The Greek Economy

And that is where we are now – with other European countries wondering how to throw Greece a lifeline without being pulled under

“It was late last night and I was rifling through the sock drawers for euros to fund the annual half-term skiing. There were all sorts of useless coins – Uzbek som, Iraqi dinars, 2d bits – and there it was, like a sudden Proustian blast from our childhood. It was a 50-drachma piece, with Homer on one side and a boat on the other. It was dull and scuffed and technically as worthless as all the other coins in my hoard. But as I turned it over in my hand it seemed to glow like a pirate’s doubloon, radioactive with political meaning. This coin was more than just a memento of beach holidays when 50 drachmas was five ice creams. This was the history of Greece in the palm of my hand. When Socrates asked Crito to buy a cock and kill it for Asclepius; when Sappho bought her Lesbian girlfriend a Lydian hat; when his listeners rewarded old, blind Homer for chanting by the fire – how did they all pay?

“They paid in drachmas, a currency that served the people of Greece for at least 3,100 years, until they junked it for the euro. And the object I had in my hand, therefore, was a symbol of the economic freedom the Greeks gave away for the sake of national prestige.

“They thought they were showing a new economic maturity,” continues Boris Johnson. “They thought they were sitting down at the top table. They thought that by merely using the same currency as the Germans they would somehow imbibe Teutonic habits of thrift and fiscal rigour. Or at least that was what they pretended at the time. By fudging their debt figures and adding income from the black market and prostitution on to their GDP the Greeks brilliantly limbo-danced under the Maastricht criteria – and then got on with borrowing and spending in the time-honoured Greek fashion, blissfully protected by euro membership from the penalty of higher interest rates.

The fifty-drachma piece


“By October last year the deficit had risen to 12.7 per cent of GDP, and the gig was up. The free-riding came to an end. It wasn’t enough to be a member of the eurozone. The markets stopped believing that the Greeks were good for their $419 billion debts, and they started charging them extra; and the higher the cost of borrowing, the more dreadful the Greek fiscal position became – until people started warning that the Greeks might actually default, and bilk their creditors. And that, more or less, is where we are now – with other European countries wondering how to throw Greece a lifeline without being pulled under.

“There are several possible endings, none of them good. The first is that Greece could simply go bust. Athens could come Acropolis, as they say, and the financial tsunami would move into its second phase. Having taken out the weakest of the banks, the short-sellers would take out the weakest of the states that bailed out the banks, with horrific consequences.

“Do not think Britain would escape. How could we, when British banks have such vast loans outstanding to Greece?

“Alternatively, the Greeks could take radical action, slashing spending and raising taxes in so fierce a way that the markets were convinced the budget was really being brought under control. Would that work, or would it send the Greek economy into a further tailspin? Look at the seething mob on the streets of Athens. Could the government of George Papandreou really make such savage cuts? Could any government?

“The final possibility – and the most likely – is that there will be some sort of effort to bail out the Greeks, either by the other EU countries or the IMF or a combination of both. Greece will become a kind of Northern Rock, rescued with vast subsidies from elsewhere in order to stop a general collapse of the system. If and when this rescue happens, we will be in new and extraordinary political territory. By scrapping the Maastricht rules against bail-outs, the EU will have set up a hideous moral hazard.

“Profligate countries will have an incentive to be profligate, in the knowledge that they stand to be supported by Uncle Sugar in Brussels. Those who have taken huge pain to cut their own deficits – such as the Irish – will wonder why they bothered. Above all, this bail-out will come at a serious political price. It is absurd to expect the Germans to write out a colossal cheque for Greece, without giving Berlin some say over how that money is spent. I am not saying we are going back to 1941, with German gauleiters in the Athenian finance ministry.

“I do not say that there will be some vast German towel all over the Greek beach. But already the EU commission is talking about an “economic government of Europe”, and be in no doubt what that means. It means diluting the ability of Greek politicians to set tax and spending priorities. It means the end of the myth that you can have monetary without political union; and at a time of growing electoral disillusion, it means a further erosion of democracy.

“There is, finally, one option that will not be pursued. Even though it would give them a vital chance to devalue, even though it is the obvious way to regain competitiveness, the Greeks will not leave the euro. For Athens it would be too big a blow to their pride; for the other euro countries, it would be too big a shock for the still-young single currency. My drachmas will remain in the sock drawer, an unused escape hatch and a reminder of the days when Greece was free. What do we feel in Britain, as we watch this Greek tragedy?

“We feel the correct Aristotelian emotions of pity and fear. There but for the grace of God goes Britain, which also has a 13 per cent deficit. Every day that this crisis endures we should give thanks that we avoided that awful Procrustean bed of pain. Thank heavens we stayed out of the euro.”

