Saturday, November 12, 2011

Greece and the Financial Crisis of the 21st Century and its Global Implications

by Vassilios Damiras
Political and Defense Analyst, Chicago, U.S.A.

Greece faces the most severe financial crisis since her independence in 1832 from the then powerful Ottoman Empire. The main cause for this complicated and serious problem is a corrupt socio-economic and political system. Greece has a huge public sector with an uncontrollable spending. Between the years 1981 to 1991, public-sector debt in Greece rose at about 5 percent per year, going from 39.3 of the GDP to 116.3 percent and climbed more in 2000s without ending in side. Of this total, 98.6 percent is been attributed to public sector. Much of this debt was taken under the Panhellenic Socialist Party-PASOK to support its redistribution policies. Throughout the 1980s approximately 75 percent of the total was spent domestically. Under this spending, PASOK strengthened the client state in Greece.

The socialist Prime Minister Andreas Papandreou manipulated the full membership of Greece to the European Union (EU) and obtained grants and loans to promote his socialist policies. Constantine Mitsotakis and the conservative party New Democracy came to power in 1989 and from 1990 to 1993 they governed Greece without a coalition try to change the economic policies without success.

The failure was due to the fact that the labor unions which controlled by PASOK and the Communist Party resisted any new financial policies. Moreover, many conservative politicians such as, Miltiades Evert did not believe in privatization as a way to improve the economic system, therefore refused to support this kind of new socio-economic policies. The main reason for this severe refusal was that Greek politicians did not want to lose the traditions of political patronage.............................................MORE SEE:

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