all the wheight of the solution measures on the lower social teams that can no longer lift that wheight. the politicians have not even touched the ones that have all the money and the ones that have really stole it the last 3 decades. even germany that has been so keen on changing the Greeks in order to lent us money and get it back with profit, allready owes us many billions from the war. the german company that built the Athens International Airport is refusing to pay 100 something million for taxes to Greece and nobody does anything about it. ministers have been taking 10% of every small or big project has been held in Greece for so many years, just to put their signature, or else……. the righter says that Greeks has fulled europe and shound not have entered E.U. on the first place. wrong. greek politicians and strong businessmes have been fulling europe since long ago. they have been reaping money that greece took from europe for education, agriculture, protection of natura areas and so many others and now nobody is taking not one euro back and they let them keep on living in the golden world that they have been living for years now. the righter and everybody else that have been spoofing the Greeks, should know that they have many more stuff to learn about the reasons Greeks are protesting. everybody in greece know that the last paragraph is true. but everybody else in the world should look up for more information about the reasons Greece is in that position. because evading taxes or retiring too early is only 10% or 15% of making Greece’s nowadays picture. but yes it’s true. greek people is 100% to blame for voting the same “tie hooligans” all these years. shame on the politicians than have destroyed our children’s future and have sold Greece. Greece now is our country but not our property any more. sorry for the long comment

Posted by Anonymous | Report as abusive

Admittedly we here in the US do have a higher GDP per person and didn’t get to our National Debt the same route as the Greeks, but Jon Steward was kind enough to point in one of his shows this week out that the Greek National Debt averages $44,000 per person, here in the US we are $45,000 and counting…

Posted by GGIGGA | Report as abusive

Vazuper, the Western media are revelling in portraying the Greeks as fat, lazy, stupid and lawless, as if the Greek people themselves are the sole cause of this problem. The tone of the “letter” is demeaning and is symptomatic of the general attitude towards Greeks and how the West (who are supposed to be allies of Greece) choose to portray the Greeks.
Amnesty international for example, reported that the protests in Syntagma were by and large peaceful, and it was the police who instigated the violence against largely peaceful protesters. However, what is beamed around the world in western media are the violent acts of a handful of hooligans and vandals with the intent to further demonise the “childish Greeks” and stir anti-Greek sentiment.
If the West wanted to resolve the problem in Greece and were serious about it, it could perhaps start by assisting the Greeks to prosecute its corrupt politicians. But of course, we all know where the corruption would lead to and hence there is a deafening silence on this issue.
Meanwhile, the Greek people are expected to just suck it up. Was General Motors told to suck it up when it faced bankruptcy? What about Fannie May and Freddie Mac? Were the Americans who borrowed funds for homes that they could never repay back, stupid fat and lazy too, which lead to the subprime mortgage crisis? Were the Americans who borrowed beyond their means the sole cause of subprime crisis, or are the lenders responsible, who should have known better?
The austerity package is nothing more than an invasion and occupation through credit and foreclosure. That is why the Greeks are protesting.
Not much different from the Turkish occupation instead the Turks taxed the Greeks less (and had little understanding of human rights but that is another issue for another day). Instead of bullets and bombs being used to acquire Greek state assets and to suppress the Greeks, it is now done by a form of foreclosure through “austerity measures”.
Decrease wages, decrease pensions, increase taxes, increase prices, sell off state assets, decrease services, sack workers, whilst lending more money to appease the lenders with the knowledge that the debt won’t be repaid.
And how is that supposed to aid a recovery to a broken economy?
The author does not understand the anger as he purports to, because the austerity program is perceived by many Greeks as an invasion and attack on its sovereignty by international bankers. Understand that, and the author might begin to understand the Greek anger.

