A Greek Revolution?

Greek President Karolos Papoulias has faced difficult circumstances and situations in his short period in power in Athens.

Yet, it seems that his short spell as President may end sooner than had been hoped by international officials as last-ditch talks with various party members to secure support appear to have been fruitless.

Attempts to form a coalition and avert a further set of elections are Papoulias’ primary concern: even higher than economic issues. Should the Greek populace be put to the vote again, there is sure to be all manner of civil reactions from apathy to unrest.

Certainly, the Greeks will have lost all belief in the abilities of their leaders to govern and manage the state properly and efficiently. At best, politicians can hope for a resolution between party factions, for any further public disgrace could spell the end of Greek’s current political system.

In the event of an election, whilst a few may look with disinterest on a failing succession of Presidents and parties, the recent demonstrations and violence that have spread across the country suggest the possibility of widespread anarchism and potential revolution.

Of course, extremist positions that promote Greek exit from the Eurozone appear all the more enticing whilst faced with current alternatives. Riddled with debt, a persistently shrinking economy and mounting unemployment, Greece is certainly not the hotbed of industry and business that marked the new millennium.

Last week, a majority of Greeks voted for parties that want to rip up the country's bailout agreement with the European Union and International Monetary Fund (IMF) - including neo-Nazis.

The biggest winner was the leftist anti-bailout coalition, Syriza, whose share of the vote more than tripled and who describe the austerity imposed by the bailout as "barbaric".

Yet, the main problem that any incoming government could face is that there is no official guidance on a country exiting the EU. No, the naïve, bright brains behind the introduction of the EU did not foresee any member country wanting to leave the zone and so did not prepare for such an event.

Therefore, Greece could essentially issue a statement to Brussels stating its intent to leave the EU and then default on its debts. Its second default, that is.

The economic repercussions across both the EU and Greece however could be catastrophic as further member states could decide that restrictive measures on their economies are no longer suitable. As such, contributors such as the UK and Germany lose billions of euros in funds that have been pumped into these nations.

Meanwhile, a new Greek government could not guarantee the stability of any currency that it introduces or predict the volatility of markets towards the new position of the country.

Greece would probably have to impose capital controls to prevent all the money leaving, much as Malaysia did in 1998 after the Asian financial crisis.

So in the best-case scenario, Greece would have no buying power, and everything would be expensive: extremely expensive.

However, the play would be based around the hope that with such a weak currency, the economy would grow rapidly.

Whilst this route would be expensive and painful, it might appease those voters who feel manipulated and controlled by central authorities in Brussels who they believe have no appreciation of their situation. If the hypothetical economic reinvigoration were to pay off, to pardon the pun, it could be the lighting spark for further action in the EU zone and render relations difficult across the EU, ushering in a new era of European co-operation, or lack thereof.

A Greek Tragedy.

Shops looted, buildings blazing, a city in panic, mobs raging.

The scene could be London last August, or any major city with subsurface tensions. This is Athens, where friction has given way to violent protests amidst the latest economic deals from Brussels.

Despite the promise of an election in April, the Greek people are none the more encouraged to retain faith that their money is safe. There has been a rush on banks and cases of citizens sending money to accounts abroad. The economic crisis could make or break underneath the shadow of the acropolis, once a symbol of Greek might and myth.

Now, the dreamy myth is long since dispelled. The latest emergency relief package from the EU and IMF is projected to offer an injection of approximately €130 billion, should they receive proof that Greece is implementing its latest austerity measures.

However, the unrest and winter of discontent only breeds malaise amongst the Greek government. On Saturday night, parliament may have voted in favour of new spending cuts, but with almost 50 deputies rebelling, battle lines had clearly been drawn on an epic scale.

If the deal is not closed however, Greece could default as early as next March.

Therefore, the balance of power rests on the foreign leaders wanting a promise of austerity measures versus the Greek electorate, who resent the interference from the West and are seeing their country’s economy downsizing for the fifth year in a row.

In this second programme of cuts, ministers in Athens have pledged to slashing 15,000 public-sector jobs as part of a longer-term strategy to get rid of 150,000 civil servants. In addition, there have been moves to reduce the minimum wage level by an overwhelming 20%, whilst also altering the labour laws to ensure easier staff dismissal.