This column appears in the Daily Telegraph

30 thoughts on “The Greek Economy”

  1. It’s spoilt a great Traditional Hand-Tooled British Joke:

    “A Greek urn? What’s a Greek urn?”
    “About 100 drachmas a day.”

  2. Good job market forces were not to blame, innit, or we might all start questioning whether there was something fundamentally flawed about our old friend capitalism? Instead we are in for another few years of the most vulnerable being made to suffer for the greed of the entrepreneurs – you know the ones, those able to afford 5 ice creams.

  3. Vicus are you one of those people who think nothing is any good, or do you have better options to put forward? It is always very easy to criticise, but not so easy to propose a more workable alternative.

    I would love to hear your thoughts on how to improve upon capitalism and would cherish your every word.

  4. Lovely. well chosen pics. on this article. I do love to see pictures enhancing Boris’s speeches – these totally enhance and encapsulate his meaning. (don’t be sarky to me Philippa, hahahaha, joke).

  5. One wonders whether any Greek would lower himself to being buried with a Euro (perhaps a Eurocent) in his mouth. Would Charon accept such a base currency ? Or would the deceased be stranded this side of the river ?

  6. Typical! Just when everyone thought the worst was over, along comes another couple of trillion bucks of dodgy IOU’s.

    Oh well, what can you do eh?

  7. Then just when you were feeling all chuffed with yourself for finally getting your head around collaterised debt obligations and credit default swaps along comes something called a “power reverse dual currency note”!

    I kid you not, google it and impress everyone at work before the journalists catch on!

  8. The credit crunch was a blip in comparison to what’s about to happen. Eurozone? Kaputozone!
    The Greeks,Italians, Spanish and Portuguese have been lying to their Euro chums and everyone else since day one of this barmy escapade.
    After the markets stomp these dudes, Germany and France will get their heads kicked in too, and we’ll have to find someone else to buy our stuff.I still like the idea of the Imperial zone.
    Oh,well, at least there’ll be cheap holidays.
    Pity? Sorrow? Not bloody likely. I hope suitable incentives are available to our short-sellers.

  9. As always Boris a lesson miss from history and still not learnt by government.
    When will will realise that we are and will always be an island race and we not the rest of the world have to put our own house in order before attempting to help overseas.
    I dont see many appeals on teh tv orr internet for the thousand of homeless in our inner cities or the kids that live in abject poverty because their parent have only ever known a welfare state.
    We need to look back at the great depresion and learn it’s lessons and apply them now.

  10. with other European countries wondering how to throw Greece a lifeline without being pulled under.

    Hopefully not us! We’re not far away from disaster ourselves.

  11. I have said this a few times and I will say this again- this whole bullshit European Union, a mere copy of the dead-as-a-parrot-Soviet-Union and communist Eastern Block, will crumble and end up in tears. And this is what the Russian communists have been waiting to see with glee.

  12. Is it me or is every country in some sort of debt?
    Most of which will never be paid and is probably destined to rise each tax year, europe will be raiding the board games for the monopoly money they call the euro.
    I collect currency but fear the euro would come along and destroy my collections reputation, probably by teaching the others how to swear and smoke , drink too much wine and such like.

    The day the pound leaves this country is the day … is the day i vote for labour! Neither of which i can imagine nor even want to try thinking about.

    If we are such an intelligent race we would not need the e.u at all! the e.u is basically a form of defence, so should a larger country come along with plans of world domination. Then all us europeans can gang up on the offending party like bullies in a school playground, although somewhere down the line we would probably end up smack bang in the middle of a europe-wide civil war, the past will not be forgotten by this advanced species who cannot forget a grudge. Is the e.u is just another effort at world domination, a governing body ruling over all countries who join? and who exactly will lead this party, im guessing Britain would have no say in the matter due to the size of our country.

    is the world so scared of the next world war that we have to form these alliances? We should know by now that people are people, cant we live together without debt to each other , conflict and constant competition , after all what is money at the end of the day? Money is nothing , it brings hate, envy, sadness and poverty.
    We call this civilization PAH!
    We once ruled half this world with less manpower we have sent into iraq iran and where ever else isnt handing over free barrels of oil.
    So if we could acheive what we did under the rule of good ole queen liz , why now do we now have to defend ourselves with alliances such as the e.u?

    if we were so clever we would be banding together and scouring space for other species to conquer.

    (ok im ready for the reactions to this post, its a bit over the top i know… well at least i know the consequences of my actions! :o)

  13. Well said Janina!
    The eu works on the following principle:
    We can share the women, we can share the wine
    We can share what we got of yours
    Because we can’t share none of mine

  14. The veteran Tory MP Sir Nicholas Winterton was under fire tonight after arguing that MPs should be allowed to claim expenses for first-class tickets because standard coaches are for “a totally different type of people”.