Posted by billpeters | Report as abusive

Dear (this is an euphemism) Hugo Dixon,

If I were not an experienced journalist I would have thought that you were either completely ignorant or naive, or simply playing rude to a whole foreign nation. But unfortunately I can read between the lines and I can understand that the stakes are high…

To start with, Greeks don’t feel anger. They feel αγανάκτηση – aganaktisi. (Have you ever heard of “ΜΗΔΕΝ ΑΓΑΝ” Miden Agan?) So: “άγαν-α-κτηση”. If you look it up, you will find out that this precious emotional reaction means that someone cannot be happy when harmony has been taken away from his life and that only catharsis can stop him from being violent.

The Latin word indignatio is not a perfect translation. Since you tell Greeks to avoid an emotional reaction you must understand that the emotion described above characterizes a very high form of life and it should never be avoided. Violence is the natural outcome of this emotion unless things go back to normal and harmony is restored. Read any Greek classical play and you will understand what I mean.

Since you like the word “must” I’m sorry to inform you that it’s not very “in” in Greece these days to ostracise people, but maybe Greeks should bring back this wise ancient custom and ostracise their politicians because they have betrayed their country. Another thing you must know is that “NO” (ΟΧΙ – OHI) is a sacred word in Greece. It’s not “childish”, it’s the biggest national Remembrance Day, the most important national holiday on October 28th. Its name is “ΟΧΙ”. If you knew the Greeks at all you would have known that saying “NO” is considered the bravest act in peace and war for thousands of years. You would also know that they never care what the other people think of them when they know they are right.

Calling the people of a foreign country “spoiled brats” and their actions “childish” is against the code of conduct of journalists all over the world. So I’m sorry to say you are completely out of line here and I’m ashamed of colleagues who behave like this.

We all know very well that Europe isn’t ready for Greece’s default and Real Politik suggests a default much later on. Greeks know that a non-orderly default now is in their national interest. They are not as stupid as you think. Telling them that they are evading taxes, enjoying highly paid public sector jobs, consuming too much and retiring too early are all false accusations – plain nonsense and you know it. The fact is 2000 wealthy Greeks who never paid taxes –including many politicians– have already “moved” their money (800 billion Euros) to Switzerland, Luxemburg and other countries. The rest of the population is struggling to survive.

I’ve noticed that in your letter to the Greeks there is not even one word about the heart of the matter and I believe this is on purpose. We all know that the whole point is the sell-off of Greece’s natural resources. We all know that Greece is very rich in oil and natural gas reserves, uranium and gold. The sell-off by the Greek government also includes the following: The Public Power Company and its monopoly in energy, water, islands, beaches, national lands, archaeological treasures, airports, ports, national roads and much, much more. This is why the Greeks call the 155 MPs who voted for all this “traitors” and they are determined to put them on trial for high treason. The legal action has already begun. The only mistake the Greeks have made is that instead of forming new political parties, they went on voting for corrupt politicians. But now new parties will be formed and this will change everything.

Now you know what “αγανάκτηση” is and why your “keep it peaceful” sounds like advice from Mars. There is no peace without catharsis. And here is my question to you: Who do you think you are to give advice to the people of a foreign sovereign nation?

Posted by AthinaBurges | Report as abusive

Nice article. It is a fact that uncontrolled spending and corruption for many decades has burdened Greece to such a point that a deep reflection in part of its citizens is required. To give you an example of irresponsible spending consider the case of pension payments to Albanians claiming to have Greek nationality. Thousands of them living and working for all their life in Albania have been paid hefty pensions from Greece for many years now..So at least by now the Greek government should know what not to do in the future.

Posted by tomi890 | Report as abusive

I am in Greece right now. All (almost) of the buildings have these metal rods sticking out of the top of them. It was explained to me that this qualifies it as “still being built” for an indefinite period and the owner need not pay property tax as long as the building remains in that state. These are buildings with tenants and operating businesses in them, but nobody is paying property tax.

I may not be a journalist, or terribly informed on greek (or any other) economics, however I do pay alot of tax (including property tax) in _Germany_ and am quite capable of recognizing downright silliness when I see it.

I also have difficulty believing Greeces woes are solely the product of the behavior of a handful of “ruling elite” when I see something like that.

