The Greek Economic Crisis

A recent short item in the journal Nature (vol 321, p6) described the Greek government raiding any spare cash in Greek research institutes and universities to stave off financial collapse. All cash reserves must be transferred to the Greek central bank. Part of what is of interest is that Nature apparently regards science as somewhat different from everything else. It is not, and the only claim it has on the public purse is that countries with a strong science sector have stronger economies, although of course there is the question, which is the horse and which is the cart? Leaving that issue aside, why has this happened? Basically, it seems the problems that the Greek government faces has persuaded only too many Greeks with cash to ship it out and put it in some bank other than a Greek one, so Greece has simply run out of cash. They must be really desperate if they have to resort to raiding the spare cash of research institutes, though, as characteristically they are invariably cash-strapped and only keep cash to pay the various bills.

The most obvious act that Greece should take is to immediately withdraw from the Euro zone and default. Yes, the default is basically dishonest, nevertheless Greece has no possibility of paying back its debts, and to stay on course it has to borrow more to pay back the interest. In short, the prescription from the Euro zone is nothing less than a pyramid scheme to favour their banks. Greece should get out now. As it stands, everything that Greece earns will go to overseas banks. Greeks are no longer working for themselves, unless they default. Apart from death, when something is inevitable, it is invariably better to face it rather than to let it make the problem so much worse.

So, who is responsible for this? The first and obvious culprit is the Greek government, which has persistently spent more than it earns. Actually, this disease is common to most countries, but Greece has taken this to extremes. Moreover, everyone has known about it. But there are other villains. Greece should never have joined the Euro zone, and as I understand, the only reason it was admitted was that one of the big New York banking institutes produced documentation that was at best overly optimistic, and at worst, fraudulent, that let Greece in. In any case, overly optimistic is a pale description compared with what eventuated. The second set of villains was the European banks, who lent all this money. Either they had to know it was impossible for Greece to repay it, or they were negligent and did not do the work a banker should do.

Whatever the reasons, I rather doubt that Greek research institutes are holding enough money to make a significant contribution to the problem. This act is a little like taking a penny to buy the cartridge to shoot yourself in the foot. What apparently is going to happen is the research institutes will be unable to pay their power bills. Whether Greek science can help Greece get out of their bind is a unclear, but what is clear is that unless Greece can improve its economy, it is always going to be in this bind. But it also must get out of the Euro zone. The likes of Greece keeps the Euro lower, which strongly helps Germany and other more powerful economies, but at the expense of the Greeks.


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