A great Greek tragedy

The austerity program in Greece is decimating the middle class as both major corporations and the intellectual cream flee the country. It is a tragedy and one that could happen across Europe.

We have just concluded yet another European leaders meeting.

This one, thankfully, at last began to tackle the reality that a large number of European banks are insolvent and have been insolvent for a long time.

But these days no one thinks about what it’s like to live in a country where both the banks and the Government are insolvent.

Today on mini-budget eve, I want to take you to Greece to show you some of the things that are happening there. Our guide is Yanis Varoufakis who is currently Professor, Economic Theory and Director of the Department of Political Economy at the University of Athens.

He was flown to Australia by CPA Australia for its 2012 Congress and when you have time I urge you to view the video of my interview with Yanis who truly puts a human face on what is happening to the people of Greece.

After the Second World War, Australia received a vast number of Greek migrants, mostly labourers but also brilliant small business people.

In 2012, its not so much labourers who are leaving Greece, but university graduates -- the very people Greece will need to dig itself out if its hole. They are finishing their Greek government funded education and are finding jobs around the globe. There are no jobs in Greece and rapidly there is no money to pay University staff. (Yanis has taken leave of absence to work in the US).

While nominal pay rates are high those wage rates are not what is paid. If you can get a job you are normally paid far less.

The middle class in Greece has been decimated and most are now the new poor.

Sadly, large international companies can see the risks and problems of operating in Greece and, led by Coca Cola, are leaving. With them go more middle class jobs.

As Varoufakis described this picture of misery, I asked him why on earth would Greece stay in the Euro. On the surface it would be far better for Greece to leave the Euro and revert to its old currency the Drachma.

The problem is that the lower currency value would lift the costs of essential raw materials and inflation would be rampant. But Varoufakis also explains the chaos that would be caused by the long time delay involved in printing the vast number of currency notes that would be required.

He believes that sadly Greece will remain in the Euro and that these tough times will last for an extended period.

I would add that if that is the case then the risk of a left or right wing dictator taking control is greatly magnified.

This risk also applies to many other European countries.


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