Well if you look through this blog you always could read warnings. Just one example http://mises.org/Community/blogs/fdominicus/archive/2010/02/22/f-b-ailouts.aspx
But let’s see at the Situation without malice. For austrian economics the problems in Greece are crystal clear. What we see is the end of a boom introduces by manipulated interest rates.
Yes and it’s one hallmark of why the help from EU can not work. The greek politicians have took every cent they could get from the EC. That’s what keeping ones house means in politics. All the
expenses for things were not driven by need and sound money. But driven by the way it works in politics. You must throw out the money, otherwise you will get less next year.
Well in normal economics activities it does not work that way. You invest while you a) see some need for your services and b) you want happy customers… However you do invest usually much more careful. You do know exactly if the customers will not buy your stuff you are finished. So you alway try to get you needs in sync with the things you can offer. There is not automatic payment it’s the customer who decides. Now let’s see how this is not done in political economics. If you ever have visited Greece you know this land is beautiful but harsh. Many live in very small villages, and quite a lot of them are on islands. So transportation is a problem. Anyway if Greece is strong on one area it’s in seafaring. And indeed even many of the Italy ships are manned by Greeks. But now the trouble starts it does not make (unfrortunatly) much sense to build big streets over the islands. But this is what happened with money from the EU. That’s bad. There was money burned, because the ways can not be used economically. They are too big, but now they are there and the trouble starts. They were oversized and therrefor overprizes, and it needs much more even to just maintain them as one could answer for. And it does not help in anyway. The jounger still have left and just the elderly are living there. So who will use the streets in the future?
This are the catastrophies triggered by subsedies. Yes agreed there must be some kind of boom in infrastructure building and maybe even housing. But Greece just has somewhat around 11 million inhabitants. So you can not build an infrastructure suitable for 30 or more millions and hope this can be sustainable. It’s impossible. Another problem in Greece is the corruption and way to large bureacracies. Again countries which more than 5 as many inhabitants do not spend that much mone yon their diverse ministries. (I read somewhere Greece has 49 of them !!!) and politicians, and it seems they are even higher paid than in many other countries with much larger population. Corruption and too large government are a clear sign mark of destruction.
So what can we hope for for the Greek? Well we just can hope they get rid of their functionaries. They must put harsh punishments on corruption (and or just take the responsibiity aware from the bureaucrats), and they needs sound money. I’m afraid this latter will not happen and there for if Greece should leave the Euro the normal population will suffer severly under extreme inflation. This will destabilize the country even more. So I’m afraid the Greece just are at the beginning of the end. And it will (unfortunatly) get much worse. As one can read the decline starts to accelerate. Hundreds and thousands of businesses are driven out of business. How could one expect from less working to have more “money”.
IMHO Greece has spiraled out of control and any “imagination” of control can be burried. No one in Greece will be able to regain it any time soon. The bureaucrats and delebets do not even see it. Of they see it and won’t. But reality strikes and it will strike the harder the longer the wrong ways are followed. Von Mises has put it:
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”
Greece was at the edge 2 years ago. I’m afraid they are beyond it now. So yes you can see exemplarily what happens to unsustainable systems driven by unsound money and too big governments. Will Greece be a warning ot the other countries? I’m afraid the answer is no, And therefor the end of Greece is just the sad beginning….