Friday, July 8, 2011

Greece: Crisis Averted?

During my most recent stint of travel, I had the opportunity to spend a day in Greece. While this country has not been in the news for a few weeks, I still feel it necessary to put in my two cents regarding the economic situation there. Admittedly, I was only there a small amount of time. However, I was immediately impressed upon my arrival at the contrast between the amount of private wealth in the area, and the obvious signs of a bankrupt government. Once you leave the old town of Rhodes, there is new construction everywhere. Many of the cars are luxury brands. On the other hand, almost all of the government run historical attractions on the island were closed until further notice. Many ancient ruins which are falling into unceremonious disrepair.
While the closed, dilapidated historical attractions did suggest the imminence of a debt crisis, it is important to remember that much of the private growth is being propped up by public spending. Any meaningful attempt at austerity would mean a great reduction in Greece' s standard of living. As a result, it is easy to see why there have been in the past, threats to recall any Greek member of Parliament who votes for such measures.
Since my visit, the Greek government did finally manage to obtain some agreement regarding austerity, in return for an EU relief package. However, it remains to be seen whether the government will follow through with their promise of responsible spending.
Even though an imminent debt crisis seems to have been averted for the time being, it has been my experience that people from euro zone countries have stopped trusting Greece, and in many cases the euro. Many either do not trust Greece to follow through on it's obligations, or have expressed regret that their country in the euro zone.
With the economic issues I had seen exemplified on the island of Rhodes still fresh in my head I left the Mediterranean for Krakow. Shortly after my arrival I found myself discussing the situation with a Slovak woman over dinner. "The dollar was so strong that we were happy to get the euro" she told me in Polish " Now Slovakia must pay for Greece's spending.

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