    After declaring himself “infuriated” with proposals from the new expenses watchdog to ban payments for first-class tickets during a magazine interview, the MP for Macclesfield told a radio interviewer that people travelling on standard tickets were “in a different walk of life” and their children might disturb an MP’s work.

    This may well be what Boris Johnson, with his Eton / Bullingdon background, also thinks, although I doubt if he’d be as honest as Winterton should that be the case.

  15. @hettie: As you are no doubt aware , the way we act and feel when we are younger, especially in social situations such as a place of education, tends to differ from from our views later on in life. Yes Boris may of had his fun whilst wearing his tails, but this i believe was more a way of standing out and showing he was infact different from those who surrounded him at the time.

    Boris was (i believe) was showing off his intelligence and charisma. Attending eton and oxford tends to make the student believe they are the best of the best, the only way to seperate yourself from this type of group is to dress and act in a different manner, making a physical statement visible to the eye.
    If you think about it boris was not in fact trying to show how he was better than the lower classes, yes he may of had the money to dress smartly and take part in activities that many others could not,is this not the same as the group of children who walk about the school in trainers with shirts untucked ?
    He was showing that he was better than the class he had been placed in by default by society. For whether you are born into riches or poverty your true class is infact measured by the wealth of your personality. Boris had something that his fellow students could not purchase , charisma, intelligence his own mind which seperated him from the pack. Although to show this he had to resort to certain measures so that people would realise he was different. Boris meets people from all walks of life and judges people not by the size of their bank accounts but by who they are as people, should they portray the negative qualities assosiated with the class they are thrown in to by society then so be it.
    In have i got views for you, boris shows his feelings towards those placed higher in the class structure making it clear that people from all backgrounds hold the ability to posses negative qualities. He refers to those who quick to judge upon wealth or lack of it as ‘bigwigs’ (i believe that is the word) and explains how due to these predujices within society he was far less likely to be able to get the job he wanted as the compettion no matter how less qualified they were than himself, were first in line due to only thier upbringing. i myself live on a council estate, i do not deserve to be categorized and judged for this do i?
    is it the negative views we have as a society that force people to revert to type?
    I see behaviour in children and adults for that matter that disgusts me but apparently that is the way people such as myself behave ???
    i also spent three years in a childrens home and have tattoos i also smoke, with all this in mind well…
    how is it that i am not in prison yet?

  16. Look at the Common Wealth leaded by the Queen Elizabeth – each member state still use their own currency and has their own rules and they are still thriving.

    Look at the newly formed EU – all member states have to use the same rules, measurements, currency blah, blah… and now it’s already crumbling. Greece demands to be bailed out by the Central Government ( Brussels ). Hungary threatens to ” send ” millions of unemployed people to the UK unless the Central Government bail her out. If this is the rule then no member state will bother to work hard to keep their own country prosperous. This is just like receiving unemployment benefits, isn’t it?

    Now economy experts say the reason why UK is at least not in the condition like Greece is because we still keep our own currency the ever-posh Sterling.

    Yet when asked to comment on the current Greece’s economy, Peter Mandelson still said the EU was working and we ought to join the Euro currency like everybody else.

  17. @Pericles: Pericles… i have received a message from the boatman for your good self it reads as follows…

    “Dear MR.Pericles ,
    after carrying out a risk assessment of my current occupation…
    i am left unable to navigate myself or others across the sea of souls, due to the new health and safety regulations enforced by the European union.

    Should i wish to carry on in my current job i need to…

    1.attend relevant training and first aid courses

    2.purchase a license for my vehicle and a permit to operate such a service on private waters

    3.can no longer accept cash, meaning i shall have to pay an annual sum for the hire of a chip and pin machine or alternatively wait until each client has made the relevant arrangement with his/her bank for a monthly direct debit, (the forms must be obtained from a MR.G.Reaper prior to arrival)

    4. i am also to purchase a modern motorised vehicle equipped with life jackets and boats, staff are required should i transport more than 10 clients at a time and more than 3 staff will require toliet facilities to be available.

    5.I will now be listed as a government employee and must charge relevant V.A.T and receive my wage monthly into an account, i must also refuse any tips as each of these becomes taxable by the E.U

    6.i will be limited to operating within the hours of 9 am and 5 pm working a maximum of 40hours per week with one days rest and take 6 weeks holiday per year

    7.i shall also be required to take on apprentices, provide relevant adaptions to my vehicle to allow disabled people to travel in comfort and have a mix of male female and employees of varied nationalities within my workforce

    8. finally i must obtain relevant proof of age , id and accommodation along with a signed statement from each client to poove they understand the risks of travelling with my company should any legal proceedings be taken out against myself or my employees

    As it stands MR Pericles i only posses a provisional licence and temporary permit thus allowing me to transport only officials of the European union across these waters at present. so if i were you i’d delay any plans of meeting (with your particular faiths)department of fate for the time being.
    yours sincerely
    MR B.Oatman ”

    well i hope that answers your question Pericles
    janina davison-forder 🙂

  18. I am sorry but until countries get a grip of the free flow of credit, Interest rate caps and the responsibility of lending there are going to be lots of countries going Greece’s way.

