Greece 2009 – Romania 2010:This reminds me of something…

I will not analyze to you the Romanian situation, but just the Greek one. All of you have your own opinion about Romania and it is not difficult for you to compare and realize what I am talking about… (I just suggest to you to compare Greece of 2008 with Romania of 2009, Greece of 2009 with Romania of 2010 etc)

(part 2, to read part 1 please press here)

The problem was known, but carefully “hidden under the carpet”
Everyone in Europe knew about Greece’s problems. But the whole situation was buried, carefully “hidden under the carpet” (you know… this is how some ladies clean their homes, moving all dirts under the carpet, so as not to be visible by the guests…)

The ex Greek Prime Minister shared the same beliefs with Mr Baroso from European Union and it looks that “the Greek friend” was protected, in exchange of help for elections etc.

(During 2010 it has been revealed that European Union had sent several letters, informing Greece that the situation looks “our of control”, or that “the deficits will end up much higher than the announced ones”).

Summer of 2009
In June 2009, the Greek Prime Minister lost the opportunity for early elections, combined with the elections for the European Parliament. This was his shot to either win for the third time or to lose with small margin.

During the summer of 2009 Greece was on fire (again), while the economy was collapsing. Noone was paying taxes and everyone was upset with the Government. (People love forgetting their obligations as citizens and then complain for their politicians)

The elections of October 2009
The Greek Prime Minister had a very thin majority in the Parliament, based on just one vote (151 from 300). His options were mainly two:

• To implement tough measures, in order to restore the fiscal order in the country and not to risk Greece’s future.
• To ask for early elections again, in order to avoid the difficult decisions for the near future.

Although too many people thought that it would be better for him to reform his government, implement the measures and try to convince the Greek society with arguments, he chose the second solution.. Elections were set for October 4^th.

“There is money available, we don’t need new taxes”
Opposition leader, the socialist Giorgos Papandreou, knew (from the polls) that he had an easy work to do. He was expected to obtain a victory. This is why some people were surprised when he stated that “there is money available, we don’t need new taxes” (as the Prime Minister declared before elections). He chose to pamper the voters’ ears with nice words.

And the voters loved him! He got a clear victory, reaching 43%, while his opponent fell to 33%, the lowest % for the Greek conservative party over the last 45 years (at least).

So, during the autumn of 2009 Greek voters chose to avoid the painful measures, voting for someone who promised “better days for the poor, without touching the middle class”.

“Playing the deaf” (again)
Right after the elections Greece woke up and discovered that “things are not as we expected”. The deficit in the State’s budget was double than what the previous government was saying! Journalists said that the new government knew this before elections. The Governor of Bank of Greece had informed them. But still the situation was very critical.

What did the new government do? During the first months, nothing! It continued “playing the deaf”, pretending that it did not need to do something urgent. “Soft measures” again, while the country was like a “car driving with 200 km / hour speed, towards a mountain”…

Facing the ugly reality
No one knows the exact moment when the new Greek Prime Minister changed his mind. Many people say that it was the annual world economic forum, at the Swiss city of Davos. There he discovered that Greece was considered “the black sheep” of Europe. He was even “chased” at the stairs of the hotel by a journalist, who was very rude and tried to obtain answers even in the… elevator!

Greece had now two options:

• Either to implement even tougher measures.
• Or to literally bankrupt as country, unable (refusing?) to pay its debts.
• The new Greek Prime Minister was wise enough in the end. He chose for his country the painful measures and started implementing them after the agreement with the International Monetary Fund. The other option, bankrupsy, meant that the country would return 10 – 15 years back in time, losing all it created meanwhile.

Results are…
Greece escaped the worst… The country started adopting measures which were delayed for 35 years or more. But ofcourse all these measures are not fair and they “hurt” the middle class and the poor people more than anyone else. The Greek State is still very sick. But now there are hopes that there is possibility for Greece to recover in few years time (allow me to comment that for this it will need more determined politicians).

Necessary clarification: Why was Greece bailed out?
Because Greece is member of Euro zone and noone wanted a country member of Euro zone to collapse. It would cause problems to the whole world, as a “domino effect”. (read more: Why Greece will NOT bankrupt in May )

In one phrase…
Greece denied the truth for years, trying to cover the problems. In the summer of 2009 the whole society was upset but neglecting any idea of reforms. During the autumn and winter of 2009 the country had to choose between measures or collapse. It took Greece a bit more, but it finally chose the measures. It was bailed out as it is member of Euro zone.

Romania is not a member of Euro zone.

Enjoy the rest of your vacation!

PS. Two years ago, during August 2008, I had shared with you my experience of what happened in Greece in 1999, compared it with Romania of 2008 and described to you what you should expect to happen in the following period: The market to fall. At that time I had received too many emails of people who criticized me for this approach (even if I didn’t clearly stated that the market would fall…). Now you know better than me what the reality proved to be.

For the ones who want to read these old texts:

05.08.2010. “Welcome to the avant premiere of our new film: Greece 1999 – 2008: This reminds me of something…”
Published on 5^th of august 2008: Welcome to the avant premiere of our new film!

Your comments back then:

1. Listening to you / Replying to your questions part 1
2. Keep answering your comments …and Financial Times of Romania
3. Listening to you…replies to your comments part 3
4. Replying to you – 4th part (and last…)

Also, interesting posts:

1. Poor Greece – Rich Greeks and Romania follows…Part 1
2. Poor Greece – Rich Greeks and Romania follows…Part 2
3. Poor Greece – Rich Greeks and Romania follows…Part 3