The Set-Up

Glyfada, Athens (G. Sarrinikolaou)

Well-being, in our great economic system, has become synonymous with materialism. In Greece, historically a poor country, acquiring a house and a car used to validate success. (My parents never had either.) At some point in the last thirty years, owning a second house, this one by the sea, and a second car became commonplace. Now the yacht and the helicopter are the true status symbols, even if one in five Greeks lives below the poverty line. Greeks, in other words, are perfectly American in this regard, shopping their way to happiness, embracing limitless economic growth. So one can imagine that they may feel set up as their creditors now tell them that they overdid it. That they wanted too much, too fast. More is always better, except when the bond markets say differently.

Consider that German and French banks have been among Greece’s creditors, but that Germany, France, along with Italy, France, the Netherlands, and Russia are also the major suppliers of goods imported to Greece. As I wrote in an earlier post, Greece spent three times as much on importing goods ($64.27B), as it earned from exporting its wares ($21.37) last year. In other words, much of the money that Greece has been borrowing has been finding its way back to the source, fueling economic growth in the industrial North. The Greek economy is small, so I don’t mean to overstate the importance of Greek consumption to the German and French economies. Still, the numbers of German, French, and Italian cars, boats, washers, dryers, stoves, and air conditioners that I see each time I visit Athens, suggest that the Greek market isn’t insignificant

To avert the crisis, successive Greek governments were supposed to have campaigned on economic growth, but reduced jobs and pay in the public sector; they were supposed to keep pensions low and allow for easier hiring and firing of workers in the private sector. They were supposed to borrow, but not so much. And all along, they and everybody else were supposed to be buying Europe’s machines, Japan’s cars, and America’s weapons (U.S. goods, mostly bombs and guns, accounted for nearly 3% of Greek imports, according to the U.S. State Department.) They were Europeans, after all, and were destined, by God, to live like Europeans.

For Greece, the fantasy of material prosperity ended last week. And so the European Union is now moving fast to ensure that fantasy is rescued in the rest of its territory. Even if it costs $957B.

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