As I pen down this piece the Greece government has implemented austerity rule of law in a second parliamentary vote that adequately guarantees for Greece the next trenches of funding it needs to ward off bankruptcy. But the country’s two major unions have called the austerity drive as “anti-popular” and “barbaric”.
Over the past few years, Greece went on a debt carousal that came crashing to an end in late 2009, instigating an economic crisis that exposed both Europe’s recovery and the future of the Euro. Over the next two odd years, Greece confides in bailout money from its neighbors and actualize austerity measures meant to cut its deficit and revitalize economy.
In recent years Greece has been living in profligateness, owing to which the current debt has become a monster. All through the recent past the system of cronyism, nepotism, graft and unabated spending has vitiated the system to the ebb. Members of the Parliament et al have failed to set an example and continue to act in an outrageous way, still in a “profligated” mindset.
In recent times a plethora of impending vicissitude is taking place in Greece, nobody knows if it is for the better? For the past few weeks massive protest have been taking place at Syntagma Square, center Athens and various other Greek towns. They are organized by the ‘netizens’. For the most part they are awe-inspiringly peaceful.
Everybody in the world particularly the 15 other Euro zone economies are worried about the recent Greece crises as its default may bereft the EU countries of their bailout to Greece and the spiraling event may trigger the default of PIIGS country which are also more or less in the same basket(“PIIGS– Portugal, Ireland, Italy, Spain and Greece – all of these countries face challenges re-balancing their books.) That domino effect of events would be a catastrophic scenario that would not only have significant ramification for Europe, except for the U.S. and the rest of the world. At least, a Greek default would approximately total $486 billion, but would be much more taking the account credit default swaps (CDS) that would be executed. If Greece finally defaults, then the solvency of many European financial institutions would be in grave question as they could be on the hook for unknown multiples of that amount, as they pay up on the losing side of the credit default swap. This could easily result into a global-wide double dip recession that would probably even not exclude the U.S.
Greece must promptly introduce oodles of radical tax reform which encompass 14%-17% income tax, a 9%-11% corporate income tax, strict enforcements of law, keeping a stable currency, freezing public sector workers’ pay, making further cuts in civil servants’ benefits, hiking VAT (sales tax) and fuel duty, raising the retirement age and reducing pensions.
opening up of trade, expanding economic opportunity, reducing government spending, maintain fiscal policies and expedite structural reforms, concentrating on measures to aggrandize competitiveness and it should stick with Euro as devoid of bona fide currency, a developed nation can swiftly degenerate into pandemonium —and even anarchy.
Greece’s Socialist government says the nation faces “sacrifices” in a “choice between collapse or salvation”.
Nilaya Mitash Shanker