Simple, Really.
Allan Massie writes for The Scotsman regularly on a wide range of issues, but in this piece for the Telegraph he boils the great Greek drama down the the essential point that successive (and unreliable) Greek governments borrowed huge sums of money from the European Union because they were either unable or unwilling to raise enough in taxes to meet their public spending commitments.
And now it's time to honour their debts although I suspect they'd have got on a hell of a lot better if Greek politicians had resisted the juvenile temptation to call their German partners 'terrorists'.
Simple, really.
The current crisis is tough on the Greek people, but it's their own politicians from successive governments who have hired and then spent that money
Photo: 2015 Getty Images
By Allan Massie - The Telegraph
The story as I remember it goes like this. Sometime in the early 1920s Britain and France asked for relief from some of their war debt to the USA. An American senator, speaking, I like to think, in the accent of Humphrey Bogart or John Wayne, said “they hired the money, didn’t they?” Quite so; end of story.
Well, successive Greek governments over many years have hired an awful lot of money, and, if the latest bail-out deal is approved and goes through, are about to hire a lot more. Not surprisingly, the lenders want some assurance that this time the Greek government is serious about cutting public spending and raising public revenue.
There have been promises to do this in the past, and the promises have not been kept. So it’s not only Germany that has doubts about the Greeks’ willingness to do whatever they promise. Finland, Poland and Slovakia are all sceptical.
When a Government spends more than it collects in taxes, it has a choice. It can practise austerity or go for growth. Some of those who now criticise the insistence of the EU – or rather the eurozone states – that Greece must endure another round of austerity if it is to receive yet another bail-out loan, are among those who approve of George Osborne’s austerity policies here. Among those indeed are some who insist that he hasn’t gone far enough quickly enough in order to cut the deficit and prevent the national debt from continuing to rise.
Be that as it may, the truth is that the creditor almost always has an advantage over the debtor, especially when the debtor is asking for new loans to keep afloat. When the Labour government had to turn for support from the IMF in 1976, the Chancellor of the Exchequer, Denis Healey, was obliged to make deep cuts in public spending. Going for growth in the hope that a booming economy may make it easier to cut the Government’s deficit may make sense, but this is not how the creditor sees it.
Sadly, it’s reasonable for Greece’s creditors to suspect that the Greek Government will promise anything to get the loan it urgently needs – and then forget its promises unless they can in some way be made binding.
This is tough on the Greek people, but it’s their own politicians in successive governments who are primarily to blame for the mess the nation is in. They hired the money and spent it.
When a Government spends more than it collects in taxes, it has a choice. It can practise austerity or go for growth. Some of those who now criticise the insistence of the EU – or rather the eurozone states – that Greece must endure another round of austerity if it is to receive yet another bail-out loan, are among those who approve of George Osborne’s austerity policies here. Among those indeed are some who insist that he hasn’t gone far enough quickly enough in order to cut the deficit and prevent the national debt from continuing to rise.
Be that as it may, the truth is that the creditor almost always has an advantage over the debtor, especially when the debtor is asking for new loans to keep afloat. When the Labour government had to turn for support from the IMF in 1976, the Chancellor of the Exchequer, Denis Healey, was obliged to make deep cuts in public spending. Going for growth in the hope that a booming economy may make it easier to cut the Government’s deficit may make sense, but this is not how the creditor sees it.
Sadly, it’s reasonable for Greece’s creditors to suspect that the Greek Government will promise anything to get the loan it urgently needs – and then forget its promises unless they can in some way be made binding.
This is tough on the Greek people, but it’s their own politicians in successive governments who are primarily to blame for the mess the nation is in. They hired the money and spent it.
