A Greek Tragedy?

The title seems to sum up the unenviable scenario that Greece has got itself into succinctly. In a typical Greek tragedy the characters are themselves responsible and have none other to blame but themselves for the trouble they land into, so much like what Greece has done to itself. The question being debated is whether the EU should don the role of the knight in white armour and rescue Greece the damsel in distress, not withstanding the fact that it was the damsel who chose to put her self into the trouble that she is into. This article is not an in depth analysis of the factors that led to the collapse of the economy in Greece or whether it should be the right thing for the EU to bail it out of the current crisis. We are simply highlighting the basic facts, so our readers can draw their own conclusions

In a basic sense most nations that find themselves in dire financial straits have none to blame but themselves for their predicament. In most cases it is on account of pompous and unfettered spending, reckless borrowing and failure to notice the cracks when they first appear and not heeding to sane advice. These nations do not take any kind of austerity measures or tighten the belt when there is still a chance to recover and slide down rapidly to the abyss of no return. This is the case with other countries in the brink of bankruptcy like Poland, Ireland and Dubai one of the wealthiest nations just some years ago. What is amusing in the whole episode is Greece accusing the EU of going slow and not reacting fast enough and with the required funds, making it sound as though being bailed out is its birthright. The EU and the IMF need to mobilise trillions of dollars to affect one of the largest economic bail out in history, a sum which Greece should realize cannot be laid at its door overnight.

A financial bail out makes things too easy for the country in question so it never learns its lessons from the fall, it also taxes the economy of the benefactor nations so badly that its citizens start wondering whether they are being penalized for being prosperous - a result of their hard work and better money management. A bail out would also send the wrong signals to nations in the brink of a fall that there is always big brother (EU) to bail them out in case of a collapse. The scenario is similar to the millions of dollars that the World Bank writes off as bad debts when borrowing countries fail to repay much to the chagrin of equally poor nations that tighten their belts and attempt to repay the Bank, which amounts to penalizing the countries that are prompt in their repayment while rewarding the defaulters with a loan write off.

Questions that are being debated are, whether the bail out would be successful? Who would monitor if the bail out funds are properly channelized. Opinion is also divided among economists whether a bail out is necessary or it would be better to let the country go bankrupt, devalue its currency and let it limp back to normalcy. Supporters of the bail out however argue that the bail out of Greece is in a sense a bail out of the EU itself and if the bad situation is allowed to continue in Greece it will spread like a festering wound to the rest of Europe.

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