Throughout modern history, militant socialism has been a powerful and often destructive socio-economic force.
Nations whose populace have embraced it have used it to reduce national industry bases to near extinction, and to engender a sense of entitlement which, when there is no more money left, often results in unrest and civil disobedience instead of a will to work hard and pull the economy back into the black.
The most recent example of this is clear and apparent in the events which occurred in Athens during the night following
the Greek government’s acceptance of bailout terms which will ensure that the country remains in the Euro, as well as the European Union.
The radical left Syriza party, which was elected earlier this year on the premise that it would ensure that Greece does not have to pay its vast debts to the European Central Bank and the International Monetary Fund, has passed a series of austerity measures through parliament in order that it can secure yet another three year bailout.
If a possible outcome can be predicted, it is very difficult to conclude as to which is the least damaging path that can be chosen. If Greece left the Eurozone and the European Union, it would leave behind a 394 billion Euro debt which is almost at levels equal to the entire capitalization of the European Central Bank.
This would have to be written off, causing tremendous potential damage to the European economy and potentially causing productive member states such as Britain to leave voluntarily in order not to have to recoup this liability through the business activities of its own taxpayers, leaving nations with very high dependence on IMF funding such as Italy and France, as well as Spain with its 57% youth unemployment, to attempt to set the balance sheet back on an even keel.
The alternative is that Greece remains in the Euro and a member state of the European Union, which has now been formally decided. This means another 89 billion Euros will likely be thrown down what is already a very large bottomless pit, without likelihood of repayment of the first two bailouts, let alone the next one.
The austerity measures are likely to be relatively ineffective, as the size of the debt is so vast and about to get larger, that an unproductive nation of only 11 million people will never be able to repay even part of it unless serious industrial and economic reforms are made within Greece.
The value of the Euro collapsed to 1.09 against the US dollar following the decision, depicting low investor confidence as the entirety of continental Europe is now saddled with further commitments with very high risk of non-repayment.
To provide more funding calls into question the ability of the European Commission to make sensible fiscal decisions. Cutting the loss by allowing Greece to leave the Euro would, despite creating damage to the European economy, likely be less of a burden than retaining it and paying more to support it.
Greece has received two enormous bailouts and is still in financial ruin, therefore it is hard to imagine what the European leaders think will change.
Ultimately the bailout terms were agreed after 229 of the country’s 300 MPs backed the ‘yes’ vote. But it wasn’t all good news for Prime Minister Alexis Tsipras as many of the 64 ‘nos’ were members of his own party. In what was a bruising night for the country’s premier, 32 of the 149 members of the radical left-wing Syriza rejected the measures.
A government official has insisted that Mr. Tsipras will not resign despite the hit, although he had said he would step down if he did not gather the support of more than 121 of his Syriza MPs. He ended up with the backing of 124.
Former finance minister Yanis Varoufakis and house speaker Zoe Konstantopoulou were among the big names to vote ‘no’ to the reforms.
Mr. Varoufakis, who quit his post last week, had earlier said the deal was a ‘new Versailles Treaty haunting Europe’, while Ms Konstantopoulou called it a coup that could cause ‘social genocide’.
Several thousand Greek citizens took to the streets in Syntagma Square in Athens last night to throw petrol bombs and create destruction, rioting violently whilst police ran for cover to avoid being burned.
The hooded rioters are protesting against the austerity measures, despite having lived in a nation which has been provided with a blank check from the European Central Bank, with more funding on its way despite the nation’s clear will never to pay any of it back.
Greece was allowed to enter the European Union despite the nation’s debt being far higher than the parameters stipulated by the Maastricht Treaty; the figures having been massaged by bank executives and consultants in order that Greece could be accepted as a member.
Whilst the citizens of Greece riot in Athens despite the likelihood of never having to repay their debts as well as gaining further funding, Britain’s workforce makes its daily commute with the lingering concern that they may have to pay 1.6 billion euros from their taxes toward Greece’s third bailout, a proposal that the British government vehemently rejected but will likely be enforced under European Union law.
Conservative British politician William Hague once stated that Greece was a burned out room within a burning building, referring to the knock-on effect of Greece’s debts to the European economy. Indeed, it is now clear that the room is still well and truly ablaze.
Photograph courtesy of the Daily Mail, chart courtesy of Google Finance