  19. The big difference is one union is headed by Queen E and the other is headed by Queen P.

    Use Euro money and in the Sterling? Use metric and bin pounds and ounces? You can’t just erase a country’s thound years of history just because you want to. This is communism-influenced clearly. Like Russian communists changed the names of their cities – St Petersburg became Leningrad!!!

    Some people are so brained washed by Labour political correctness-wise up their ass, they are so blind that, to them, it’s perfectly acceptable for a gay British minister to hang around with Russian mafias who are backed by Putin.

    They are so brained washed by Labour that now they want to find ways to save the EU. Why do you want to save the EU?

    Tell me if a gay Russian minister is allowed to hang around western mafias. No he is not. A gay man is not even allowed to be a minister in a communist country.

    Tell me if citizens of the Common Wealth have the right to move and live in other member states of the Common Wealth freely? No, they have not.

    The Common Wealth is only about economy, defence and culture.

    Even citizens of communist countries don’t have the right to move and live in other communist countries freely.

    This just to shows you Brussels left wings/ hardcore socialists have been brained washed by Russians to let citizens of the EU have the right to live in any other EU member states. To cause social unrest and chaos socially and economically. That not to forget to mention a lots of these EU’s citizens from Eastern Europe are actually Russians with a different passport from any Eastern European countries which are new members of the EU.

  20. (sorry me again, must be sick of me by now, just a final patriotic word from myself)
    To those still blind to the misguided ways of labour…

    We ask, do you value the pound?
    As a certain Mr J Callaghan did in 1967 when he devalued it by 14%….hmmm…ist thou aware of this snippet of labours history?

    Me thinks we should include this in the trial..
    ‘The Labour party Vs queen, country, public and common sense!

    And say what you may thou lovestruck labour loonies, Mrs thatcher the one you believe is the root of all evil (sigh) she defended our great british pound…

    “if anyone is suggesting that i would go to parliament and suggest the abolition of the pound sterling – no!”

    I wager Mr brown would freely throw the pound into the Thames, if he believed he would gain as little as a friend,nay , penpal ! from his traitorous act. Who would you rather send to war brown or Thatcher????

    As for the E.U.. the french ridicule us for our food and drinking culture, while in germany i was witness to the germans laughing at us for our cleanliness, and we are now part of the same alliance? But ridicule us at will for we have something you do not, we have a history of great monarchs, of nation upon nation waving our flag, of the legendary penny black, we have a health service, benifts for those less able to work, st pauls, tower bridge. We have oxford and cambridge who people from many countries come to for an education, a police force that fights to stop crime through working with the people not through intimidation, and among much more lies the pound, not only a currency but a symbol of hope, faith and courage an impressive coin unlike the euro.

    yes we have our faults we make mistakes like any other nation, but we are not prepared to be walked over by a union that wishes to demolish all we hold dear to our hearts….

    We have something that will never cease, nor reach the end of the road, till the end of time we shall remain.. we will be… we are always…

  21. A fed Bear is a dead bear.
    Feeding the Serbian bear with $20 billion grant aid from the West, and with $20 billion in weapons from Russia East, ended in 10 years war with 500000 innocent civilian dead, through execution, torture, raping, kidnapping and forcefully displacing millions of Croatian, Bosnian, and Kosovars. Shame on EU, shame on Russia.
    The actions of Serbian beast ended in dismembering of Yugoslavia, and creation of many independent states, sworn enemies to Serbia. If you go to Croatia they say don’t forget VUKOVAR, don’t forget Srebenica in Bosnia, Vojvodina in Hungary, “Western Outlands” in Bulgaria, and about Kosova there never will be peace without justice. So, Serbia will end a dead Bear if not protected from outsiders forever.
    Feeding Greece with grant aids, the West is creating another beast. Greece has created a virtual reality, with a very strong military, (330 Leopard tanks, F 16 jet fighters, a very powerful Navy, included up to date submarines, and more.)
    The Greek people never learned to pay their taxes …. because no one is ever punished.
    To make things more interesting Greece has FREE HEALTH CARE, LUCRATIVE PENSIONS, and HIGH PAID JOBS, which they cannot afford either.
    So the WEST is feeding another Bear that soon or later will end in a DEAD BEAR.

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