A group of people having lived in
Myth 1: Debt crisis occurred because
The Greek debt crisis is often attributed to the country’s ‘bloated public sector’. To start with, Greek public expenditure as a percentage of
A large part of the financial press attributed the crisis to ‘excessive’ government wage expenditure as a percentage of
Irrational public spending on armaments has always been there, and therefore it cannot be held liable for the deficit crisis; it is however one of the factors that have deteriorated the country’s finances. Some German and other politicians that have complained about the ‘excessive solidarity displayed towards Greece" miss the point that their own countries are at the same time depending on the Greek military spending to support their military industries.
The current deficit is mainly due to the inability of the state to generate tax revenues, rather than due to increased spending. The reduction of corporate tax rates and the illegal tax evasion by big corporations and wealthy individuals has brought the Greek deficit at its present heights: it is estimated that €20 billion are still owed today to the Greek state by no more than 8,000 persons and businesses recorded to have committed tax fraud. This is twice the amount of debt that
Structural weaknesses of the Greek economy exposed it to speculative attacks. But who is to blame for these weaknesses? The continuous austerity regimes of the last decades, also linked with the European liberalisation agenda and the country's entry into the Eurozone, have led to a superficial and short-term development rather than a real one. "Development" was supported by sectors with no long term perspectives, like transportation of commodities and selling away public property, to the interest of a small Greek elite. The Greek governments' obscure reporting of Greek public finances is also to blame. But they were not alone on this: the mess has been created in cooperation with global banks like Goldman Sachs, which was hired as a consultant by the Greek Government, and is now under legal inquiry in the
The defiicit crisis took its gigantic dimensions only when speculators chose