As Greeks went to the polls yesterday in a crucial election, nobody really knew where the campaign stood - because pre-election polls have been forbidden, under Greek law, since June 1.
This struck me as an apt metaphor for how Greece got into its plight in the first place, and for why there is likely to be far more suffering to come before it gets out. Greece treats facts as dangerous instruments that must be managed, suppressed or, when all else fails, ignored.
Why would a democratic society cut itself off from information about its own election campaigns? The state of a country’s politics can certainly be deplorable - many nations, including our own, are well aware of this - but how does knowing the state of a campaign hurt the society? With less information, do people make better decisions? Are citizens not entitled to share views and information with other citizens?
In Athens, apparently not. When the country’s finances failed to meet the standards required to join the euro, it fudged some numbers (shamefully with the help of some Western investment banks) and lied about others. When its ongoing budget deficits exploded past the currency zone’s limits, it hid the deficits. That is how the country amassed a national debt that far exceeds its annual economic output and its capacity to pay, even after a major default. The default was part of a bailout plan from just a few months ago that would have provided the Greek government with enough new cash to keep paying its bills in return for sharp budget cuts and privatizations intended to shrink Greece’s public sector to a size the country can realistically support.
But it all teeters on the brink of calamity. Greece’s national treasury is nearly empty as it awaits the next handout from the country’s European sponsors. But those sponsors, notably Germany, say they have no intention of throwing more money onto the pyre until the Greeks show concrete evidence that they are carrying out the strict financial reforms that the country needs. But those financial reforms are painful, and the Greeks are once again denying the unpleasant truth about their lot.
The most brazen practitioner of this denial is Syriza, the radical leftist coalition that finished a close second in the inconclusive May election that led to yesterday’s re-run. Syriza insists that Greece can renege on its austerity commitments, remain in the euro, keep its vast public payroll and still receive the financial aid it needs in order to pay its bills. The argument is that rather than acknowledge Greece’s failure, Germany and other European nations will choose to deny the reality of the situation and just keep paying.
That is what recent Greek governments would have done. However, it is not what German Chancellor Angela Merkel is likely to do, as she and many others have made clear. The Greeks would do well to look at German public opinion polling, which is not suppressed. Merkel’s hard line on European budget austerity is widely applauded by her countrymen.
Moreover, while the costs of a Greek exit from the euro will be great, those costs have already been largely discounted by almost everybody outside Greece. The widespread European perception going into Sunday’s vote was that Greece’s days in the euro are numbered, no matter how the election turned out.
The Greeks, in fact, largely share this perception, as evidenced by the fact that they have been rushing to withdraw money from their nation’s banks. Those who can do so have stashed their savings in banks in Germany, Switzerland and elsewhere.
The conservative New Democracy party campaigned to keep Greece’s commitments and keep the country in the eurozone. Before polling was suspended, New Democracy appeared to hold a slight lead over Syriza. The lead was seen as a big deal, because Greek law gives the top vote-getting party a large slice of extra seats in the national legislature.
I’m not convinced that it matters. Even if New Democracy wins, it may not be able to form a coalition or hold it together long enough to pass the reforms that the country’s lenders are demanding. More importantly, even if such reforms are enacted, it is doubtful whether they - like others enacted before them - will be implemented. Greece got through the first several years of its financial crisis because lenders were willing to disburse funds in return for legislation. Now those lenders are demanding action.
Greece has not yet shown that it is willing to act. Many Greeks rely on their government as a source of income, and few feel obliged to comply with tax laws to support it; even the prospect of economic disaster may not be enough to get the country to give up its life on the dole. The Greek welfare state may not end until simple lack of cash forces it to shut its doors.
The situation contrasts sharply with that of places like Portugal and Ireland, whose populations accepted deep cuts in government spending and social benefits in exchange for foreign financial support. While the spending cuts are depressing employment and output in the short term, those countries have much better long-term prospects than Greece.
Spain and Italy are sharing the headlines with Greece this week as the economic weaklings of Europe. Spain’s situation, however, is very different. The national budget is in much better shape, and despite some protests, the Spanish citizenry has supported many of the reforms Greece has resisted.
Italy, though vastly larger and more important economically than Greece, has some of the same characteristics of an ossified, inflexible, bureaucracy-heavy society. But on the other hand, the Italians also have world-leading brands and entrepreneurial pockets that Greece lacks, and they are much closer geographically and economically to eurozone powerhouses Germany and France. Though it is not pretty to watch, Italy usually finds a way to muddle through its crises.
I have few comforting words to offer about Greece. I hope I’m wrong - I think the citizenry is likely to suffer dreadfully for its nation’s failures - but I don’t think this latest round of balloting has prepared Greece to face the facts about its situation. It is, after all, a country that still thinks opinion polls need to be suppressed.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
As Greeks went to the polls yesterday in a crucial election, nobody really knew where the campaign stood - because pre-election polls have been forbidden, under Greek law, since June 1.
