ABSTRACT
This paper investigates the latest problem of Greece (Hellas) since the Treaty of Rome (1957) up to her European integration and today with the common currency and the uncommon debt crisis, due to the loss of her public policy. The most severe difficulties for Greece are the social chaos, which is increasing every day, due to the overvalued euro, an enormous debt, the current financial crisis and the worst recession (double digits unemployment) since the war, occupation, hunger, and great depression of the 1940s; the economic and political corruption, which are underrated by the officials; the European Constitution; and the tremendous uncertainty that this artificial and controlled Economic and Monetary Union has generated to its member-nations and their citizens. Greece, in her journey, experienced many difficulties, conflicts, and invasions by barbarians and other neighboring countries, but never an “invasion” by her creditors (usurers) of the West, as the current Troika with its memorandum (mnhmovnion). After the political changeover of 1974, the European integration, and the accession to EMU, which abolished the domestic public policies, has destroyed the sovereign state-nation and it is ruling undemocratically not only Greece, but an entire continent. EU has lowered the European indigenous cultures to a uniform sub-culture of waste, dependency, and apostasy. Greece, due to her history, idiosyncrasy, and values should have not become a member of the Euro-zone.
I. PROLOGUE
Today, the 27-nation EU, with more than 500 million people, and the 17-nation EMU, with more than 300 million followers is the world’s largest economic area, but it is insignificant politically, financially in crisis, noncompetitive in trade, and in deep recession (high unemployment), due to the loss of their public policies. Its key economic sectors are: metals production and processing, petroleum, coal, cement, chemicals, pharmaceuticals, aerospace, rail equipment, vehicles, construction and industrial equipment, shipbuilding, electric equipment, machine tools, manufacturing systems, electronics, communications, food and beverage processing, tourism, media, and financial services. Agricultural products include wheat, barley, oilseeds, olives, olive oil, sugar beets, wine, grapes, dairy products, cattle, sheep, goats, pigs, and poultry.[1] Greece produces all these agricultural products, but competition from abroad has reduced prices and farmers’ income is declining and their products are unsold in warehouses. Goods exports include machinery, vehicles, aircraft, plastics, pharmaceuticals, fuels, metals, pulp and paper, textiles, meat, dairy products, and fruits and vegetables. Imported goods include machinery, vehicles, aircraft, plastics, crude oil, chemicals, textiles, metals, and food. Greece is producing bauxite, aluminum, and many other minerals. Also, she has tremendous oil and natural gas reserves, which have not been utilized yet, due to xenophobia of the Greek governments. Her shipping industry is the first in the world. Leading EU trading partners are the U.S., China, Japan, and Switzerland.[2] As it is mentioned below, with its free trade with China, Greece faces the most unfair competition of all times, even the entire EU economy is in serious problems; it is gravely risking its future prosperity and its citizens’ welfare. On November 8, 2006 the Commission approved the Strategy Paper and the candidate countries’ (Croatia, Skopje,[3] Turkey) and potential candidate countries’ (Albania, Bosnia and Herzegovina, Montenegro, Serbia, and Kosovo) progress reports on their road towards the EU.[4]Of course, “the number of other nations now approaching or knocking at the entry door of the Community was at the very least evidence of the material advantages outsiders could see in membership.”[5] The latest problems that the existing EMU members are facing and have no tools to confront them are enormous and their consequences are very difficult to be predicted. The U.S. Fed was weighing the use of more untested policy tools after two rounds of bond buying totaling $2.3 trillion failed to spur sufficient economic growth and reduce unemployment below 9%.[6] Thus, Greece without public policy is in permanent trouble.
