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article imageOp-Ed: Greek whiners still whining about overspending

By Gar Swaffar     Jun 17, 2015 in World
Athen - Today's news regarding the Greek intransigence against facing reality is pretty much the same as yesterday's. And the day before, and the day before that.
Is anyone else as disappointed by the the government of Greece simply refusing to take a look at reality and recognize it as reality as I am? Again today, reports at the BBC show the hard truth regarding the economic reality which Greece is facing, and as they say in southern U.S. states: "It ain't purty" ("it isn't pretty" for those unfamiliar with Southern vernacular). The ugly truth is rising to a level which just can't be ignored.
With a debt to GDP ratio of 177 percent, Greece has two options and only two. Get real and cut the state-funded payrolls, or remain in a state of indebtedness to the ECB (European Central Bank), Germany and the IMF (International Monetary Fund) forever — in essence, becoming a ward of the EU financial system, for the Germans, French, British, and the rest of the EU taxpayers to support.
It may seem incomprehensible to the recently elected PM Alexis Tsipras, to be held accountable for playing on the fears of his fellow Greeks, when they were told to accept austerity measures which would reduce the debt to GDP ratio, but that is the only source of healing for the Greek financial problem. PM Tsipras will be held accountable at some point in the future, however — the very near future if the IMF, ECB and Germany have anything to say about it.
Today, Tsipras regurgitated the ongoing whine that the ECB, IMF, Germany troika only want to "humiliate" Greece by forcing austerity measures and structural reforms on the Greek people. It's the same old line he's been playing for the Greek voters since he was elected by playing to the irrational belief the EU should simply pay up and shut-up instead of asking Greece to make changes to a system which created the problem.
The European Commission President Jean-Claude Juncker accused Tsipras (the Greek government) of misleading the Greek people with regard to what is being required prior to another bailout being handed over to the Welfare State of Greece.
Yesterday in the BBC, Tsipras was reported as stating the Greek government "will wait patiently for international creditors to become realistic"
Tsipras has at least noticed Greece has "International Creditors" — perhaps the international creditors will be willing to wait patiently for Tsipras to notice the debt Greece piled up unsustainably and then aksed for a handout to pay off? Seems unlikely for the IMF, ECB and the rest to wait very long though, since there is a payment due this month of 6.74bn euros, next month another 5.95bn euros and in August a measly 4.38bn euro payment is due.
After all is said and done, a mere 17.07bn euros is due in the next 90 days. Overall, Greece has a debt of 320bn euros, with 56bn euros owed to Germany alone, and with 240bn euros having pledged or paid out from the EU.
Olivier Blanchard, the IMF chief economist may have laid out the situation best in an IMF blog,
"How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?"
Mr. Blanchard seems to understand that Greece is unable to meet the original goals of debt reduction established in 2012, and Greece is not able to meet the requirement of a primary surplus in their economy of 3 percent this year, and 4.5 percent next year. Not an unreasonable stance for a person whose task is to look reality in the face and call it reality.
Blanchard is also able to see what appears to escape Tsipras though, and that is the unwillingness of the Euro Zone to continue propping up the Greek government indefinitely into the future. The Euro Zone after all is supported by individuals who pay taxes and would like to maintain their own households in some degree of stability.
Blanchard mentions in his iMF Direct blog post the startling figures for what is being paid out to pensions in Greece. A staggering 75 percent of Greece's primary spending goes to pensions and wages. A full 16 percent of the Greek GDP is spent on wages and pensions. Blanchard and the IMF have suggested cutting that amount by 1 percent, when everything else which can be cut has already been slashed to a bare minimum.
The Greek government has already raided the public sector entities such as cities and hospitals to make loan payments, and without some semblance of rational behavior from the Leftist government, an exit from the Euro zone seems likely. A Grexit may seem like the best option for those who don't live in or near Greece, but the ramifications of that type of national bankruptcy (loan default) will almost certainly be widespread and difficult to contain the European continent, banking is truly an international business.
With the scenario of a Greek failure to recognize the impossibility of maintaining a debt to GDP ratio in such a disastrous range, well above 120 percent, the global financial system may look back at the Oct. 2008 crisis the American bankers and Congress set into motion and wish it were no worse than that disaster.
For those nearing retirement age, the problem may seem more important than for those who will be able to regain personal prosperity through hard work. For those who simply don't care, "have you bumped your head?"
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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