Posted by JoeyButtafucco | Report as abusive

to JoeyB, that is probably why so many Germans are now buying holiday homes in Greece. Seriously, you are right that too many Greeks avoid paying taxes and this needs to be addressed and from what I understand, is being addressed. I have heard for example, that property taxes will now need to be paid including those owned by non Greek residents (such as Germans) which were once tax exempt.
However, the average Greek wage is very low and it is the black economy that needs to be targeted not the average worker many of whom will risk losing their jobs (and have already taken pay cuts) whilst the economy collapses under the austerity package. There is only so much blood you can get out of a stone.
But the average German worker who diligently pays his/her taxes is right to be upset about the situation in Greece when it sees the silliness of the Greek tax system as you put it.
The whole situation IS a mess but Germany can’t expect to generate huge budget/trade surpluses at the cost of its weaker European neighbours who have huge trade deficits, and not expect there to be some trade off down the line. You see, usually where a country has a large trade surplus, its currency will rise due to the demand for it, thus making its exports more expensive but this doesn’t happen where the countries’ share the one currency. Perhaps the whole Eurozone is a failed concept and the sooner it collapses the better, unless the economies/countries that gain the most from the single currency, play their part too and share the booty around rather than use their financial muscle to foreclose on the weaker neighbour.

Posted by billpeters | Report as abusive

Dixon must have just returned to this planet, so his arguments are understandable.

First of all the banks didn’t just “lend” the Greeks (and others ) money, they pushed and sold the loans to them. Why? Because the bankers got a healthy commission on each loan.

More importantly, loans served as the basis for a raft of “derivative” financial instruments. The bankers got commissions on each dollar of derivatives. The derivative market is virtually unregulated and not disclosed to the public (see the Financial Times article on the “black box”). The base loans were also used to create insurance policies sold to other “customers” and underwriters.

In the US the ratio of (total dollars of derivatives)to (total dollars of underlying assets) reached 50/1. On top of that the total amount of assets plus derivatives was insured by other lenders.

Bankers are paid to assess risk and set premiums. It is inconceivable that they weren’t at least slightly aware of the risks. Yet they didn’t feel motivated to act on that knowledge because of the winking and nodding understanding of the policy of too big to fail would lead to government would make good on any and all debts, not just on the assets, but on all the derivatives that weren’t publicly disclosed and that dwarfed the original debts.

In the US the bankers got bailed out to more than the full value of the original loans plus all the “three card monte” derivatives, side bets, mixtures of toxic assets etc because public monies were used to pay bonuses to bankers for creating all this flim flam.

What is the icing on the cake is that nothing has changed. If the bankers were all fired and forbidden from doing further banking business and the rules were set up to prevent further massive, society crushing bailouts then maybe this all could make sense. But that hasn’t happened.

The bailout of the bankers for Greek debt, plus all the associated derivatives, will only be used to set up more debt in multiples of the original assets. When the system goes bang the bankers and politicians will flee to safe havens with their money.

Any realistic plan for Greece should include, as any other bankruptcy proceeding does, a plan for paying off the debt and for getting the bankrupt entity back on their feet. The current plan doesn’t. So why beat up on the Greeks, they are a pawn in the system.

Posted by jobardu | Report as abusive

Mr Hugo , I am most grateful , also as a possible compatriot of one of your great grand mothers , for your invaluable contribution on my in depth inderstanding of my current financial woes. Your memorable article has also inspired ingenious commenting such as the one posted by mr JoeyButtafucco ( July 2,2011). Mr J. has the belief that metal rods sticking out on top of almost all buildings in Greece ( as he puts it ) are connected with property tax evation , Greek siliness and the rest. The whole argument is a total – total – total nonsense. I pay for whatever property I have many more taxes than mr J can ever imagine… As for mr Hugo’s general advice , well I will be willing to provide similar nonsense to the British people when ever ( you never know … ) such an occasion arises in the UK ( Long live the interests of the bankers , who cares about people ….. ).