None of this is good news for the populous at large. Greek is already one of the poorest EU countries, with a low GDP per capita, and their borrowing has spiralled out of control, despite being burdened with a set of sweeping cuts last year.

If Greece were to heed to calls for the return of its Euro predecessor, the drachma, then there were be further turmoil across Europe, as funds pumped into the economy were annexed and other countries were made to subsidise the lost revenue. In addition, there would be mass movement of Greek Euros abroad, so as the people could capitalise on falling trade values and earn more money.

When concerns first started in 2009, Greece was burdened with debt amounting to 113% of GDP - nearly double the eurozone limit of 60%. Ratings agencies started to downgrade Greek bank and government debt and this has only led to stifled growth and the increase in debt. But how had EU regulations not picked up on the expenditure that saw such huge waste of resources?

The possibility is that Greece could be forced to leave the Eurozone so as there is not a continual stream of lost wealth. But whilst this might only disrupt Europe for a little while, the impact on Greece would ensure that it was hampered by debt well into the latter half of this century, with little consumer trust, economic growth, or trading partners.

The outlook is bleak then. With an uncertainty as to whether the Greek can meet Eurozone demands, public backlash and a potential run on more financial institutions, the recovery is far from certain. There are those who belief that another loan from Europe just kicks the inevitable further down the path and that reductions in deficit by 2020 are unrealistic.

Certainly, the play before the Acropolis today is a Greek tragedy.

I (Do Not) Agree With Nick: The Latest Economy Stance.

Amidst continuing financial woes, Deputy Prime Minister Nick Clegg stated earlier today that the government will not change course on spending cuts.

Of course, the long mocked slogan ‘I agree with Nick’ from the previous electoral campaign rings ever more true, as the Lib Dem defence of the cuts outlines how far they have backed from original party politics in order to hang on to the coattails of power.

Despite declaring that his party would stand up for themselves more openly in May, Clegg has reiterated that the cuts will continue as projected, amongst growing concerns of a double dip recession.

Following moves from the International Monetary Fund (IMF) earlier this week, there are rumours that £5bn could be released to deal with boosting economy infrastructure. Within the past few days, the IMF cut its growth forecast for the British economy not only for 2011 but subsequently for 2012 too, despite the prospect of being the Olympic host. In addition, the organisation said the government should delay its deficit reduction programme if growth slowed further, or risk loss of consumer confidence and a deeper recession.

Ministers pushing for such a move believe it would not be seen as a U-turn as the money would be capital spending, on infrastructure projects like roads, rail and broadband, rather than current spending.

However, Nick Clegg insists that the ruling coalition is not about to alter the course of its plans over any of the concerns. It is thought that such a move would again raise eyebrows and threaten already stalling growth figures.

Of course, this is not likely to help Clegg’s tumbling popularity figures, which in turn could lead to a situation by which the nation would want to ratify a different route of recovery.

In the wake of the widespread riots that overran various UK cities last month, there was a perceived understanding that the government would alter several of its policies in response to such an unpredicted outcry of sentiment. Whilst various reasons have been attributed to the sudden unleashing of fervour, one of the most resounding put forward is that many people believe that they have little money and little leisure time and space, whilst a capitalist economy boasts the many luxuries that are outside swaths of Britons’ pockets.

Remembering a time when election politics foretold a riot if Tory cuts were implemented, it seems as if Clegg has not fully appreciated the wisdom of his own words.

Yet in spite of such scenes, Clegg presents the recovery as it stands as “the right thing, not the easy thing”.

It appears that it is a game of nerve and cheek. Reflecting on the economy as ‘a game’ firstly is not going to install any confidence. But it would seem that here lies the government’s wish that the city hold firm in the face of probing questions and concerns over the state of finances in Italy and Greece.

The aim is to continue with the outlined plans so as to “build a new economy. An economy for the whole nation.”

However, Clegg’s bravado does not muster the same feeling of unity that it did in May 2010. Such idealistic views are no longer heeded with the same anticipation and there remains a great unease that this latest government has made little headway into resolving the deficit crisis over its 16 months in Westminster.

Cries of ‘I agree with Nick’ are now few and far between.