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European Union austerity: It's all Greek to them

June 29, 2011 |  1:07 pm

Forget "Beware of Greeks bearing gifts." These days, it's "Beware of Greeks wearing gas masks."  

Greece's government has been twisting in the wind for weeks, caught between European Union demands for austerity measures and protesters in the streets bitterly opposed to the belt-tightening.

Guess who won? As the Los Angeles Times' Henry Chu reported:

Greece has approved an austerity bill that helps pull the debt-ridden country back from the brink of an immediate default. After days of public unrest and impassioned debate, the Greek parliament voted 155-138 on Wednesday in favor of the controversial bill, which authorizes $40 billion in brutal budget cuts and tax hikes over the next several years for a nation already reeling from previous belt-tightening measures.

What is it with these little countries causing such big problems?  Remember how Iceland ran into trouble in 2009, and all three of its major banks collapsed?

Is it just me, or should we be taking a hard look at places like Jamaica or Tahiti?  'Cause I'm not going down for a place whose main export is "good times."

Back to Greece, though. Just how bad is the situation?  As Chu writes:

EU officials in Brussels are just as eager as Athens to avoid a Greek default, afraid that such an event would roil markets worldwide, hit European banks that hold Greek bonds and cause the debt crisis to spread to other financially shaky Eurozone countries such as Spain and Italy. 

But economists question whether Athens can enforce its austerity program in the teeth of major public opposition. In addition to unpopular spending cuts and tax rises, the government has also committed to selling off about $72 billion worth in state assets, including public utilities. 

Many analysts openly doubt that Greece will ever be able to pay off loans that far exceed the country's entire economic output and predict that the country will eventually have no choice but to restructure its debt, a form of default.

Now the odd thing is, I know several Greek families in L.A., and they are all hardworking, frugal, responsible folks. 

Which perhaps explains Greece's problems: Maybe all the hardworking, frugal, responsible Greeks left and came to America. 

Still, it may be hard for many Americans to understand how Greece got itself into this fix. So imagine this: 

What if, in the U.S., greedy banks gave millions of people mortgages for homes they couldn't afford, and those people used their homes as personal ATMs, and when that money ran out they used their credit cards. And while that was going on, the government was cutting the taxes of the rich, who got richer. 

And then, one day, it all fell apart.


In the United States, we can fall back on our Founding Fathers for advice. There's Benjamin Franklin's famous quote: "A penny saved is a penny earned."

Or, if you prefer something a bit more modern sounding, there's Alexander Hamilton:  "A national debt, if it is not excessive, will be to us a national blessing."

Turns out, Greece also has some famous guys who have offered pearls of wisdom.

First, Aristotle: "The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes."

Second, Plato: "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."

And finally, Socrates: "He is richest who is content with the least, for content is the wealth of nature."

Of course, Socrates ended up drinking poison.


Obama: Deal must include taxes

EU ties fray over debt crisis, border control

Mortgage settlement costs Bank of America $14 billion

-- Paul Whitefield

Photo: A protester near Parliament takes aim at police in Athens. Credit: Orestis Panagiotou / ANA-MPA

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