Posted by aristotelis | Report as abusive

Reportedly Henry Kissinger, while addressing a group of Washington, D.C. businessmen in Sept.1974, said:

“The Greek people are anarchic and difficult to tame. For this reason we must strike deep into their cultural roots: Perhaps then we can force them to conform. I mean, of course, to strike at their language, their religion, their cultural and historical reserves, so that we can neutralize their ability to develop, to distinguish themselves, or to prevail; thereby removing them as an obstacle to our strategically vital plans in the Balkans, the Mediterranean, and the Middle East.”

The conclusions are yours.

Posted by memosraft | Report as abusive

Dear Mr Dixon,

I have a feeling that you have addressed your letter to the wrong recipient. ‘We’, that is the Greek people, are not in a position to negotiate, reject, or indeed accept any measures put forward by the IMF and the Eurozone chiefs to the Greek government. You, like many journalists – and by extension many of your readers – appear to conflate, and thus confuse, the millions of Greek citizens with the few hundred Greek politicians who govern ‘us’. There has been no referendum on any of those measures that the Greek Parliament voted for on 29 June; there isn’t even a prospect of imminent elections, which might have allowed us to put some indirect pressure on ‘our’ politicians.
I will readily agree with you that Greece has been suffering endlessly from endemic and systemic corruption, nepotism and cronyism, a deficient infrastructure and the catastrophic complacency and apathy that characterises many (perhaps most?) electorates the world over. However, these are nothing new; in fact, I’d argue that they are the main causes of an enduring but primarily internal crisis. The crisis which we, the Greek people, have been drawn into now, was born of bankers, financial institutions, politicians, and big investors with enough clout to influence the policies of institutions and governments.
You write that ‘we’ cooked our books with the aid of foreign banks, whereas in demonstrable fact the 2002 Greek government secretly colluded with Goldman-Sachs to distort crucial figures. ‘We’ did not know about this, let alone have a hand in this, any more than you did. Yet, your wording unwittingly places the responsibility for that massive scandal squarely on ‘us’. As bizarrely, while you rightly point out that the rest of the Eurozone turned ‘a blind eye’ on the Greek government’s book-cooking, you don’t even pause to take ‘them’ to task for their complicity in the current crisis and to weigh their share of the responsibility against ‘ours’. The Eurozone chiefs brokered the deals that allowed Greece prematurely into the Eurozone on the basis of figures falsified by the then Greek government and certain financiers; the Greek people didn’t. Corrupt, nepotistic, ineffective or otherwise, how are the Greek people to blame for this high-level trickery?

Very understandably, you exhort us to ostracise those who resort to violence. There are countless eyewitnesses, videos, photos – let alone the 500 people who needed medical treatment because of the riot police’s teargas spree – pointing to the police, and those who managed police operations on 29 June in particular, as the worst perpetrators of unjustified violence. Still; neither authorised police barbarity nor the hundred or so thugs who wrecked Syntagma Square converted the thousands of peaceful demonstrators into violent terrorists – we remain present and peaceful, whereas many Greeks keep absent and quiet. Some keep away from the protests out of apathy, some out of fear (teargas, police batons, and 100 thugs perplexingly unrestrained by 5,000 police are powerful deterrents) some out of fatalism, others out of cynicism.

Many – deeply disappointed – Greeks sneer at what they perceive as our (no quotes here; I’m referring to peaceful protesters) ‘romantic’ persistence in voicing our opposition to an IMF & Eurozone package of sharp sticks without so much as the tip of a mangy carrot – nothing will ever change, they argue. They may well prove right; perhaps there really is no point in speaking up against crooks, closet dictators, or blinkered financiers more interested in the welfare of banks than in the welfare of human beings, or in replying to the editors of giant news agencies. But then again, if you believe in chaos theory – and there’s plenty of political and financial chaos in Europe at the moment – perhaps even ruffling the air imperceptibly with our presence in protests, with our vote (given the chance), with our voices, and with such letters might trigger some miniscule change that could eventually make a perceptible difference.

Artemis G.

Posted by Artemis67 | Report as abusive

Monday Night Quarterbacking, from the couch is fun!

Posted by GeopayMe | Report as abusive