Wednesday, June 29, 2011

Greece: Trojans and Spartans Return to Battle

By Grant de Graf

On June 22, 2011, I posted an article on "Why Greece Needs to Vote Against Austerity to Survive." In essence, I articulated a number of issues that would destroy Greece, if it chose to remain part of the Euro Zone and embrace the Euro. That message is no more clearer today, epitomized by the violent clashes that erupted on the cobble streets of Athens, in protest to the Government's austerity program. This is the same venue where Trojans and Spartans might have battled for freedom, in a era that was lost to time. Therefore, it is ironical that a similar struggle is being waged today.

This time the enemy is the European Central Bank, who chooses to impose its values and discriminating predisposed remedies, on a country and people that are gasping for survival. Its message is gift-wrapped with delicate tissue, proposing a manifesto that will provide the county with prosperity and economic recovery. The contents of the endowment is curried with a poison that tastes enchanting at first bite, but that will leave Greece with a legacy, handicapped and embattled for generations to come.

The biggest failure of the ECB has been its inability to implement fiscal and monetary policy simultaneously, from the same hand. The needs of local governments are so different to those of central government's and the discrepancies between the two, have in Greece's case, been irreconcilable. How can central government dictate to Greece a spending package that is largely a right that belongs to its citizens? How can central government deny it's members, participation in their own local affairs? How can central government actively restrain growth of a member's economy (which could potentially be activated through the development of its export industry) by forcefully compelling it to function with the Euro, as the official currency? Instead, Greece is being held to ransom, to be part of the Euro zone and retain the Euro.

In the end, both the Euro zone and Greece will suffer, as they grapple to fight the tide and reconcile a situation, the conclusion of which is inevitable.

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