Grexit has been averted for now. Greece has accepted the terms of the EU and are harsher than the previous ones in the referendum of last week. The situation did backfire for them. After further consideration and outweighing consequences, both sides adapted their proposals and a deal was reached last Sunday. On Greece’s side, the situation is grim, with massive reforms coming their way to restructure the country’s finances and as always the poor and senior citizens will take the burden of the situation. Goods will cost more because of sales tax hikes, all underperforming public companies will be privatized, pensions will be lowered, and many other indicators will be adjusted to meet the terms of the bailout.
This is the third bailout in recent years. The EU and its main leader Germany, was not about to continue financing the good life of the Greeks. Since the introduction of the EU Commonwealth, the smaller economies-such as the Greek- took advantage of the riches that came their way with the creation of this economic block and did pretty much nothing to live within their means and just lived of the tourist industry-which is the main source of income alongside with some olive production- and not diversified to other productive activities. There is really no other big contributor for the economy and it is hurting them.
Germany and France which lead the block were fed up with the situation and particularly Germany said enough. The German Chancellor Angela Merkel is seen as the bad girl in the movie but she had a double obligation, to its people and to the EU. The German people that are extremely austere and that live very much within their means-recently in a survey most Germans said that if they’ve win the Lotto they would save the money compared to other nationalities were would go on a shopping spree, that is how austere they are- said, do not bail any more.
After further consideration from both sides and after Putin’s expression that he would take care of the Greeks, an ultimatum was agreed for now. Putin was probably drooling like a wild beast before making a kill, because of what this opportunity represented for the Russian Federation to annex Greece, in addition of the recent annexation of Crimea by force. It would have been a midfield goal for him, but this was averted for now. Anything can happen really, Greece could receive more money and after not delivering the terms of this ultimatum they could turn to Russia in a couple of years, yet to be seen.
Greece probably also considered the immediate consequences of leaving the Eurozone, sure in the midterm they would’ve been able to somehow stabilize the situation, but in the short term it would’ve been chaos. Huge monetary depreciation- were money is worth less and less by the hour- rampant unemployment, suicides galore, bankruptcies, crime- you name it- and finally, if choosing the Russian option, becoming a 21st century colony of Russia.
The days of “La vida Facil” are over. It is not the Greeks peoples fault but of their leaders and public policies that have led them to this situation. This way of life has been going on for a while and people just went along for the ride and being good tourists hosts and having a good life in the Mediterranean. It is not Germany and France’s fault either. The EU cannot afford this type of economies anymore. The world’s economy cannot afford this type of monetary behaviors either, the easy days are over and volatility is immense now that all markets are interconnected.
* Athens is burning right now, looks like it is going to be a long and hard recovery.
“Greece fell asleep in their Olympic laurels, it is time to rise again like the Phoenix”