II. THE LATEST PROBLEMS FROM THE LOST PUBLIC POLICY
The invented U.S. financial crisis of 2007, which continuous up to now (2011) and might become worse in 2012, had a drastic effect on the overburdened with its debts EU. Member-nations of the EMU have a hard time to absorb this “planned” shock. All these trends (increase in taxes, raise of the value-added tax, reduction in wages and pensions, weakening the power of labor unions, reducing subsidies, shifting some of the burden of health insurance from employers to households, increasing the number of years for work, etc.) of tremendous austerity, and many others that are coming are against the poor European citizens. In Fall 2008, the Greek government gave to the Greek banks €28 billion (taxpayers money) for their economic support and to increase the liquidity in the financial institutions and their lending towards businesses and received back a big nothing. It seems that all parties in EU became neo-liberals (market oriented and acting against the social interest of their countries) and very corrupted.[7]The German and other country-members’ budget deficits are above the Euro-zone limit, but for big countries the pressure from the chairman of the Euro-zone finance ministers (Jean-Claude Juncker) is small. The opposite happens to small countries like Greece; they suffer from the ECOFIN pressure and they have to take inhumane measures. The worst for Greece is the Memorandum (mnhmovnion) that Troika imposed on her citizens and Greece has no independent public policy to stimulate her economy and improve growth through an expansionary monetary and fiscal policy. Greece has suffered since 1824 with her western creditors (actually, usurers).[8]
On November 24, 2008, the Chinese President made an official visit in Greece. He signed an agreement to lease for 30 years the seaport of Piraeus (the harbor of Athens).[9] Chinese will invade and occupy Greece![10] Greece is selling everything to foreigners and soon will be in major socio-economic and political crisis.[11]The EU cut by 50% the subsidies to tobacco growers (farmers) and gradually, it will eliminate all subsidies.[12]This has a tremendous negative effect on the Greek economy because tobacco was the main agricultural product in many poor regions of the country. The EU policy is destroying the agricultural and manufacturing sectors;[13]Europe is becoming a service economy and for this reason the latest financial crisis has a drastic effect on all country-members, except the manufacturing (industrial) ones.[14] The unemployment is a very serious problem for Greece. A businessman from Thessaloniki said that the unemployment in the area was 20%.[15]The OECD was predicted a very high unemployment in Greece (it seems like 15.9% at the moment with regions of 40% unemployment rate).[16] Of course, one major fiscal problem of the country is the tax evasion by the wealthy people and professionals.[17] Privatization,[18] outsourcing, the moving of firms in countries with lower cost of production, the abandonment of the country-side (villages) and the concentration of the people in big cities, and the illegal migration are some causes of high unemployment in the country. Many people were selling their cars in a flea market in Schisto, outside of Athens at half a price, just to make a little cash because they cannot afford to maintain them, due to the gas prices and the financial crisis.[19] Imported crime (mostly from Albania),[20] up> anarchism, and terrorism is another serious issue for the Greek society.
Further, the revenue of small businesses declined in EU and Greece by 40% in 2004 and became worse in 2008-2011. Thousands of small businesses went bankrupt during the last five years and the reasons are the “invasion” of Chinese in Europe, the financial crisis, and the austerity measures. Companies also move to other countries to lower labor costs. EU and Greece cannot compete with these countries and her hundreds of years old textile industry disappeared,[21] creating thousands of unemployed workers.[22] Of course, the worst thing that has happened to EU member-nations is the loss of their public policies, their sovereignty, and their independence; they are enslaved without providing any resistance, which is uncommon in human and Greek history for seven thousands years. What happens to these European citizens- Are they sound in their minds- This controlled EU had asked Greece to pay as penalty €1.5 billion because she was subsidizing Olympic Airlines and it asserted that this practice had created unfair competition to the other EU airlines.[23]Then, the arrogant EU tells to nations what will be their domestic public policy, social welfare, safety, security, legislation, employment conditions, taxes, size of government, public wealth, pension system, retirement age, education, tradition, faith, religious symbols, and value system. Greeks and EU citizens have to take some measures for this union before it will be too late for them and for their future generations. Politicians in member-nations cannot do anything because they have been enslaved from the glory of the power or they are just betrayers of their own citizens.[24] Of course, the enormous debt and deficits made Greece dependent on her “lenders” (“white collar criminals”).
On March 11, 2011, at the European Summit meeting in Brussels, Greece got an extension by 7.5 years of her loan from Troika. This €110 billion loan will be paid off in 2023, instead of 2017 that was determined before (this will increase the interest cost of the country). Also, the interest rate was reduced (the variable rate to 4.02% and the fixed to 4.2%). These new agreements, the reduction of interest rate by 1%, will save for Greece €6 billion in interest cost. Thus, Greece, hopefully, will avoid bankruptcy until 2023. But, there will be more severe austerity measures by the lenders. Also, Greece has to generate €50 billion in revenues through privatizations and the sales of public property.[25] Officials in Europe widened the scope of their €440 billion ($614 billion) bailout fund and eased the terms of Greek rescue loans, even as they resisted calls to buy bonds in the open market or finance buybacks. Unfortunately, Greece has lost completely her independence and the nation its sovereignty after all these restrictions by the EU, ECB, and IMF. The country has no public policies to act counter-cyclically.
On April 7, 2011, the ECB became the first monetary authority in a major developed economy to raise interest rates since the global financial crisis struck. The rate from 1% became 1.25%, a sign that the long period of extraordinarily easy credit is beginning to come to a close.[26] But, economic conditions vary greatly among the EMU countries and the new target rate cannot be suitable for all the members.[27] Also, Europe’s rich countries pushed Portugal to make deeper-than-planned budget cuts in the heat of an election campaign in exchange for an emergency aid package estimated at €80 billion ($115 billion). In an unprecedented intervention in national politics, Euro-area finance ministers said Portugal can win relief by mid-May as long as it makes cuts that go beyond measures that failed to pass parliament in March and led to the government’s downfall.[28] Also, a Euroskeptic party finished a close third in Finland’s vote (4/17/2011), casting a shadow over EU rescue plans.[29]Spain and Italy are, now, the new victims of the debt crisis in the Euro-zone.
Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a “soft” restructuring of the country’s debt being studied by European Union policy makers would be considered a default. Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 55 basis points to 16.6%, more than twice the level of a year ago when Greece accepted a EU-led bailout.[30]The ECB warned it may pull the plug on funding for Greek banks in the event of any restructuring of Greece’s government debt.[31]
In addition, European Union and International Monetary Fund officials agreed to pay the next installment to Greece under last year’s €110 billion ($161 billion) bailout,[32] paving the way for an upgraded aid package that includes a “voluntary” role for investors. Papandreou, confronting opposition at home and the demands of international lenders, will establish an agency to manage an accelerated asset-sale schedule and make “significant” cuts in public-sector employment. The agreements capped a week when Greece’s fiscal crisis worsened enough for Moody’s Investors Service to raise the probability of a default to 50%. Bonds gained on the prospect of a new aid plan, with the yield on the country’s two-year notes falling 146 basis points to 23.1%. With the review complete, EU leaders focused on wrapping up a new bailout package to prevent the euro area’s first sovereign default. A year after the rescue that aimed to stop the spread of the debt crisis, Greece remains mired in recession, shut out of financial markets and saddled with the biggest debt load in the euro’s history and these people that are responsible for her debt crisis are steel at large.[33]
President Obama, while hosting Merkel at the White House on June 7, 2011, made it clear that he is looking to policy makers in Europe’s largest economy to prevent an “uncontrolled spiral of default” in countries such as Greece to avoid “disastrous” harm to the U.S. economy. But, the German chancellor faces members of her own coalition, who say she has done enough.[34] On Friday evening (August 5, 2011), S&P cut U.S.’s credit rating by one level from AAA to AA+. This nondescript and irresponsible action by this controlled rating firm will have enormous global repercussions on the financial markets and the real economies.[35]
European governments and the International Monetary Fund would lend as much as an extra €45 billion ($65 billion) to Greece under an expanded plan to avoid the euro area’s first sovereign default. European estimates put Greece’s 2012-14 financial gap (budget deficit) at as much as €170 billion. It would be filled by the loans, plus around €57 billion in unspent aid from last year’s bailout, roughly €30 billion in asset-sale proceeds and about €30 billion in rollovers by creditors. Structuring the rollovers remains the most sensitive part of the package, with European Central Bank President, Jean-Claude Trichet warning euro-area officials that German calls for a debt exchange might lead rating companies to declare Greece in default.[36]
On June 13, 2011, Greece had its credit rating cut three levels by Standard & Poor’s, which branded the nation with the world’s lowest debt grade and said a restructuring looks “increasingly likely.” The downgrade follows Moody’s Investors Service’s decision in June of 2011 to grade Greece only one level higher and may intensify pressure on European governments to stem the region’s sovereign-debt crisis. Credit-default swaps[37] on Greece, Ireland and Portugal surged to records on June 13, 2011 on concern governments’ struggles to resolve the turmoil that will threaten their ability to pay off their debts. Swaps on Greece jumped 47 basis points to an all-time high of 1,610, after the S&P downgrade. Contracts on Ireland soared 27 basis points to 740, Portugal climbed 22 to 764 and the Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped 7 basis points to 218, approaching the record 221.75 set January 10, 2011. The yield difference or spread, between 10-year German bunds and Greek securities of a similar maturity was at 1,402 basis points on June 13, 2011, close to a record. The downgrade comes as the European Central Bank and Germany battle over how to bail out Greece and whether officials should push creditors to share some of the costs. ECB President Jean-Claude Trichet said that his advice to European governments is to “avoid what would be a compulsory concept” and “avoid whatever would trigger” a default. [38]
Further, Euro-zone finance ministers meeting in Brussels on June 14, 2011 failed to narrow sharp divisions over crafting a second bailout for Greece.[39] On June 15, 2011, Prime Minister George Papandreou called on his allies in parliament to back his austerity plans that aim to stave off the euro region’s first default. Papandreou did not give any details of the government reshuffle that he announced after his bid to form a unity government with the leading opposition party failed. Defections by key allies fueled investor concern that his grip on power was slipping and chances of default increasing, roiling global financial markets. The yield on Greece’s 2-year bond topped 30% for the first time and the cost of protecting Greece against default climbed 280 basis points to a record 2,050 basis points, according to prices compiled by CMA. The euro fell to a three- week low (1.4161 $/€) earlier in the day. The Stoxx Europe 600 Index fell 0.5% to 266.73.[40]
European finance ministers said after a two-day meeting in Luxembourg that Greece will get her next installment of bailout money only after the country’s parliament adopts a package of new (more cruel) austerity measures.[41] The Greek Parliament’s vote of confidence in Prime Minister George Papandreou shifts the spotlight back to Germany and the European Central Bank as key to Greece’s quest for further international financial aid. The vote may bolster Greece’s chances of securing a €12 billion ($17 billion) loan payment, which hinges on support from European leaders and on Greece’s ability to push through €78 billion in additional budget cuts next week.[42] European governments began a delicate task of convincing their major banks to voluntarily accept losses on their holdings of Greek debt. In Germany and France, finance-ministry officials met with representatives of their respective countries’ leading banks on June 22, 2011, to discuss how banks would shoulder some of the cost of a second bailout of Greece.[43] Greece plan to raise €50 billion ($71 billion) by 2015 through privatization by selling everything (four wide-body Airbus jets, a state lottery, a state horse-racing, stakes in a casino, several ports, a national post office, two water companies, a nickel miner and smelter, a munitions maker, electricity and gas companies, a telecommunications operator, shares in a half dozen banks, hundreds of miles of roads, a defunct airport, old Olympic venues, and thousands of acres of land, including magnificent stretches of Greece’s famed coast).[44] This fire sale of Greece’s public wealth will be catastrophic for the future generations of the country.
