Hooray! The European Union unanimously welcomed the resignation of Yanis Varoufakis, the former Greek finance minister.
I thought it was a pity.
First; that man has character. Where do you find another individual who has the guts to be so stubborn that it brings 27 countries to despair? And then the great looks of this guy; compare that to the dopey types that you typically see in politics. And furthermore, if Varoufakis would have stayed in office, that would have put an end to the surrealistic amounts of money that flow from our wallets (in my case the Dutch) directly into the Greek treasury. So that would have been fine too…
But no, things went differently.
And with that, everything became much worse.
Because Varoufakis still oracles all kinds of nasty things from the sidelines. Such a dude is even more vocal when the politial burden falls from him.
And early last week, Greek Prime Minister Tsipras once again asked for a “loan”, this time of no less than € 53 billion. A few days later that appeared to be € 74 billion. But soon, that amount had risen to € 84 billion!
Although the history of the Greek debt drama gives more than enough reason to suspect that this amount of money is going to be even bigger, for the sake of the argument I will just assume that this € 84 tomorrow still stands at € 84 billion. Now consider that as an additional Greek debt and split it up among the Greek population of 10.7 million…
That would result in an additional debt of € 7.850 per Greek resident, including children and the elderly. That means every Greek “default family” (2 parents, 2 children) would end up with an EXTRA debt of € 31.000, just because of this one proposal of Tsipras.
I wrote the word ‘EXTRA’ in capital letters to underline that this is an additional debt on top of the existing Greek public debt, currently being € 340 billion (July 2015). Basically, every Greek family already has a public debt of more than € 126.000. If this new plan will become reality, every Greek family soon will be € 157.000 in debt. Now that only includes the public debt. Credit card debts, personal loans and mortgages of Greek residents come on top of this. Plus the interest payments on these debts. However, the average Greek resident earns approximately half of the average Dutch salary …
So how … what …? I am a bit confused here…
Therefore I request Your assistance with answering the following question:
Can anyone tell me how the Greek government will repay € 157.000 per family?
The only way to pay back public debt is deriving it from tax revenues. But this whole mess is partly caused by the inability of the Greek government to collect taxes in the first place. Which one of you has the illusion that the Greek government will succeed in raising another EXTRA € 157.000 in tax revenue per family?
On the Internet You can find laughable calculations, even from serious sources, which are supposed to prove that it’s not that bad. The online edition of The Telegraph states that the Greek public debt could perfectly well be repaid in 30 years. And if that fails; not to worry, eventually the Greek goverment will be able to pay the money back.
The time-frame of repayment of a debt is essential to the question whether in fact a loan is still a loan or a donation.
You see, if You can borrow money, and tomorrow You can again borrow money, and then the day after tomorrow yet again, and then You can not pay the interest on Your loans anymore, so You get another loan to pay Your interest, and then You are told: “Do not worry too much about when to pay back, as long as You pay it back someday, sometime”, in that case You have found the magical infinite money-well.And those who lend money to You, are throwing it into a bottomless pit. They lost their money for a long time to come, and by the time it is payed back, perhaps in a few generations, it’s worth nothing because of decades of inflation. That is not a loan, it’s a donation.
It’s actually even harsher than I describe above. In the countries that have paid for the Greek drama, there is poverty too. My country, The Netherlands, has borrowed at least € 18 billion to the Greek government so far. That means that every Dutch household payed € 4.700 in additional taxes to Greece. I myself don’t live in poverty, but unfortunately a few million Dutch people are having trouble getting ends meet. To them, € 4.700 means the difference between a stressful life with debt, or a new start without the worries of having bailiffs at the door. Therefore it is understandable that a large part of our population has a bad feeling about those Greek loans.
It’s clear now that I’m pretty good at complaining about the Greek drama. But I wouldn’t want to wrap this up without telling You how I think we have to solve this terrible crisis.
I suggest the following:
1) Greece remains within the EU
We do not let Greece fall and we keep the country within the EU; the Greek people are our friends. A quarrel between the EU and the Greeks could be the beginning of a scenario in which external parties see the opportunity to throw Europe into a long period of tension and perhaps even war. This should never happen.
