Here are some interesting speculations about what is going to happen in and to Greece over the coming months… Obviously not from me. I am as likely to make an in-depth, considered political analysis as I am a strawberry pavlova, so don’t worry that I am going to get serious on you.
But a journalist friend of mine in England sent me some interesting distilments from the media that I thought I would share. These are quick thoughts from early Monday morning as the results were still coming in:
“The BBC has more or less decided this radical left party with the slogan “Hope is Coming” will be forming the government. They have of course now raised vast expectations among disgruntled Greeks who will expect them to deliver. In fact, the newspapers here are reporting that lots of Greeks have now stopped paying their taxes in the expectation that the new government will just write off the bill. The expectation is that if the new party tells Europe to [Foxtrot Oscar], and refuses to pay any of its debts, then taxes will go down, so why bother paying them now?
The truth is that if the new government does refuse to pay its debts and just writes them off then Greece will be at a position zero (ie no debts) but will be unable to borrow anything. As it happens, the old government has managed to balance the books. They’re managing to raise in tax exactly what they need to pay for public services. So, provided they continue raising the same amount of tax then they should be able to pay everybody’s wages. But if taxes go down, then they won’t.
What they won’t be able to do is modernise, build new schools, new hospitals, and the private sector won’t be able to move forward and create new jobs because there will be no investment in Greece. So the country will stand still – with the notable exception of tourism which will boom, but there won’t be enough money to improve facilities for tourists (new hotels etc).
And standing still also means no jobs for the 25% currently unemployed (which is 50% of young people as well).
So in a nutshell, those currently in work will continue to get paid but basically the country will come to a standstill. Everything will carry on just as it is now and Greece will be locked in austerity for years with no end in sight, or else go bankrupt. Tourism will flourish, but most of that money will be spent on jobs for people working in tourism and building new hotels (not hospitals or schools or roads).
The drachma (if it comes to that) will be a rock bottom currency, which means Greece will be very cheap for everyone outside Greece but people in Greece won’t be able to afford much in the way of imported goods. Everything outside Greece will be hugely expensive for them. Anything imported will rocket in price. And if Greece imports a lot of fuel and energy, then that will also cause price rises for Greek goods depending on them (manufacturing and delivery costs).”
But we shall have to wait and see what happens now. Right, that’s that done. Tomorrow I shall talk about something a bit closer to home.