Anyone maintaining a modern-day, household budget knows that if one spends more than one earns in a year, problems will develop, and if the practice continues year-over-year serious problems will develop. Furthermore, if steps are not taken to immediately redress the imbalance, one will eventually face creditors, repossessions, foreclosures and/or bankruptcy. This applies not only to individuals but also cities, provinces and countries.
The only people who appear to be having trouble acknowledging this fact are the Greeks, and they are the most unwilling of all to take a "Greek haircut" as they expect others to do. If this teaches us any lesson, it is certainly that persons or countries in dire, financial straits cannot make any headway solving their problem until they themselves recognize that they do have a problem.
Many of us have had the unpleasant experience of a friend or relative who continually borrows money but never pays it back. And, often, they reappear at one's door expecting more loans and simply ignore all their past debts as if they didn't exist. At some point, one simply has to say, "no, this can't go on," just as an alcoholic or drug addict must admit to and face down his demons.
With debts surpassing 330 billion Euros and a population one-third that of Canada, the public debt per-person for Greece is staggering. Therefore, the present requirement for cutbacks on wages, pensions, and civil-service jobs is obvious to outsiders, but for Greeks on the receiving end, the obvious is not readily recognized.
For members of the Greek government, heads of financial institutions and other Greek creditors, the handwriting is clearly on the wall and there is no escape - pay down on their debt is necessary or default will occur. Although we see televised protests in Athen's Syntagma Square almost daily, many non-protesting Greeks have already come to terms with their situation.
Living beyond our means comes with a cost, and when we must face-the-music it is anything but pleasant. For the past decade, Greece's lavish spending habits have far outstripped its income and the day of reckoning has finally arrived.
Also, many people in North America are not aware that Greece has been a workers' paradise with higher-than-average wages, low-production output, low tax levels, full pensions at age 62, and lavish income bonuses, which
include one extra, full-month pay-bonus at Easter and another extra, full-month pay-bonus at Christmas. North American workers and pensioners receive twelve, monthly paycheques, Greeks receive fourteen, something they refuse to give up.
Lowering their hourly wages, cutting back income to twelve, annual paycheques, reducing the size of their ballooning civil service, reducing overly-generous retirement entitlements, and raising retirement ages to 64 or 65 now seem unfathomable to their luxurious lifestyle created since joining the EU.
The Greek government has had an age-old difficulty of collecting taxes from their citizens who resist and evade taxes at every opportunity, which short-changes government coffers.
Expecting lavish benefits while at the same time evading taxes which support their government's programs is not
sustainable.
PM Lucas Papademos and the Greek Parliament are fully aware of their predicament and what Greek default and expulsion from the EU will mean for Greece, the eurozone, and the global economy. They are doing the responsible thing and reining in a lavish, lifestyle gone wild.
For Greece, the party is over, a nasty hangover has set in and since all the homespun remedies have been tried and resulted in failure, there is only one choice left - it's time to face the facts and pay the piper.