The literature, regarding the lack of financial and public policy and their effects on the economy, due to the EMU is huge. Many studies are saying that there are obstacles to optimal reforms. The credit crunch and the mortgage crisis became a global financial crisis and countries need to exercise their own counter-cyclical domestic public policies to correct the recession and start growing again. Some say that the current financial crisis was predictable and discuss the problems of the free-market economic system, which will prove to be worse than the communist one. Others say that money supply has no effect on real activity when the short-term interest rate is constrained by the zero bound; only certain fiscal policies (public investments in infrastructures) are capable of providing stimulus. Maastricht criteria do not allow the Euro-zone country-members to use fiscal stimulus during the current debt crisis.
III. A PHILOSOPHICAL ARGUMENT ON PUBLIC POLICIES
The world faces two serious problems, today, weak governments from the one side and corrupted markets from the other; and in the middle of those two dilemmas are humans (me and you). As citizens of democratic nations and having the power of voting, we have to give more power to our governments and to control completely the exploitations that the market exercises on our society. The economic objective of individuals is the optimization of their utility, which includes different goods, services, leisure, values, knowledge, improvements, accession, interactions, sociability, and other variables.[45] The individual is assumed to be rational, informed, knowledgeable, and wise.[46]
The objective of every well-governed, developed, ethical, uncorrupted, and sociable democratic independent nation is the optimization of its social welfare function (citizens’ utilities). Of course, subject to many different constraints from the “friends”, enemies, and the markets (EU constraints, resources, endowments, technology, tastes, directives of EU, budget, etc).
The goal of public policy is to pursue approaches, rules, and regulations, which should be evaluated from the point of view of the society’s well-being and not from the profit maximization of multinational institutions, firms, risk-taking billionaires, and European Union’s objectives. The total welfare of a country (given the growth of population, the factor endowments, and the state of the economy) must be improved continuously. General concerns about the state of the economy or anxiety about crime rate, high risk, restrictions from EU or job losses are negatively affecting the social welfare. Also, the measurement of social welfare requires some ethical and country-specific standards, which involve internal and eternal value judgments and not common to other member-nations. As a welfare criterion, can be the growth of the wealth of the society (nation’s GDP), which increases employment (unemployment must be zero) and production (keeping prices stable). This implies that the income distribution will be ethical and just (not exactly equal). A high (out of control) growth can lead to reduction in social welfare, due to waste, pollution, large fluctuations of business cycles (uncertainty and high risk), and negative mental, physical, and spiritual effects on humans. Efficiency (saving of recourses) is very important in social welfare (respect of the creation and individuals). Financial markets stability (normal return) and low risk to attract long-term investments and prevent speculators and opportunists through regulations improves the wealth of the investors and their utility. We cannot accept an action, which increases some individuals’ utilities (or nations’ welfare), while others’ utilities decrease as all individuals are equal (have the same “worthiness”). Thus, the criterion must be objectively measured and a Pareto-Optimal one,[47] so the public policy objectives must maximize the social benefits, given the state of the economy.
The giant out-of-control private institutions and firms are concerned mainly about their profits, their executives’ compensation, and the market value of their own financial assets (bonds and stocks) by ignoring their obligations towards the society, where they operate and exploit its pro-business mentality. Private businesses are producing, where marginal cost is equal to marginal revenue; actually, the uncontrolled private firm is becoming gradually a monopolist, producing the lowest output at higher prices, through risk-seeking processes. Their first concern is the reduction of the labor cost, increase in earnings, the determination of CEOs’ pay by themselves,[48] and the maximization of the market price of their stocks.
European Union’s suspicious objective is the power and prestige that its integration gives to the union through treaties,[49] laws,[50]institutions,[51] EMU, ECB, common currency, citizens’ policies,[52] sectoral policies,[53] external policies, and European constitution. Of course, subject to a global socio-political-economic stability; otherwise, it can be dissolved.
