I write this blog with compassion. I have nothing against the Greek people. The Greek's are in a miserable position. They are in reality - bankrupt. They will have to leave the euro or there will have to be a massive "fudge" with debt effectively written off.
The electorate in Greece have recently elected Syriza - a left wing party - promising to end austerity.
Ending austerity actually means in day to day practicalities - continuing to spend money you have not earned and do not have unless by some means you can rack up evermore debt. (your legacy for your children and their children to deal with because you were too selfish and weak to deal with it yourself).
These are simple but relevant analogies :-
Your son or daughter are running up credit card debts. They come to you for a loan or ask you to guarantee another credit card. What advice would any parent give. What common-sense measure do they have to take?
A couple get into financial trouble because they have been profligate or at least out of touch with reality or badly advised. A sibling has worked hard and made good decisions. Not for the first time they go to him/her for a loan to bail them out. What would be a reasonable and sensible decision?Probably no - or a conditional yes (providing they undertake they are going to change their lifestyle and spending habits.) Alarmingly however they also ask the sibling to forget about previous loans he has made to them. (they argue he should not have made them because they had no realistic way to repay it). The sibling believes if they cannot service their debts formal bankruptcy is the only option and the couple will have to start again from a low base. However they believe the sibling would be too embarrassed by the public humiliation of a bankruptcy in the family and will eventually bail them out on their terms.
This is Greece. However they want to continue to pay themselves money they have not earned and do not have - they want to continue to spend at an unsustainable rate. They want other countries and institutions to fund it with little or no prospect of it being repaid. In fact they are asking for some of their current debt to be written off.
Is that realistic - is it sensible - is it fair ?
Thank goodness the UK has rejected the anti austerity mentality. Thank goodness the British people fundamentally understand a strong economy gives you the income to pay for public services and welfare.
The key to a strong economy is optimism - optimism that makes businesses invest and optimism that encourages people that it is ok to buy. What fosters optimism? Economic reality. People in the UK understand increasing debt to create "stimulus" is only creating false optimism. In the main real meaningful optimism will only come from a deep felt knowledge you are doing the right thing, getting your house in order and paying your way. Anything less we might not like to admit but deep down we know is false optimism - built on sand and sooner or later the house will fall in.
It will be sad to see Greece fail - many people will suffer hardship. However in many ways it is the shock that needs to happen. There is a cancer in western society. It will emphasise to every politician and their electorates that austerity is reality.You cannot expect someone else to pay. You have to get your house in order, earn your living, be entrepreneurial, reward success, collect your taxes and don't overspend on welfare. This is a message many countries in the EU still have to accept.
On the subject of welfare - I need to say this. I really believe in the Welfare State. I really believe we should help those that are in real need through no fault of their own. However our welfare has gone too far. It has made possible a white underclass. It has underpinned indolence. It has rewarded people for not working and penalised people that do the right thing. It has made a route to financial security just by having children and doing nothing else. It has to stop. It has to stop because we cannot afford it but it has to stop because it is bad for society and it is particularly bad for those people who have been able to live a life on benefits that gives them free housing, welfare and education for their kids - which they see as ongoing entitlement and do not appreciate. The Tories are right. Cut benefits and people will get jobs. Take things away so people have to work for them and they will and they will be the happier and more fulfilled because of it.
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