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What’s the big fuss about Greece?

19/05/2012

What’s the big fuss about Greece?

Greece’s GDP of 300 milliard US$ out of 15000 milliard US$ of European Union is 2%. In reality after the cut of Greece from the external credit probably half of the GDP will disappear, so it is less than 1%. So in fiscal terms if Greece would entirely stop its economy it would influence by 1% the European GDP.

We already know, the Greece GDP will anyway fall to its real terms and Europe will lose statistically 1% of its GDP. This 1% GDP in reality never existed, only in the statistics of Greece and the assets of the balance sheet of European banks and financial institutions.

Yes for banks and financial institutions it will be a blow, good for them. Their practice of transferring financial resources from hard working productive economic entities of Europe, to the no-working non-productive governments, was a taxation of the strong and subsidies of the non-productive, who wasted it for personal enrichment and over-consumption (if the credit would be wisely invested, Greek economy would be in perfect state). This taxation reduced the potential growth of European economy by more than 1%.

This had to be stopped and good that happened. Europe without these practices will be economically stronger than before. As to the banks and financial institutions, who will probably lose additional 200-250 milliard Euro, will be forced to take loans to save themselves.  The best provider of these loans should be ECB, and if these rescue loans will be cleverly done, they will be swapped to equity, giving the ECB, decisive position in the banks and financial institutions.

I know it is nationalization, but should we be so afraid of it. Did the previous owners of the banks done so well that they are irreplaceable? Yes the owners will lose part of their assets (and some of them are pension funds and small investors). But then isn’t all the modern economic system based on penalties for mistakes and mismanagement? Did not come the time, to punish all those financial Barons, who created this mess in the European and World economy?

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