When a nation does not optimize its social welfare and experiences tremendous social cost (welfare losses), the social benefits (full employment, low risk, moderate interest rates, price stability, balanced growth, high saving and closed to zero debts and deficits, reasonable money supply, and stability in financial markets), due to sub-optimal public policy, might not exceed the social costs. This stems from the deregulation, dependence, depravity, and huge gaps between the potential economic values and the actual ones. The social benefits and costs can be measured with a social loss function. The loss to society function[54] can be expressed as a weighted average of deviations in the important macro-variables (social benefits) from their targets (optimal values), like unemployment from its target, risk, interest rates (short-term and long-term), inflation, output, saving, money supply, trade balance, national debt, and financial market from their potential levels.[55]
Thus, the social objective must be the minimization of this social loss (L).[56] When social losses are increasing the financial market is deteriorating, the results tend to be the economic movement towards recession. The opposite occurs when the social losses are declining or social benefits are improving; the value of this social loss could predict the forthcoming bear financial market and the creeping recession. Public policies (monetary, fiscal, trade) have to work towards these target values of the variables. Individuals must try to satisfy the social objective of higher savings (25% of the disposable income) and lower debt (zero if it is possible); the government has to become more efficient, more independent, more powerful, and to reduce its deficit and debt; private enterprises (especially, financial institutions) have to be regulated for the benefits of the people. Through incentives, regulations, education, and a more social policy, the social loss can be minimized and the economy could be at its potential level (absolutely full employment,<-xml:namespace prefix = v ns = “urn:schemas-microsoft-com:vml” /> ). Of course, when people are concerned about the security of their income, they make choices (such as delaying purchases, hoarding cash, distrusting each other) that are acts of self-preservation, but that worsen an already bad situation. People’s optimism and favorable expectations are necessary for our full information (misinformation and propaganda = “new age” political warfare) era. Governments have to regain their powers and markets have to be controlled and their dynasty to be restricted to their absolute financial functions; otherwise, we do not need them and it will be beneficial for the society to be deserted. The value in our world depends on humans and not on businesses.
IV. EPILOGUE
We tried to give a small synopsis of the recent economic history and the political economy of the oldest nation-member of the EU and EMU, the “chosen by God’s Providence” nation, the historic and Orthodox Hellas. It is bad and unfair, the oldest country of the world to be controlled by the newest one today. In this European integration and in the world economy the interdependence is highly asymmetric and unfair, with substantial negative processes that work mainly to the detriment of most of the countries, especially the small and peculiar ones. The autarkic societies in the past had been led almost to success (at least in full employment, happiness, homogeneity, independence, safety, and security), but the current economic system with the competitive advantage and the loss of manufacturing, reduction in agriculture, and enormous debts is against self-sufficiency (autarky) and insensible to small businesses. It encourages interdependence (unilateral dependency), forces (imposes) free but unfair trade (based on competitive advantage, exploitation of labor, and dumping), sale-offs of state-own enterprises, and augments uncertainty for the future of this falling world. The first results were shown during the 2007-2011 financial crises, the deep recessions of 2009-2011, and the enormous social cost of unemployment and loss of wealth. There is no need for someone to be an economist to understand these basic economic rules that countries in recession need expansionary public policies to grow and exit from the crisis or a historian to avoid the same mistakes of the past or a philosopher to conceive these social problems or a prophet to predict the future of our world or a politician to blame the opposition party,[57] if we allow the current trend to continue. The greediness of the financial market will contribute to the destruction of our world.[58]
In summary, the European economies and the Greek one that copy the extreme U.S. socio-economic system had, lately, two major problems; overconsumption (underproduction, low productivity, and waste of resources) and lack of savings (dis-saving and borrowing or spendthrift).[59] These trends cause current account deficits and capital account surpluses, tremendous public and private debts, which affect the financial markets, the credit-worthiness, the risk, the interest rates, the oil prices, the inflation, and the growth (employment). We must learn that we cannot live beyond our means indefinitely, as Greeks never did it before, but not anymore. Actually, there is a vicious cycle in the Greek economy. Without an investment in sustainable development, increase in productivity, and protect their domestic industries,[60] EMU member-nations will lose their competitiveness race. The Chinese “invasion” is a serious threat for Europe. The global uncertainty, the illegal migration,[61] and the other domestic problems, due to integration and globalization are going to change our economic system (many economic laws do not hold anymore) to “integr-onomics” or “glob-onomics” and “shock-onomics”. The only prediction that we can do for the future, after the current financial crisis, the deep recession, the downgrading of the countries’ securities by the suspicious objective rating firms, and the unbearable unemployment problems, due to illegal immigration (wooden horse inside the country), is that this new socio-economic system will be the last in Greece’s thousand years old moral socio-economic history, except if she will decide to go back to a different value oriented system, which was her tradition. These corrupted people in financial markets, in politics, in education, in media, and everywhere need some knowledge in value-oriented Greek-Orthodox welfare economics, business ethics, and way of life. Of course, many of them have to go to prison and their assets must be confiscated. This is necessary to satisfy the social justice and to please the relentless markets and the simple citizens. Greece has to go back to her true values and to stay as far as she can (ostracize them from her land) from those who determine the market “values” or valuelessness.
<-xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
by
Dr. Ioannis N. Kallianiotis
Economics/Finance Department
The <-xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Arthur J. Kania School of Management
University of Scranton
Scranton, PA 18510-4602
U.S.A.
