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Greece: A Default?

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Journalistic convention states that one should insert a cliché phrase about the eurozone in this introduction: "the Eurozone has turned a leaf" or perhaps "Greece has begun a new chapter in their economic comeback". Nothing of that sort has happened.

Political leaders have continues having 'crucial' meetings in which 'decisive talks' have occurred. This honestly just seems like a fancy excuse for Merkel and Sarkozy having more coffee and digestives. If only I could say in my lessons: "I have been talking and thinking decisively" rather than doing work and get away with it. So, if nothing revolutionary has occurred, what, you are asking in your mind at this moment in time, are you going to write about? Not much frankly but as they say, "the party must go on."

The woes for Greece continue despite a new government of Technocrats (academics who run the government such as economic experts) governing the country. As austerity continues, so does the frustration of the public. More and more senior economists and political figures are beginning to doubt whether austerity is the way forward; governments want growth yet if spending is cut then how exactly can growth be achieved? Greece simply cannot afford to repay its debts in the timescale it had previously agreed therefore it is asking the people who lent it money to write off some of the debt. The EU hopes that quick deal for a 50% write off can be agreed and on the day of writing this (19 January), European markets have risen amid hopes that a Greek debt deal is soon to be reached. However this is just another example of volatility in the markets: one day they rise and the next, they slump.

The trepidation doesn't stop here. The situation with regards to Spain and Italy remains dismal with high debts and a future flooded with austerity. France also looks to be vulnerable as its credit rating was downgraded by the ratings agency S&P (Standard and Poor's). Rating agencies rate countries upon their creditworthiness. If the country does not have sustainable spending plan or very high debt, it means that lending to the government is risky as they may not be able to pay it back. The top rating AAA was snatched away from France and Austria by S&P and not long before, certain French politicians had been sniping at the British economy saying how you would rather have a French economy than a British economy. It seems likely that many politicians in Britain would have been secretly pleased that the French had been downgraded. However, these downgrades added to already extravagant levels of uncertainty within the European markets.

What about the UK? Well the UK is trudging along, as always. Growth is slow; unemployment rose by 118,000 in the three months to November. The economy seems fairly stable (for now) although the future of its stability is in doubt with the uncertainty in the Eurozone continuing.

To conclude, in fact there isn't really a conclusion that I can give as I'm decisively thinking the conclusion in my mind. Frankly, nobody appears to have any idea regarding a solution for the crisis. A debt crisis on such a level hasn't been experiences before and the effects of weak economies are multiplied due to globalisation and how currents in this modern age are more closely linked than ever. A suitable metaphor for the eurozone would be an obese person who can't afford to go to weightwatchers. Similarly, the governments who are 'obese' in terms of their debt cannot afford to reduce it and pursue austerity due to lack of public support. This article must sound extremely pessimistic and a failed attempt at satire however the picture of dismay that has been painted by this article is truly a pathetic fallacy of the mood of politicians and ordinary people in the eurozone.

In my last article concerning the eurozone, I said that good news was 'to be continued'. Alas, one must prolong this continuity until next time...