This struck me as an apt metaphor for how Greece got into its plight in the first place, and for why there is likely to be far more suffering to come before it gets out. Greece treats facts as dangerous instruments that must be managed, suppressed or, when all else fails, ignored.
Why would a democratic society cut itself off from information about its own election campaigns? The state of a country’s politics can certainly be deplorable - many nations, including our own, are well aware of this - but how does knowing the state of a campaign hurt the society? With less information, do people make better decisions? Are citizens not entitled to share views and information with other citizens?
In Athens, apparently not. When the country’s finances failed to meet the standards required to join the euro, it fudged some numbers (shamefully with the help of some Western investment banks) and lied about others. When its ongoing budget deficits exploded past the currency zone’s limits, it hid the deficits. That is how the country amassed a national debt that far exceeds its annual economic output and its capacity to pay, even after a major default. The default was part of a bailout plan from just a few months ago that would have provided the Greek government with enough new cash to keep paying its bills in return for sharp budget cuts and privatizations intended to shrink Greece’s public sector to a size the country can realistically support.
But it all teeters on the brink of calamity. Greece’s national treasury is nearly empty as it awaits the next handout from the country’s European sponsors. But those sponsors, notably Germany, say they have no intention of throwing more money onto the pyre until the Greeks show concrete evidence that they are carrying out the strict financial reforms that the country needs. But those financial reforms are painful, and the Greeks are once again denying the unpleasant truth about their lot.
The most brazen practitioner of this denial is Syriza, the radical leftist coalition that finished a close second in the inconclusive May election that led to yesterday’s re-run. Syriza insists that Greece can renege on its austerity commitments, remain in the euro, keep its vast public payroll and still receive the financial aid it needs in order to pay its bills. The argument is that rather than acknowledge Greece’s failure, Germany and other European nations will choose to deny the reality of the situation and just keep paying.
That is what recent Greek governments would have done. However, it is not what German Chancellor Angela Merkel is likely to do, as she and many others have made clear. The Greeks would do well to look at German public opinion polling, which is not suppressed. Merkel’s hard line on European budget austerity is widely applauded by her countrymen.
Moreover, while the costs of a Greek exit from the euro will be great, those costs have already been largely discounted by almost everybody outside Greece. The widespread European perception going into Sunday’s vote was that Greece’s days in the euro are numbered, no matter how the election turned out.
The Greeks, in fact, largely share this perception, as evidenced by the fact that they have been rushing to withdraw money from their nation’s banks. Those who can do so have stashed their savings in banks in Germany, Switzerland and elsewhere.
The conservative New Democracy party campaigned to keep Greece’s commitments and keep the country in the eurozone. Before polling was suspended, New Democracy appeared to hold a slight lead over Syriza. The lead was seen as a big deal, because Greek law gives the top vote-getting party a large slice of extra seats in the national legislature.
I’m not convinced that it matters. Even if New Democracy wins, it may not be able to form a coalition or hold it together long enough to pass the reforms that the country’s lenders are demanding. More importantly, even if such reforms are enacted, it is doubtful whether they - like others enacted before them - will be implemented. Greece got through the first several years of its financial crisis because lenders were willing to disburse funds in return for legislation. Now those lenders are demanding action.
Greece has not yet shown that it is willing to act. Many Greeks rely on their government as a source of income, and few feel obliged to comply with tax laws to support it; even the prospect of economic disaster may not be enough to get the country to give up its life on the dole. The Greek welfare state may not end until simple lack of cash forces it to shut its doors.
The situation contrasts sharply with that of places like Portugal and Ireland, whose populations accepted deep cuts in government spending and social benefits in exchange for foreign financial support. While the spending cuts are depressing employment and output in the short term, those countries have much better long-term prospects than Greece.
Spain and Italy are sharing the headlines with Greece this week as the economic weaklings of Europe. Spain’s situation, however, is very different. The national budget is in much better shape, and despite some protests, the Spanish citizenry has supported many of the reforms Greece has resisted.
Italy, though vastly larger and more important economically than Greece, has some of the same characteristics of an ossified, inflexible, bureaucracy-heavy society. But on the other hand, the Italians also have world-leading brands and entrepreneurial pockets that Greece lacks, and they are much closer geographically and economically to eurozone powerhouses Germany and France. Though it is not pretty to watch, Italy usually finds a way to muddle through its crises.
I have few comforting words to offer about Greece. I hope I’m wrong - I think the citizenry is likely to suffer dreadfully for its nation’s failures - but I don’t think this latest round of balloting has prepared Greece to face the facts about its situation. It is, after all, a country that still thinks opinion polls need to be suppressed.
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