order http://csautomation.net/wp-content/plugins/woocommerce/includes/widgets/class-wc-widget-layered-nav.php geneva;”>Greece has been referred to as the home of democracy and classical culture, this http://clermontraces.com/wp-content/plugins/nextgen-gallery/products/photocrati_nextgen/modules/i18n/package.module.i18n.php everything from our buildings and sculptures to the systems of our laws have been influenced by the ancient Greeks. Greece today however is a shadow of its classical ancestors.
The recent recession and the austerity measures that the EU and IMF are imposing on the country have sent it’s citizen’s into a rage. There are riots in the streets, politicians cannot come to an agreement on the best way forward for the country and the Greeks themselves seem to have lost hope for the future, something they aren’t happy about.
How did Greece get in this position? Well in the simplest of terms, Greece made cheques with their mouth that their ass couldn’t cash. Let’s go back in time for a moment to around the turn of the millennium.
The economy was at its best. Confidence was high and everybody thought that the good times would last forever. America’s economy was constantly growing and the people were taking out loans they couldn’t pay because they all believed that the good times were here to stay and money would always be there. Greece was no different.
The biggest source of income was tourism. Greece is a beautiful country with beautiful white beaches, clear blue seas and constant sunshine. Tourists in bikinis, rubbing sun block into their skins were a common sight in the country attending the latest fashion shows, sampling the red wines and yellow cheeses and generally making Greece a fun place to be all the while pumping money into the country.
The Greece government instead of using this money to encourage local development suffered from high levels of corruption and continually borrowed money from the IMF and the EU, deluded that money would never be a problem. But then the Recession took place.
Why the recession took place is simple. Somebody couldn’t pay back a loan and it caused a chain reaction which made debtors recall loans which people took even though they couldn’t pay them.
When this happened the debtors didn’t have money and refused to give money for loans. Companies collapsed, people lost their jobs, and countries were brought to their knees in the ensuing cycle of chaos and fear. Greece wasn’t an exception.
The recession reduced tourism significantly and the government now found itself without money so they did what any sane person would do. They decided to ask the EU and the IMF to bail them out. The two however had certain conditions, conditions that sent the entire country into an uproar.
Why the fuss? The IMF and EU just want to save Greece and it isn’t bad that they want conditions so that they get their money back. Let’s look at the conditions; Greece must encourage greater foreign investment, reducing taxes on foreign companies. Greece must reduce government expenditure significantly.
Greece must encourage specialization in and complete privatization of government owned companies. Those are the basic three conditions but why would they make Greeks go mad with anger.
First of all by encouraging more foreign investment, Greece would sacrifice they local industries. Foreign companies prefer to bring their own manpower and send their profits to their home countries meaning that the number of jobs given to Greeks would be reduced and the companies would exploit Greek resources but not use the profits in Greece.
Second, by reducing government expenditure significantly the government in order to operate would have to reduce pensions, social benefits and reduce the number of people that work for them all of which aren’t to the Greeks benefit.
Thirdly by encouraging complete privatization means that the prices of goods and services cannot be controlled by the government meaning that ordinary Greeks must suffer high prices in an economy where they can’t even make ends meet.
All these conditions, no matter what they say are intended not to help the Greeks but rather to ensure that they pay their debt in one way or the other to their debtors, their so called saviors, the EU and the IMF.
Why does this matter to Africa? It’s simple actually. The conditions that the EU and IMF gave to Greece are the conditions that they have been giving to African countries for years. The Greeks looked at these conditions once and immediately started rioting in protest. That says a lot especially of us.
The current recession has been called the worst since The Great Depression that swept through the world and particularly hit the US. The Great Depression helped lead to the second World War and changed the world forever.
How did the US deal with it? President Roosevelt understood that borrowing money and not encouraging public spending would be a quick fix but it wouldn’t help in the long run. He knew that the economy was driven by the public, encouraging them to spend and how do you encourage them to spend? By creating jobs as many jobs as possible.
Roosevelt increased government spending in this respect. He began the building of Dams and public works throughout the US which provided jobs and when finished provided services cheaply to the public. Roosevelt also knew that the middle class and the ability of others to join the middle class was what made a truly great economy.
India has one of the largest numbers of billionaires in the world but they still require aid from foreign countries in order for the country to operate because it’s middle class is weak economically and politically.
Roosevelt encouraged the middle class by encouraging local industries and heavily taxing foreign industries. Everything that Roosevelt did was the opposite of what the EU and IMF advise countries and he’s actions created one of the greatest economies the world has ever seen.
The Greeks understand this and they resent their government, the EU and the IMF for taking the easy way out. We should take a lesson from the Greek austerity riots.
Africa’s economy is one of the most promising in the world, courted by Europe, Asia and America for its large markets and abundant resources. Africa needs the long fix, protecting its local industries and promoting its middle class.
This is the only way our economy will grow to its full potential. We should take a very close look at Greece and learn from the reasons for the austerity riots.