2) We take our losses
The money that we send to Greece will never be returned in full. At least not as long as that money is still worth something. We should immediately relieve their debts by 50% and from then on accept all the conditions under which they wish to repay the remainder. The Greek crisis turns out to be a very important and expensive lesson for the EU. That lesson should lead to the measures as mentioned below. Any other solution that implies new loans to Greece is plain stupid. The only thing that will be achieved with new loans is that the pain will be postponed but brought to an even higher level. I want this crisis to be resolved now and I don’t want my children to pay the bill.
3) No new EU money for Greece
As of now not one Euro is send from the EU to Greece. And that is no longer necessary because of the previous point. The Greeks have been relieved from their debt, so they don’t need new loans. This policy applies for half a century. After 50 years, Greece will be eligible voor EU loans again. But only if it meets the conditions defined in paragraph 5.
4) Greek amnesty applies to all EU countries
There are more EU countries that want their debts to be releived. Alrighty then… Portugal, Italy, Spain, You name it. Ditch all of their EU debts if they wish to, but under the same conditions as Greece. So no more loans for half a century.
5) Much stricter rules for EU loans
As of today, the EU drastically changes the criteria as to which they provide loans to member states or any other country. There will be no more loans for countries whose debt exceed 100% of their Gross National Product or whose deficit exceeds 3%. The maximum loand will de 2% of a countries’ GDP per year, up to a maximum of 5 times. Each loan is paid back after 20 years. The interest rate on such a loan is about half of what consumers pay on a mortgage with a 20 years fixed interest rate. In short; a nice low interest rate, but still there will be some incentive to repay. After 20 years, no interest will be charged anymore. Each time a loan is not paid back on time, 10 years will be added to the number of years that no further loans will be provided. Even if that country meets the other conditions.
6) No new EU members for the next 10 years
The European Union is full for the next 10 years. Closed. Occupied. Please come back later. The limits of what can be controlled have been reached. The limits of Russian tolerance are also within range. I gladly make an exception for 2 countries; Norway and Switzerland. But they have little to gain from this. After this period of 10 years, the European Union is open to new members again. And then only for countries that are located entirely within Europe and fully comply with the new stringent demands.
7) Acceleration of European unification
The further integration of the European Union will be put in a highly accelerated pace. More unity in collecting taxes, more unity in legislation, and so on. The unfair competition which still exists is reduced as soon as possible. Our (Dutch) entrepreneurs are now pushed out of business because of unfair European rules. Our employees stil get unemployed by unfair competition from much cheaper labor from southern and eastern Europe. This must stop!
8) Dismissal of European officials
The administration of the European Union is reformed drastically. In Brussels there are at least 50,000 – 100.000 people working for the EU. Paying for all of these European officials took about € 8.5 billion in 2013! But despite this absurdly large and expensive administrative machinery, the European Union has not been able to prevent the Greek crisis. Maybe there is just too much chatting and dining going on in Brussels. Therefore, I propose to lay off half of all EU officials. And all that BS with the moving from Brussels to Strasbourg every year; it must be stopped right away. Even better: The European Union is going to leave Brussels (and Strasbourg). “Brussels” has become synonymous with bureaucracy, wasting money and scandals. So perhaps they should just leave Brussels altogether. Luxembourg has always been a very solid member of the EU and has one of the strongest economies in the EU. Perhaps the EU’s headquarters should move to Luxembourg in some sort of light version.
9) The guilty ones should be held accountable
There will be a European Parliamentary Inquiry which will investigate who is guilty of the Greek drama. All this misery is caused by a sloppy Greek government and sloppy European officials and politicians. The suckers who have send our money to Greece for so many years should feel there are consequences!
10) 3 Strikes is out
Each club has its code and every game has its regulations.
A strong club is only possible if members follow the regulations.
Any chain is only as strong as its weakest link. This club may have to say goodbye to a member who performs insufficient and thus inflicts damage to the whole team. But in the EU we are good friends and we do not kick out members easily. Nonetheless, there are limits to the pan-European solidarity.
Breaking the rules once can perhaps be condoned, but a member is certainly held accountable. Making that mistake twice will lead to a very firm warning. But if a member of the European Union fails to comply with the ‘club regulations’ for a third time, that member should be expelled from the EU. The European Union is irreversible. But only for members who abide by the rules that we agreed upon. Only then the European Union will remains strong, and only then there is a future for a European Union which actually provides value to its citizens.