Going Soft On Greece
Posted 07/18/2011 07:09 PM ET
Diplomacy: Secretary of State Hillary Clinton on Sunday praised Greece for its economic policy "leadership." Wait a minute: Isn't this the country that lied to its creditors and has just stuck U.S. taxpayers with an IMF bailout?
Greece is such a wretched mess that it's hard not to feel sorry for it. It's racked up $329 billion in debts it can't pay.
Now it's passed an austerity package in exchange for a $145 billion bailout from the International Monetary Fund and has its hand out again for a bailout from Europe, which will be hashed out Wednesday.
Beset by riots from its own clueless citizens who refuse to recognize that it's out of money, Greece has become pathetic. In such straits, it's tempting to offer its government some encouragement.
But the hard fact remains that Greece's woes are self-made, making Clinton's words of praise reek of weakness and disingenuity.
"We stand by the people and government of Greece as you put your country back on a path to economic stability and prosperity," Clinton said, appearing with Greek Foreign Minister Stavros Lambrinidis and praising Greece for its recent austerity measures. "Committing to bring down the deficit and passing the medium-term fiscal strategy were vital first steps. We know these were not easy decisions. They were acts of leadership."
Leadership? Actually, in other places, this is known as paying one's bills and living within one's means.
Greece, though, pretty well amounts to the Bernie Madoff of governments. And its late efforts to correct course are driven by the fact that it's bankrupted itself.
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Its bad path started from the beginning of the crisis.
• Having promised the European Union it would never let its deficit go higher than 3% of GDP upon joining in 1981, it blithely ignored that and racked up a deficit of 10.5% of GDP without ever seriously trying to cut the size of its government. Today, its endless spending has left it with debt worth 143% of GDP.
• Greece's debt crisis was marked by a notable dishonesty. Working with investment banks such as Goldman Sachs, it borrowed more than it could repay to finance its bloated government and then hid the debt from the European Union and its creditors.
Using an off-balance-sheet currency swap arrangement since 2002, it swapped its own debt into euro debt to keep it off the official statistics.
That enabled Greece to issue $15 billion worth of bonds it couldn't have issued under honest conditions.
• The country has also been plagued by corruption and a riot-prone citizenry that not only has no idea what big government costs, but has clearly been taught by its own government to always blame others.
This is the sorry reality of Greece. As Clinton pays a solicitous visit, she does so knowing that the U.S. and Europe have been saddled with bailing Greece out.
The U.S. piece of the IMF bailout is $39 billion, money from U.S. taxpayers she purports to represent.
Instead of coddling Greece like a spoiled debutante, wouldn't it have been better to deliver an icier greeting to a country that has practiced so much habitual dishonesty? Some tough love might ensure Greece's government recognizes its error. After all, its weakness not only hurts itself, but leaves it as an enfeebled NATO ally that can no longer pull its weight.
But there are several reasons why that's not happening.
First, Greece's problems are big, and a recalcitrant Greece could pull down some big continental banks.
So Hillary's conciliatory words are little more than the weakness of a banker who wants a faulty creditor to keep paying. That's not a good position for a superpower to be in against a beggar state that isn't even sure it needs to reform.
Second, the U.S. federal debt showdown has the U.S. sadly in about the same situation at home — too much borrowing and big government.
How the U.S. could exert any moral authority over Greece at such a time is hard to see. So while the U.S. is paying the Greeks' tab, it has a tough time telling Greece to live within its means.
Clinton may want to finesse everything, but it's obvious the U.S. position is one of a big government comforting another big government instead of standing up for the interests of the U.S. taxpayers. In the end, again, it's they who get stuck with the tab.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=578706&p=2Can't write this stuff. One of the most poorly mismanaged countries on the planet is being praised by pantsuit for their economic prowess. In other news, those who actually read about things besides Rupert Murdoch, the EU kleptocrats are on the verge of letting Greece "temporarily" default so that they can keep their Euro scam going.
Great work, Greece!
