It´s no longer time for cleverness

The European Union´s decision to concede a 30 million Euro loan to Greece makes stock exchanges happier, but Athenians need to give up the improper behavior of the past.

It´s no longer time for cleverness

By Alberto Ferrucci
Published on città on 14/04/2010

On January 1, 2001, Greece agreed to the economic and monetary union established three years earlier by the eleven countries that were most convinced about a united Europe. Since then, savings, titles and actions made in Dracme (the Greek monetary unit) include a fixed tax when converted to Euro, and the Greeks, like the Italians, Spanish, Portuguese and Irish before them, were becoming richer thanks to the solidarity of more efficient European countries, whereit was becoming less expensive to get their products and services out in those promising markets. 

The monetary union, which favors investments in weaker countries where money costs less, is based on the Maastricht Treaty on which the value of the common currency depends. All participating countries commit themselves to rigorous management of the state budget so that the difference between annual expenditures and income do not exceed three percent. 

For countries in Southern Europe, this meant a drastic change. With just one currency and central bank, these countries would no longer be able to print more currency to cover higher debt and compensate with periodic inflation to balance the budget. From that point on, they would have had to increase their income or reduce their expenditures, or both. As taxes are already very high everywhere, a fight against tax evasion, illegal employment and public corruption would have to be launched. To reduce expenditures, they would have had to adjust the age of retirement to meet the rising life expectancy, reduce family favoritism and tax financial speculation.

All would be clearly unpopular actions, even if useful for improving civil co-habitation and safeguarding citizens against financial maneuvers capable of making years of sacrifice unexpectedly evaporate. They would be unpopular actions that, in my opinion, Greece had hoped to avoid by rigging its accounts. But now, in spite of popular protests, it must take all of these actions at one time, at least if it does not want to be expelled from a group of nations whose citizens are not inclined to be supportive of members who do not intend to respect the undersigned pacts. With fuel prices increasing, these countries are already paying off Greece´s improper actions. An example of what would happen to Greece if it leaves the Euro can be seen in Great Britain. This economically strong nation did not want to adhere to the Euro, but now because of the financial crisis the savings of the English have lost more than 30 percent of their value. 

Awaiting a quick settlement of Greece´s budget, EU countries have made it an offer, even if at a high price: the protection of a 30 million Euro loan with which to pay off its next few expiring loans. This decision relieved world markets by making stocks rise again. For the good of Greece and other European destinations, we hope that the Greek government, without further circumventions, will be capable of balancing its books. 

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