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Greece Installing an Interim Government to Weather the Fiscal Storm

Prime Minister Papandreou, of former Greek Panhellenic Socialist Movement (PASOK) fame, was elected to office in a landslide victory in 2009. Over the weekend, however, Papandreou agreed to step down as Prime Minister and today was working in concert with the New Democracy Party, the other dominant Greek political party, to create an interim government to help Greece comply with the conditions of their internationally-funded bailout. At the same time, EU finance chiefs were meeting over in Brussels discerning the best way to calm the jittery markets and stop the crisis from spreading throughout 17-nation currency union. Sounds like some good times in the eurozone:


Greece’s main political parties agreed over the weekend to create a 15-week government tasked with enforcing the terms of the latest €130 billion ($179 billion) rescue package before elections. The parties were still in talks to name a prime minister for the interim administration. ...

But Jean-Claude Juncker, prime minister of Luxembourg and chairman of the Eurogroup, said he expected no decision Monday on whether Greece would get the next installment of €8 billion ($11 billion) in bailout money.

“We have some time to discuss this question,” Juncker said.

German Finance Minister Wolfgang Schaeuble said that before any decision on the next payment could be made, Greece’s two main parties had to make a “binding” commitment that they will implement the terms of the second bailout agreement.

Meanwhile, Italy was also due to get some scrutiny at the meeting. The country has quickly become the main concern for investors in the debt crisis as its government appears unable to push through much-needed reforms. Its financial failure is not an option as its economy would be too expensive to bail out.

Premier Berlusconi is facing similar heat to step down in Italy, but he's so far staunchly resisting the pressure. Italy has fearsome debts and a painfully slow growth rate, but unlike Greece, Ireland, and Portugal (the three countries that have already been rescued), Italy's government has dug so large a hole that the EU cannot afford to bail them out, too.


As BBC asks with two differing side-by-side opinion pieces, "Should we feel sorry for Greece?" On the one hand, the for-sympathy piece points out, it is disheartening and disturbing that a mainly guiltless up-and-coming generation is going to be saddled with the dire fiscal consequences handed down by previous generations of feckless moochers. American is quickly striding down the same path, and it may be harder than we realize to turn back. On the other hand, as the forget-sympathy piece points out... get it together, Greece, and don't act like nobody saw this coming. It's called socialism:

There's a popular new parlour game in Europe, where players complete the sentence: "Did you know that in Greece…?"

Here are some winning examples:

  • The railway system would be cheaper if every passenger was taken to their destination by taxi
  • Every MP has the right to an official car
  • There are more Porsche owners than taxpayers declaring an income of over €50,000 (£43,000)

Some answers may stretch the truth, but the bottom line is that Greece has evidently squandered the benefits of being in the eurozone in a quite startling way.

Instead of using low interest rates and the efficiencies of the world's largest single market as a mechanism to drive economic modernisation, Greek politicians continued their game of buying support by splurging state largesse.


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