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[1] In the past the “mad cow” disease and lately, the chicken flu were creating many problems to this sector of agriculture. TV News ERT, MEGA, ANTENNA, and ALTER, February 19, 2006. This cow feed, which caused the disease, was imported from India by Britain. Recently, the death toll has risen to 35 in Germany’s E. coli epidemic and health officials say about 100 patients have severe kidney damage. The source of infection has been identified as bean sprouts from an organic farm in northern Germany. At least 3,255 people have fallen ill, mostly in Germany, of whom at least 812 had a complication that could be fatal. See, http://www.bbc.co.uk/news/world-europe-13746682 .
[2] See also, Fact Sheet, Bureau of European and Eurasian Affairs, Washington, D.C., January 12, 2006 (statelists@state.gov).
[3] The official name of this tiny state, before usurp the name “Macedonia”, was Vardarska. This must be its name today. The name “Macedonia” is Greek and represents the area of North Greece; then, it cannot be used as the name of this Albano-Bulgaro-Greco-Gypso-Slavic little state. See, Kallianiotis (1992 and 2010a).
[4] See, http://ec.europa.eu/enlargement, 12/1/2006.
[7] Greece has three major political parties, but with the same imposed philosophy, which makes them as one party, the “communist-socialist-centrist” party(kommounisto-PASOKo-kentrw`/oi). Kostas Karamanlis tried to improve a little the country, after all these years with the pseudo-socialists in power, but he was stopped by the “dark powers”. See, http://hellasfrappe.blogspot.com/2011/06/plot-to-assassinate-kostas-karamanlis.html
[8] Greece lives for 187 years with foreign loans and has experiences bankruptcies, too. In 1824, when the liberating struggle was in a critical phase, Greece needed arms and especially the strengthening of her navy. The president of the executive branch (anglophile), Georgios Kountouriotis (Gewvrgio~ Kountouriwvth~), turned to the “protectors”, the British, who provided two loans, with their only objective the maximization of their profit, because England was supporting the Ottoman empire, as it is doing today by supporting Turkey in Cyprus and for its entrance to the EU. Unfortunately, the terms of the loan were predatory. The first loan was £800,000 and Greece received only £308,000 (38.5%) and some supplies (equipment) of £11,900 from England. The lien was “the land and the destructible properties of the nation”. The second loan in 1825 was of £2,000,000 and Greece received £1,100,000 (55%). An amount of £529,000 was retained for payments of the previous loan plus interest, commissions, etc. In 1827, Greece had her first bankruptcy because she was unable to pay the maturing loan installments. In 1833, Greece received her third loan of FF60,000,000. They withheld FF33,000,000 for the payments of the previous loans and Turkey received FF12,500,000 as indemnity (Greece had to buy out her own land from the conquerors). Then, Greece received from this loan only FF14,500,000 (24.17%). In 1843, Greece had the second bankruptcy. From 1879 to 1893, Greece received nine loans of 643,000,000 golden francs, but she received only 463,000,000 (72%). The eight from these nine loans were requested by Charilaos Trikoupis (Carivlao~ Trikouvph~). For these loans, Greece paid 455,000,000 in interest and other costs. In 1893 (December), Charilaos Trikoupis said in Parliament, “unfortunately, we went bankrupt” (<<Dustucw`~, ejptwceuvsamen>>). In 1897, the …IMF, which was called the International Financial Control Commission (England, France, Russia, Germany, Italy, and Austria) approved a new loan of FF170,000,000, which was spent for indemnities to Turkey. This loan was requested by Theodoros Diligiannis (Qeovdwro~ Dhligiavnnh~). In 1932, Eleftherios Venizelos ( jEleuqevrio~ Benizevlo~) stopped Greece’s payments. See, Giorgos Romaios, “Greece of the Loans”, Newspaper Ta Nea, June 14, 2011, pp. 1-8 and Kallianiotis (2011a). See also, http://www.suite101.com/content/the-bankruptcy-of-greece-in-1893-a113142 and http://en.wikipedia.org/wiki/Treaty_of_Constantinople_(1832)
[9] TV News ALTER, November 24, 2008. From November 3, 2009 the seaport went to Cosco (Chinese firm) and workers were in strikes for many days. TV News ALTER, November 2, 2009.
[11] See, Kallianiotis (2009b). Troika is forcing Greece to privatize all the public enterprises. This is the worst choice at the moment because all the assets (real and financial) are undervalued. Deutsche Telekom had bought in 2008 the 30% of OTE at a price 30% higher than the market price, at the price of €27.5 per share. On June 6, 2011, the Greek government sold another 10% of OTE to Deutsche Telekom at a price of €8.1 per share, which is 29% of the 2008 price. The total proceeds for the Greek Treasury was €400 million. See also, http://www.antibaro.gr/forum/3117
[13] Countries with strong agricultural sector are not afraid of financial crises; manufacturing is coming second; and services last and over-sweating. Countries have to be self-sufficient and in a state of autarky. The EU plan was to destroy Greece’s agriculture (olives, oil, wine, livestock, etc.).
