In response to the many economic questions we get, we are going to repost this from our FAQ in case certain people have not had a chance to read it.
The main root cause of the current situation, can be traced back to 1974. From 1967 to 1974 Greece was ruled by a military regime known internationally as the “Junta”. The leader of the regime George Papadopoulos, began developing the infrastructure of the country at a time when it was poor at the level of other Balkan countries. Roads to remote areas of the country, electricity, telephone systems, schools, and factories were built, and the country had its most prosperous period of NATURAL economic growth not seen since.
This is to say that the while the economy had grown, it was growing at a slower, steadier pace without huge loans and massive debt. It was still economically not at a level of western European countries, yet production was there and the country was on the right track economically. With its own factories and industries, its own currency and its own interests without the “European Community” dictating what it should do.
However, in 1974 this all changed, by 1980 the current system called “Social Democracy” was put into place, factories were closed down little by little, the country joined the “European Commission” and Massive Loans were taken under the son of George Papandreou Sr., Andreas Papandreou of the “PASOK” party, and later its twin “Nea Dimokratia”.
Civil Servant Jobs, State Funded Jobs, State Funded Government Programs, appeared almost overnight, and within a decade a massive middle class was created. Greek people who had been poor almost all their lives suddenly had secure useless bureaucratic jobs all over the country. “Vote for PASOK, they will give your son a Job” was a common phrase heard in villages across Greece. This “miracle” was so widespread, that Greeks learned a bureaucratic state job was superior to any other . Useless positions were created to produce army of loyal voters, government jobs that may need 2 or 3 people were employing 10. Pensions, and the near impossibility of getting fired all sweetened the deal.
As the purchasing power increased, the once poor Greek working class was now able to live in a way never imagined before, they felt they had finally reached a level of prosperity only western Europeans once had. They never questioned how this “miracle” happened. An average person, who grows up in a small town in Greece, or anywhere for that matter probably is not going to understand how international loans and finance works. All the average Greek had to do was vote for PASOK or Nea Demokratia and the cars, houses and job security would keep rolling in.
While the average Greek did not understand the cause of this “miracle”, The Papandreou and Karamanlis family certainly did, the western educated Greek politicians certainly did. This “miracle” came at a price, and the price was Greece’s national autonomy. The price was international access to all of our homeland’s resources natural, political and economic. This was a systematic plan.
Now we are told that the international banks who loaned Greece all this money, were “tricked” by Greek politicians into making Greece look like a lucrative economic investment and that now the Greek people must pay with harsh austerity measures to compensate for this supposed trickery.
Banks can approve or deny loans for private citizens based on things like debt to income ratio, credit history, assets etc and is virtually never “tricked” because the borrower always has some kind of collateral. Yet we are to believe the banks naively loaned billions of dollars to an entire country for decades without suspecting there would be a default? In this case, the collateral the banks want is our whole Nation, our people and our future.