Greek Hoi Polloi: Eurozone crisis refusing to budge.

The Brussels elite may be furious at the decision to hold a referendum in Greece, but when the figures look so dire, and people are becoming increasingly agitated, we should remember how things were in Greece not too long ago.

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An EU flag burnt during protests in Greece.
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Anthony Pickles
On 2 November 2011 10:46

To the apoplexy of the Brussels elite, Georges Papanderou, the Hellenic Prime Minister has proposed that the Greek people should decide whether to accept the measures being taken to solve their debt crisis.

In Brussels this is seen as a move so selfish and dangerous that it is beyond all sensibility that such a referendum could be held. Surely from the inventor of democracy, this is of little surprise.

What happens though if the Greeks vote no to austerity?

Greek 10 year bonds are trading at close to 24 percent. They have the lowest credit rating possible; CCC. Junk status. No money market will lend to them, and yet they remain inside a currency that gives them no ability to devalue. 

This, tied with high wages and price inflation, has created a situation where people are beginning to think there is no solution.

The European Bank estimates that based on relative prices and competitiveness, at a conservative estimate, Greece has declined in real terms by around 18 percent since 2000 (or entry into EMU).

There is a point when people can only take so much, when their lifestyle has declined to such an extent, that their only option is to turn to unrest.

The referendum in Greece could be the pressure valve.

All of this comes at a time when there is going to be another vote of no confidence in the Greek Parliament and despair from Sarkozy and Merkel.

One has to wonder whether all of this pain is worth it. Even if the Greek economy stops its decline, how many years will it take for them to grow back to the standards of living that many Greeks had in 2000?

The statistics in Greece now look so desperate that most people are expecting a default. A ‘no’ vote in the referendum could trigger that.

The markets are clearly nervous. Italian ten year bonds are trading at 6.2 percent, close to their highest ever level. Most people accept that it won’t be Greece that causes economic woes, but Italy and contagion.

The Brussels elite and bureaucrats may be furious at the decision to hold a referendum in Greece, but when the figures look so dire, and people are becoming increasingly agitated, we should remember how things were in Greece not too long ago.

Colonels took over the running of the country in a “revolution to save the nation” or Ethnosotirios Epanastasis”. Brussels should remember this.

Anthony Pickles is a Parliamentary Researcher and Conservative activist. Follow him on Twitter at @antpickles

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