[16] TV News ALPHA, June 9, 2011. Unemployment is very high among young professional, too. Young lawyers are paid €400 per month and there are more than 20,000 lawyers in the area of Attica. (TV News ALPHA, November 30, 2008).
[18] See, Kallianiotis and Dragone (2009). The ministry of interior tried to privatize the garbage collection, but due to disagreement with the workers in the local government, the management of garbage stayed with the local city governments. (TV News ALTER, November 30, 2008). But, this decision cannot remain for very long, because Troika forces privatization of all the public enterprises.
[20]Sali Berisha said that, “Albania has changed during these years faster than ever. Once a country of the most notorious organised crime in Europe, Albania is today one of the safest and most secure countries of Europe where incidences of criminality are clearly below the NATO and EU average.” (Euronews.net/2009/04/07). Berisha opened the prisons and sent all the Albanian prisoners to Greece.
[22] The cause of these problems is the Varied Wages. Hourly labor costs for the textile industry, as of 2004 were: France $19.82, Italy $18.63, U.S. $15.78, Slovakia $3.27, Turkey $3.05, Bulgaria $1.14, Egypt $0.88, Mainland China $0.49. (The Wall Street Journal, September 27, 2005, pp. A1 and A10).
[23] TV News ANTENNA, September 12, 2005. Also, the European Court imposed a fine of €2,000,000 and a daily penalty of €16,000 to Greek government because it was subsidizing the Olympic Airlines. (Newspaper Estia, July 8, 2009, p. 3). Greece has already privatized Olympic Airlines since March of 2009 and you do not see its planes anywhere anymore. Thus, the European plan was successful; Olympic is not a rival of European airlines anymore. (sic). Greek governments have to say “No” to these anti-Greek EU policies.
[24] Greek politicians have proved after 1974 that they act against Greece’s interest. The current political crisis in Greece is unique in her entire long history. Of course, some terrified news regarding Kostas Karamanlis were heard lately, due to his openings towards Russia. See, Hellas Frappe, June 16, 2011.
[26] See, The Wall Street Journal, April 8, 2011, pp. A1 and A8. The U.S. federal funds rate is 0.25%.
[27] See, Fernanda Nechio, “Monetary Policy When One Size Does Not Fit All”, FRBSF Economic Letter, June 13, 2011. http://www.frbsf.org/publications/economics/letter/2011/el2011-18.html
[32] Greece started borrowing money since 1824 to liberate her land from the barbarians of the East (the Ottoman Turks) and unfortunately, she was enslaved to the new barbarians of the West (the European extortioners and usurers). See, Giwvrgou Rwmaivou, << JH JEllavda tw`n Daneivwn>>, TA NEA, 14 jIounivou 2011.
http://www.tanea.gr/default.asp-pid=96&ct=1&artid=4635429&nid=0&rid=
[33] “I expect the Eurogroup to agree to additional financing to be provided to Greece under strict conditionality,” Luxembourg Prime Minister Jean-Claude Juncker said after meeting with Greek Prime Minister George Papandreou. “This conditionality will include private sector involvement on a voluntary basis.” See, Bloomberg.com, June 3, 2011.
[35] TV News CNN, ERT, August 5, 2011. On Monday, August 8, 2011, the U.S. stocks tumbled [DJIA fell by 631.73 points (-5.52%)], giving the Standard & Poor’s 500 Index its worst slump since November 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown. See, http://www.bloomberg.com/news/2011-08-07/u-s-stock-futures-fall-amid-concern-s-p-cut-may-worsen-economic-slowdown.html . The Theory of Finance has to change from now; the U.S. government securities are not risk-free any more. Who gave this power to the rating firms to overturn (even though that we know it is wrong) our global financial system- The negative effects on the real economy and on peoples’ lives are enormous. These existing financial markets, institutions, and houses have to be controlled by the governments of the sovereign nations; otherwise, they will generate very soon a global collapse and the worst civil unrest and destruction of the entire world.
[38] The move to CCC from B reflects “our view that there is a significantly higher likelihood of one or more defaults,” S&P said in a statement. “Risks for the implementation of Greece’s EU/IMF borrowing program are rising, given Greece’s increased financing needs and ongoing internal political disagreements surrounding the policy conditions required.” No other sovereign nation is graded as low as CCC by S&P, a spokesman said by e-mail. Moody’s cut its rating on Greece on June 1 to Caa1, leaving only Ecuador as a worse sovereign risk. See, Bloomberg.com, June 13, 2011.
[39] See, The Wall Street Journal, June 15, 2011, pp. A1 and A9. The ECB said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability. “Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt, when presenting the bank’s semi-annual Financial Stability Review. “That’s the reason why we are against any sort of default with haircuts and any form of private-sector event that could lead to a credit event or a rating event.” The euro area’s sovereign-debt woes have worsened as investors increased bets that Greece will not be able to pay its debts, sparking the region’s first sovereign default. The risk that euro-area banks holding Greek government bonds will be saddled with losses has jumped, after Standard & Poor’s slapped Greece with the world’s lowest credit rating on June 13, 2011. (Bloomberg.com, June 15, 2011).
