Greece: galloping now to the edge.

As indicated in a previous post, the failure to elect a Greek President has forced the calling of a new election on Jan 25. The expectation is that it will be won by Syriza, a neo-Marxist Party, much like the 'Occupy Wall Street' crowd. Greece is in an untenable position. Social Democracy (Capitalism for the few and Socialism for the many) had produced six years of recession, 1.5M unemployed, 3M heading into abject poverty and a majority who can not pay their bills. The Country has been kept afloat by the loans of the troika (the  IMF, the ECB and the EU). A debt payment of 20B Euros is due at the end of February. Greek banks have enough funds to make it through February, but after that they must be bailed out again.


Into this mess marches Syriza. It promises an end to the policy of austerity, renegotiating the terms of the bailouts and staying within the EU.


Will these changes solve the problems of Greece? NO! First, the mechanics of the change are not doable. Even if Syriza wins, it will have to form a coalition government and renegotiate the terms of its indebtedness - all in a month. What if the Troika bulks, which is likely?


What is the Greek problem and the possible solution? Simply put: Greek products are not competitive. Greek products are too expensive due to Socialist practices. In addition, Greece is tied to a strong currency, the Euro, so it can not devalue its currency in order to sell its products at more competitive prices. The obvious solution then is for Greece to leave the EU and the Euro and slowly privatize its industries and reduce the size of its government.


Will this happen? NO! Syriza being a Marxist Party will try to seize the wealth of top earners and remain in the EU. That will still leave Greek products uncompetitive, spending will increase and stagnation will continue. That is the optimistic scenario. The pessimistic scenario is chaos and civil war.