Tag Archives: the European Central Bank

The Greek Debt Crisis: Democracy is on hold, and up for Ransom

I have been pottering about with some maths for you… slightly boring I know, but important given the total codswallop we have all been told over the last few years about the EU and its political and financial remits within member states.

Today the “troika” of the IMF, the European Central Bank, and the European Commission agreed to lean Greece 130bn euros, £110bn, or about $170bn.

Let me put that another way:

£110,000,000,000 

But what does this number actually mean? Greece has a population of about 11,300,000. Of these approximately half are of working age. Not all of those who are of working age actually do any work, and not all of those who work pay any taxes, but lets keep this simply for the time being. So about 5,650,000 people are trying to pay back this debt.

This all means that every single Greek of a working age has today been lent approximately £19,500

Given that the average annual salary in 2010 in Greece was equivalent to £17,400 this means that they have been lent about 14 months salary each. And this is on top of an even bigger loan last year, and it has already been indicated that there will need to be a third bail out some time before the end of the decade.

And there are serious political impactions to all of this too. As a consequence and requisite for the loan,

  • Greece will undertake to reduce its debt from 160% of GDP to 120.5% by 2020
  • Private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%
  • Greece’s economic management will be subjected to permanent monitoring by eurozone experts on the ground
  • Greece will amend its constitution to give priority to debt repayments over the funding of government services

Notice that last one… yep… AMEND ITS CONSTITUTION!

Staggeringly Greece has also agreed to put off elections till it can afford to hold them. Yep… Democracy is on hold, and up for ransom, till Greece pays its political and economic masters.

Hmm… whats the price of democracy again?

Well now you know. £19,500

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