[40] “We must rise to the occasion and realize how dramatic the situation is and work with a united spirit to face the crisis… Our answer to the storms around us is stability and to continue our course, with our planned changes and targets.” Papandreou told lawmakers in Athens. (See, Bloomberg.com, June 16, 2011). Also, “Greece shook global markets, intensifying fears of a default, as tens of thousands of demonstrators protested a new round of budget-cutting plans and its prime minister offered to step down to try to preserve them.” (See, The Wall Street Journal, June 16, 2011, pp. A1 and A14). Later in the day, Papandreou changed his mind and decided to continue as prime minister (after pressure that he received from his mother and brother), even though that he had given his resignation early in the day to the President of the country. (TV News ERT, June 16, 2011).
[42] Lawmakers in Athens supported Papandreou in a 155-143 vote after the prime minister shuffled his Cabinet and sought the chamber’s approval. See, Bloomberg.com, June 22, 2011.
[43] European Banks’ exposure to Greek sovereign debt is: BNP Paribas €5.01 billion, Societe Generale €4.23 billion, Deutsche Bank €3.02 billion, HSBC €1.94 billion, Credit Agricole €0.85 billion, Intesa Sanpaolo €0.83, Unicredit €0.80, Santander €0.51, and Barclays €0.39 billion. See, The Wall Street Journal, June 23, 2011, pp. A1, C1 and C2.
[44] See, Charles Forelle, “Ailing Greece Tries National Tag Sale”, The Wall Street Journal, June 28, 2011, pp. A1, A7, A12, and C1.
[45] A prudent individual tries to maximize his efforts to become a better (perfect) human being by undertaking different actions towards his only true objective. Of course, he faces many social constraints (influences) from the ignorant world and the “enemy”. A human being is not only an economic being, but a very complex entity by having eternal value.
[48] What is the marginal product of an executive and he is compensated by $240,000,000 per year- This unfair and corrupted practice is increasing social cost and increases the uncertainty in our questionable financial markets. Salaries must have a cup (ceiling); no more than $1,000,000 per year, which is also very generous and unnecessary.
[49] European treaties are the ones that established: European Coal and Steel Community (ECSC), European Atomic Energy Community (EAEC), European Economic Community or Treaty of Rome (EEC), Treaty on European Union or Treaty of Maastricht, Treaty of Amsterdam, Treaty of Nice, Treaty of Lisbon, etc. See, Moussis (2003, pp. 19-26).
[51] The European institutions are: (1) European Council, (2) European Commission, (3) Economic and Social Committee, (4) Committee of the Region, (5) European Parliament, (6) Council of Ministers, (7) European Commission, (8) Court of Justice, and (9) Court of Auditors. See, Moussis (2003, pp. 39-63).
[52] One of the citizens’ policies is the Schengen Agreement, which developed the Schengen Information System (SIS), a computerized data bank (the “beast”, tov qhrivon) containing all information on European citizens.
[53] They are: Industrial and Enterprise Policies, Research and Technology Policy, Energy Policy, Transport Policy, Agricultural Policy, and Common Fisheries Policy. See, Moussis (2003, pp. 285-400).
[56] Our objective must be to minimize the deviations from the target value of the variables. A negative deviation is reducing the overall social loss and a negative loss represents social benefits. We do not want a high negative L either because it means exaggeration, inefficiency, waste, and lack of optimality (Moderation is everything in our lives).
[57] It is a possibility to move to moon, now that they found water on it (sic). See, The Wall Street Journal, November 16, 2009, p. A1.
[58] “What will it take for Americans to finally get the message that much of Wall Street, in its current form, is a corrupt enterprise in need of a top-to-bottom overhaul, a task that the year-old Dodd-Frank law, for all its verbosity, barely attempts-” as William D. Cohan said. See, http://www.bloomberg.com/news/2011-08-08/ending-moral-rot-on-wall-street-part-1-commentary-by-william-d-cohan.html
[60] Free trade is to be blamed for most of the current economic crisis. The only thing that is causing is the stagnation and destruction of economies that have comparative disadvantages; but behind these economies are the poor citizens that we cannot ignore. Then, our entire economic philosophy needs some serious restructuring.
[61] Muslims from Pakistan and other countries roused against Greek police in a march from Omonia to Syntagma Square in Athens, burning and destroying 75 cars, 10 stores, 1 bank and injured many policemen. This is the beginning of the Muslims’ reaction in Greece after her liberation from them in 1821. (TV News ALPHA, May 23, 2009). The Obama administration intensified a crackdown on employers of illegal immigrants, notifying another 1,000 companies in all 50 states that the government plans to inspect their hiring records. (The Wall Street Journal, June 16, 2011, pp. A1 and A2).
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