A while back I was offered the golden opportunity to invest in a Sushi Bar in Hollywood. There were celebrities involved and for a mere $15,000, I would buy my way in to a rock-solid investment that would pay me back in both cash and prestige. Most of us have been in the situation at some point or another. A wealthier friend offers us an opportunity to do something that richer people do and lays out a panoply of reasons why we should join them. They can be very convincing.
Each times this happens to me, I go through the same internal struggle where the rational part of me understands that I'd have to be an idiot to participate while another, stronger, part of me, a part of me that has had a controlling interest in my psyche since pre-school, says: "The cool kids want you to be like them!"
What I consistently fail to realize in these situations is that, really, I'm not that cool and if they want me to join them, it's often because they need me for something. This is always true when they offer to lend me the money, explaining that I can pay them back afterwards.
I've lost a lot of money that way. Then again, I'm Greek, so maybe I'll chalk it up to national character.
In essence, this is the story that everybody's calling the "Greek Debt Crisis" and it isn't the first time the Greeks have been talked into poor financial decisions -- it's been happening for thousands of years ever since Pericles convinced the Athenians to spend the war treasury rebuilding the Parthenon. There's something in our cultural subconscious that allows us Greeks to lose all sight of rationality when somebody talks pretty.
And it always seems to end with the crumbling of a Greek government and with the Greek people paying the highest price.
But this time the poor decision to join the Euro has also been used to bundle a whole batch of annoying Northern European stereotypes of their more swarthy Mediterranean neighbors into one big tangle of cuphineous allegations and accusations.
First of all it's not a Greek Debt Crisis. In reality, it's a German, French, and American Bank Crisis. The reality, which bears no resemblance to the media coverage, is that the Billions of Euros that are being "given" to Greece are not going to go to Greece. They are going to go to Duetchebank and other institutions who lent the Greek Government money. Calling it the Greek Debt Crisis is akin to saying that the TARP was used to bail out homeowners. In our dreams, maybe, but completely not related to reality.
And just as the right wing in our country keeps pointing frantically at brown people who bought houses and tanked the economy, the establishment economists and politicians of Europe are all pointing at the lazy, ouzo-swilling, tax-avoiding, tavli-playing, coffee-slurping Greeks and saying, "Just look at them! If they won't work hard like a good German, then they don't deserve our help."
Ok, the ouzo and coffee and tavli are all pretty much true but who can blame the Greeks for that? They had 5000 years to develop good booze, good games, and good times.
But the Greeks are also the 2nd hardest working country in the world behind South Korea. The average Greek puts in 2,052 hours of work each year, which makes them a good 250 hours per year more industrious (or overworked) than us here in the USA.
Part of the issue is that since the Euro, it takes more than one job to make ends meet. Prices have tripled for the average Greek in the last 10 years and the Greeks tend to have more than one job to compensate. It isn't uncommon for the average Greek to have two or three jobs that, together, add up to more than 40 hours per week.
And as far as taxes are concerned? Sure, the Greeks hate taxes more than most, but until they joined the EU there wasn't a problem. Seriously. The Greek economy plugged along just fine between 1974 and 1999 even with almost half of the Greek citizenry secreting their stashes of Drachmas into off-shore companies and Swiss bank accounts. The Greek Ministry of Finance and the Greek tax rates were built to accommodate the fact that they were dealing with Greeks.
In short, Greeks had no problem being Greeks until the Great White North made them an offer they couldn't refuse.
"C'mon, Greece, you're European and you invented democracy," the cool kids said, "We know you don't have the economy or the currency situation or the infrastructure to be able to be successful in the Euro-zone, but we'll lend you the money until you get there -- it won't be any fun without you!"
Greece had been one of the original 10 members of the EEC, the European Economic Community, which was the free-trade zone that predated the transition to the EU. Unlike Sweden or England, who joined the EU without adopting the Euro, Greece was not able to do so. Greece's option was either to not join the EU (which would have been an embarrassing admission of 2nd-class status) or to join the EU and adopt the Euro. So they entered and adopted the Euro.
But Greece's main source of income has always been tourism and one of the things that a tourist country relies on is being affordable enough for people to go there. When we went in 1999, we could afford to go for 5 weeks and the average hotel room cost $30 per night. When we went in 2007, we could only afford to stay for 10 days and the average hotel room cost $120 per night. Food, transportation, and entertainment all rose commensurately.
It was hard on tourism, but it was even harder on the average Greek who suddenly became more interested in holding on to their meager wages rather than coughing up to pay taxes.
And since Greece did not control its own currency anymore, they couldn't revalue it to save themselves.
And so here we are and this time instead of a Parthenon which will stand for the ages as the economy and government collapse, the Greeks have a few more highways, set prices in restaurants, and a crapload of cheaply built vacation homes that very few Greeks can afford to buy (before the EU, only citizens could buy property, but with the EU, Northerners turned the Greek islands into Europe's Florida) to show for it.
So what now?
If you're an average Greek, the answer's pretty simple: default. Leave the Euro. Take the hit and then take control of your currency. Sure, there won't be any borrowing for a long time, but there will be tourism, autonomy, and Greek goods sold in the stores instead of Belgian ones.
And there won't be four straight stages of imposed pro-bank and anti-worker austerity.
Much like in our own country, arguing that average people need to suffer to save banks from their own poor decisions is a loser's position. Arguing that the wealthy shouldn't lose because the system they created has bit them in the balls shouldn't get much sympathy.
If a friend offers to lend you $5.00 with interest so you can pay them back the $5.00 you owe them, they aren't a friend.
And default won't be a permanent scar on the face of Greece. Argentinashows us that investors will return -- money goes where there is money to be made.
I took a bath on that restaurant, but I recovered and was better off as soon as I got out from under it and the same will be true for the Greeks.
Bring back the Drachma:personal blog