Monday, May 7, 2012

If Greece goes under...

Among other news the past weekend - like France narrowly kicking Sarko out of office, Putin winning in Russia and many Sicilian cities electing new mayors - a pivotal story involves our neighbor Greece, where it appears that another government is about to be dumped. Some Greeks want to abandon the euro and perhaps default on the bailout loans they are receiving from the EU through the ECB. Germany and France are shouldering most of these loans but Italy and other countries are helping out too.

The Greek economy is a lot like Sicily's, except with twice the population and without the organized crime. Like Italy, Greece is plagued by public-sector corruption, high taxes and what might be described as "welfare state" policies. Not a pretty picture. But abandoning the euro might throw its fragile economy into free fall down a black hole, in the process debasing the value of goods and services for years to come. It wouldn't help the Euro Zone generally.

How does this involve Sicily? In many ways, Greece's problems are quite similar to Italy's. In both nations the roots of the economic woes transcend (and pre-date) the current crisis which began in 2008. The difference, of course, is that Italy is slowly getting her house in order and had a much larger economy to use as a shield. We wish the Greeks well.

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