July 9th, the Independence day of Argentine.
I saw it on my calendar out of sudden yesterday, and it triggers my thought on, once again, Greece.
Home of the great soccer players of all time, the tasty wine, and eccentric tobacco, yet this Latin country reminded people nowadays a lot of with the homeland of philosophers.
Maybe due to the same catastrophe they had revolving this same damn thing.
And interdependency towards bigger power, who acts as invisible hand yet successfully, controlled every single economic decision they wanted to take, direct or indirectly.
Aside from that, Argentina has been linked to Greece most of the time due to their similarity in so many different aspects:
Medium-sized economy, trapped into ‘overvalued’ fixed currency (as Argentina has pegged their Peso to US$, making them exposed to America’s monetary policy) and also the similarity on how chaotic their corruptions history is, long-list of tax evasion, the hiding of their true budget deficit and little progress in labor market and structural reform.
They also both loose competitiveness towards neighboring country and uncontrollable consumption growth leads them to an insignificant public debt enlargement.
What different now, is the fact that Greece now a Union, which they don’t own their own currency while Argentine is a sovereign country, which means they have an option to leave the pegging system, default their debt and devalue their currency, despite the entire painful consequences they should face.
Their government suddenly has power to confiscate people’s money, people have no money to repay their dollar-nominated debt with peso on their wallet, ATMs running out of cash to withdraw, people living within poverty line arose tremendously, and series of politicians forced to step down their chair, are only the small glimpse of the reality Argentine should face after altering their currency.
And it might be the future Greece will face later on.
For the longest time, the options of Greece getting out of Euro seems so taboo, regarding on the probability of contagion to other troubling country inside EU (Italy, Portugal and Spain) and how badly it will affect to EU financial market in the future, since the credibility of EU has been ‘cheated’ by their own members, not to mention of how much France, German and UK as biggest creditors for Greece will lose.
The cost of Greece of leaving Euro for the rest of EU members is enormous, and Greece has to start assessing this measurement by their own for their own future.
For Greece itself, leaving Euro will be disastrous, knowing their lack of export commodities, which if compared to Argentina with their agriculture commodity that now has been the main export goods in China, is nothing.
Bank run, re-domination of assets and liabilities, and abandon from financial market will be even tougher since Greece has belonged to union in the past and have no currency.
Not to mention how their decision will trigger social tension in other EU members, especially their main exports partner Germany and Italy, and possibly killing their main source of income from traveling sectors, since more than 90% of their visitors came from EU members.
Hatred, at the end will take their roles, and business would not be just business anymore.
Who want to visit a country, who “stole” their money right before their eyes?
So after voted no to more austerity package, Greece now left with only, I don’t know, 100 Million Euro, or about 4 Euro per person.
4 Euro per person sounds completely insane, but that’s the consequences of rejecting austerity package that gives them room to “breathe”.
That money did not even enough for food in a day, dear God.
So what, should all Politicians in Greece do and scratch their notebook, after learning from Argentine past?
Quick political restructuring is THE core important thing to do in Greece; learning from what Argentine also did in the past.
Transforming not only a clean, transparent political institution with committed taxpayer is needed. Political leader in Greece must be open, meaning they needed to expose ALL measurement they have assess in order to open people’s mind in Greece on what options they have right now and what are the losses.
By this, society will know their own capacity, not just creating riots and social unrest that pushed back even more investors, and understanding this means that they needed to commit to such options that their political parties choose later on.
Clearing what they committed to, which questioned by European Leader and annoyed me somehow, is important to also gain trusts from their neighbor, since there’s no instant solution for each options and EU are their main, and might be their only source of help.
In my humblest and rarest opinion, I think what Greece all need now is a miraculous European-made Marshall Plan.
A recovery program that could re build a whole continent; even after the most disastrous war in the century. Imagine, if Europe welfare could be restored and rose into one of the most developed industry after 4 years of bombardment and total meltdown, why don’t implement the same aid to Greece, which only handled one troublesome country?
Programs should focus on rebuilding, NOT only cutting public expenditure that, at the end make Greece economy even smaller and smaller and waiting to be collapsed at any time.
Gather up all economic experts, top social workers, teachers around Europe to develop new Greece, with better sense of mind.
One thing for sure that Greece should (have already) realize now, is that there is NO such thing as debt relieves.
One simply could not forget that others wrong doing has made them suffer, paying higher tax so that others could lend more.
Good deeds are easy to erase, but wrong doing will forever be your debt.