By Rob Gelb If any country is aware of the concept of tragedy, it would be Greece. Contrary to what students learn in their high school literature classes, the one major qualification for a tragic figure is acting in ignorance. With this financial crisis, acting in ignorance was the tragic flaw of the troubled hero: the Greek government did not realize the extent of the measures they would have to take in order to combat this financial conundrum. The void of competent leadership in Greece during the immediate aftermath of the late 2000s financial crisis put the country on the road to ruin. Greece’s demands that half of its debt be written off may seem extreme, but its critics fail to realize the extremity of the situation.
Greece did not go far enough in austerity, and when they realized that, it was already too late. Look at America, arguably still recovering from the Great Recession of 2007-2009, which some economists worried would lead up to a crash worse than the Great Depression, with an unemployment rate of 28%. Greece is in many ways what America would have become if such nightmares came true. To make matters worse, the bailouts were not directed towards helping Greece’s economy recover, but to satisfy creditors at its expense. Only about 11% of this money went to the Greek government. While the creditors benefited in the short-run, Greece remains in the thick of one of the worst economic situations in Europe.
Despite the Greek government's past mistakes, the steps it is taking now are much more effective at reducing its debt burden than it was a few years ago. They are standing down on anti-austerity measures. They are accepting the programs of the eurozone. Despite its adversarial campaign rhetoric, even Syriza is willing to reach a primary surplus. It has also expressed a willingness to reach primary surplus at the cost of some of its spending pledges. Michael Ball, portfolio manager at the $850-million money manager Weatherstone Capital Management, suggests investors should have more confidence in the Greek government: “I think people look at it and say, ‘The worst is behind us.’” Take pity on this greek tragedy, people.
Editor’s Note: This piece is one of two op-eds framed around the question, “Are Greece’s Creditor’s Being Reasonable?” It takes the negative position. To read the opposing view, please read “Time For Greece to Stop Passing the Buck" by Joe Kearns.