3 Reasons Why Greece Is Not Bankrupt

An article on Keep Talking Greece quoted Papandreou as saying Greece is bankrupt and needs IMF help. As usual from Papandreou, this is not the truth here is why.

1. Government.

This is the 10 tonne elephant in the room. The simple fact of the matter is that it is the Greek government that is bankrupt not “Greece”. Unfortunately the Greek government is passing the consequences of its mistakes onto the private sector through huge tax increases and this is what is causing the depression in Greece.

The Greek government is bankrupt, Greece is not bankrupt

2. Labour.

Nothing has happened to the amount or the skill of the labour in Greece since 2008. In other words Greece has just has much productive labour as it did when the country was booming when it joined the Euro. Labour is by far the biggest asset of any country and for this reason Greece is not “bankrupt”.

3. Resources & Land

Nothing has changed with regards to the amount of land or territorial waters that belong to the Greek nation since the boom times of the early 2000s. For this reason Greece is not bankrupt.

Will “Greece” cease to function if the government defaulted?

In a word, no.

The government will still be collecting taxes after a default. The money will not simply disappear from the Greek economy. The government will still be able to pay for the police, the army the hospitals, pensions etc.

The propaganda that is being pumped out by Greek politicians which says the country will implode if the government defaults is simply not true.

Greece cannot be compared to Russia or Argentina. In those countries the value of the currency disappeared. Greece has the Euro. The Euro will not implode if the Greek government defaults.

What does the government need to do after a default?

Cut back dramatically.

Is this possible?

Yes, in 2003 the Greek government was spending 40% less than in 2012. I think Greeks will agree 2003 was not such a bad year, the Greek government simply has to adopt its 2003 budget to almost halve its spending.

It is very simple.

A default will mean that the government will no longer be able to spend more than it takes in taxes, there is no catastrophe.

Summary

Greece is not bankrupt. It is the Greek government that is bankrupt.

The Greek government can default and it will still be functioning because it will still be collecting taxes.

The tax revenues will not simply stop if the government defaults. The Greek government will simply have to stop spending more than it takes in which means it has to focus on the most important functions such as tax collection, policing, pensions, benefits etc.

The template for massive cuts exist. The Greek government simply has to adopt its 2003 budget where it was spending almost half as much as it does now.

It is simply false to suggest “Greece” is bankrupt.

 

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