The Greek Problem is Not a New Thing

I found this quote from an older Finem Respice article about Greek financial problems in the mid-20th-century to be pretty funny:

So hopeless was the state of Greek finances that, even as [the Nazis] routinely hung with piano wire prominent citizens and officials on the thinnest of provocations, and even given three years to do it, the Nazi's were somehow unable to compel what amounted to a totally subservient collaborator government to put its fiscal house in order.

The Axis administration soon realised it would be a waste of effort to get the Greek government to balance its accounts.

Later, in 1945, it was a British problem.  These problems from the late 1940's should sound really familiar:

Fortunately for Germany, by the time the matter came to a head the Germans had RSVP'd to Scobie and Greece was Britain's problem. It wasn't just partisans the British would end up having to fight....

What followed could only be described as a comic progression of populist pandering, the spread to the national economy of a series of parasitic labor unions and cabals, and a confidence on the part of the Allies in their own fiscal administration abilities that was as enduring as it was inflated.

At first [British Treasury Secretary] Waley sold gold to support the drachma, conditioning the sale on a series of fiscal and monetary reforms the Greeks adopted in principle and promised to implement– at some later date when it was somewhat more convenient. It was around this time Waley quipped:

...the Greek government are in effect paying doles to a large part of the population who spend all day parading in the streets in idleness with political demonstrations as their chief occupation.9

Liberation governments, fearing popular backlash were terrified of taxing the Greeks. Instead they continued to look for sources of wealth to redistribute, and were happy to resort to even the most gamey monetary policies to buy time. After raiding "punitively" the only entities with wealth of any kind (businesses) in 1945 in order to buy popular support with cheap food and wage increases, the Greeks were, again, running out of options.

The whole thing is interesting, and depressing.


  1. morgan.c.frank:

    athens has been doing this since the days of Alcibiades.

  2. kidmugsy:

    Ambrose E-P in the Telegraph: This is not really different from the International Committee for Greek Debt Management in 1898 imposed on Greece after the country went bankrupt following a disastrous Balkan war.
    A six-power league of bondholders, led by British bankers, impounded customs duties in the Port of Piraeus, and seized revenues from stamp duty, tobacco, salt, kerosene, all the way down to playing cards. But at least there was no humbug about solidarity and helping Greece on that occasion.

  3. Matthew Slyfield:

    Those who do not remember history are doomed to repeat it, over and over and over until the end of time.

  4. Andrew Garland:

    Lending to a company is moral. The lender expects to be repaid out of the profits of production freely paid by customers.

    Lending to a government is almost always immoral. The lender expects to be repaid out of the power of that government to tax the people by force, to tax even the unborn who supposedly should pay the debt incurred by their father's politicians. That used to be called Bond Slavery.

    It doesn't matter to the lenders if the government invests the money for a greater good (a theoretical possibiliy), or distributes it in schemes to pay graft, buy votes, collect "campaign contribtions", and cover up prior idiotic policies (the usual). That is immoral.

    A bankrobber takes cash from the bank. A government does the same, but leaves government bonds promising to return the cash someday. Later, the government arranges to repay in inflated currency or just defaults. That is the sophisticated, modern way to rob a bank.

    Banks are unofficial departments of governments. They bought the debt of Greece, France, Italy, and the US, under government regulation, encouragement, and backroom directives. The people put their money into banks, because their deposits are "insured" by those same governments (while they are going broke) and because they have little choice.

  5. Matthew Slyfield:

    "Lending to a government is almost always immoral. The lender expects to
    be repaid out of the power of that government to tax the people by
    force, to tax even the unborn who supposedly should pay the debt
    incurred by their father's politicians."

    Lending to a government is delusional. Many governments (the US included) pay off old debt with new debt, even to the point of using new debt to pay the interest on the old debt. Governments that would be willing to impose the level of taxes needed to actually pay off debt without massive cuts in services are usually just as willing to default.

  6. Jens Fiederer:

    Given that this measures the responsiveness of the Greek citizenry to foreign occupations (i.e., "resistance") it is not necessarily pertinent to Greece's actions as a free people. Although it does seem that way.