Pandora’s Box of Problems for Greece

"The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage," former Greek finance minister Yanis Varoufakis said. 

Varoufakis resigned from his government position after persuading the Greek people to reject the bailout money from the Troika.

But for the birthplace of democracy, drama and philosophy, the economic journey is far from over. Banks are shut, shops are becoming empty and there is still no solution to the economic misery Greece is in. All that is left, according to Alexander Douglas, lecturer in the philosophy of economics at University of London, is hope. Douglas told Sputnik.

"Hope is always the last thing to go, and the recent referendum might suggest that the Greeks still have hope – at least belief in themselves. Maybe we won’t have to know how much more punishment Greece can take; maybe the Troika will find their hearts. Otherwise, we’ll see." 

The Troika Want Blood

But what Douglas really believes the Troika want is blood.

"I think they’re out for blood – wergild. They’re not getting anything else, yet they keep on ripping into Greece, calling for more austerity, more primary surpluses, which means that almost no bailout money gets invested in repairing the Greek economy."

"Instead it goes straight to the creditors, yielding a steady stream of interest payments and keeping their assets from collapsing."

Douglas says that the Troika are really bailing out the creditors, not Greece — and that is the plan to solve Greece’s financial situation.

"This keeps the creditors off the Greek government’s back, but if the condition is austerity then it can’t do anything about unemployment, it can’t get back to growth, and it can’t get out of its situation.

"The Troika have shown themselves willing to keep paying off creditors and shuffling liabilities from one balance sheet to the next, so long as they retain the authority to keep Greece in depression conditions. That’s enough to show, in my view, that they’re not really trying to solve a financial problem at all."

Many versions of the story surrounding the economic crisis in Greece have been told in recent month. In one, the government spent too much money — got bailed out by the banks – mismanaged the money and kept overspending until their economy collapsed. 

In another, Greece is no different to any other debt laden country and has been suffering for years. Its debt, according to economics and philosophy expert Alexander Douglas, is morally and politically different.

"In financial terms, the Greek debt is unpayable, but so are the sovereign debts of many Eurozone nations,” Alexander Douglas explains to Sputnik. "Unpayable debts are usually generated through financial fraud: overrating the creditworthiness of borrowers.

"In most nations, the fraud was perpetrated by the private banks, who were lending to non-creditworthy borrowers. When the banks had to be bailed out, the bad liabilities ended up on the government’s balance sheet.

"The difference with Greece is that the government was in on the fraud – fiddling the books with the help of Goldman Sachs in order to hide a lot of debt and qualify for the euro."

"Debts that can’t be paid won’t be paid, so any solution will involve write-offs in some form or other. The Troika know this, but with Greece there’s all this residual resentment because of the past dishonesty." 

Punished Without Mercy

"Apparently it’s fine to let your banking system get up to the eyeballs in fraud and then bail it out when the game is up, but if you actively participate in the fraud, then you must be punished without mercy. This moral distinction strikes me as less important than it’s made out to be by those in charge," says Douglas.

"Basically, I think the framers of the monetary union are embarrassed that they built a non-functioning system. To admit their mistake would hurt their pride, so they try to moralize the issue instead.”

According to financial analyst Patrick Young, the deadlocked discussions that led to the referendum still appear shut.

"Nobody is able to move. The International Monetary Fund is in a tight corner and risking internal dissent. The European Union is in chaos. 

"Bulgarian currency is now circulating freely in northern Greece – signs that the end of the Euro is imminent," Young told Sputnik. The tragedy of the Troika is that they’ve ignored the people to preserve the construct of the monetary union."

"The plight of the people is tragic. The situation is not going to get better in the interim term, there will be many weeks of turmoil ahead and pain and suffering for the Greek people. It’s a wretched situation."

Jeroen Dijsselbloem, head of the Eurogroup of finance ministers said "difficult measures and reforms are inevitable," in order for Greece to recover.

Finance ministers are to hold emergency talks on Tuesday. And with chaos all around them, the Greek government says Prime Minister Alexis Tsipras has agreed to present a proposal to Germany’s Angela Merkel and on Tuesday. So perhaps Prime Minister Tsipras shares in the people’s hope – and that hope remains firmly inside a Pandora’s Box.