Olympian fail

The financial crisis in Greece has been absorbing me for some time. I blogged about it last year and have been following it in the news since.

For those who haven't been following the drama in depth, we present the QO's 'Dinner party expert' guide to what's gone wrong, Hellenically speaking. Should your fellow diners look at you with admiration, seek your opinion on many other topics you have no real idea about, and propose that you sleep with them forthwith, please mention this blog. Should you find that your fellow diners' considered opinion is that you're a tedious, economically illiterate tit, well, you're on your own. Repeat after me: 'Believe Nothing You Read on the Internet'.

All that said, here are some notions that should at least provoke interesting debate.

The root cause of the Greek economic crisis is twofold: Europe - or more precisely, the Euro - and the Greeks. Joining the eurozone should not have been possible for Greece under EU economic criteria, but of course the EU leaders were gagging for another country's worth of taxpayers to join. Little did they know that the Greeks are notoriously bad at paying tax. Greek companies are also very bad at paying tax. The black economy is rampant in Greece at all levels.

Having put the Greek economy (officially largely based around the public sector, tourism and things to do with goats) into the eurozone, the Greeks can no longer let their own currency float... sink... to an appropriately low level, but must perforce stay where the euro stays for the good of Germany. This sucks, economically.

Governments have virtually no sources of income other than tax revenues and borrowing. Since annual Greek tax revenues amount to around 57 euros and a handful of olives, this means that huge borrowings are required. This money has indeed been forthcoming, in large part from avaricious private banks across Europe and the rest of the world, plus monies from other European states.

The private banks, now realising that the Greek sovereign debt they hold is increasingly worthless (as nobody really wants that many goats or olives), are getting very edgy and don't want to lend any more money. Since huge numbers of Greeks are employed by the Greek state, which doesn't have any money of its own, the monthly salary cheques might be a bit of a problem. More importantly on a global basis, they won't be able to meet the next round of sovereign debt repayments. This is the dreaded sovereign default, which everybody says can never happen and often does. (See Iceland and Argentina for recent examples.)

And so our EU leaders, those wise men of Brussels, are also rather troubled. They have a sneaking suspicion that the private banks not only hold huge amounts of near-worthless Greek debt, but all sorts of other toxic "assets" and are in reality worth no more than your average doner-kebab stall. Should Greece default, some of those banks will come unravelled big-stylee and doubtless come running to national governments to be propped up. With humungous wads of taxpayers' moolah, which is in somewhat short supply at the moment following similar cock-ups over recent years.

Other members of the Euro might join in the game of fiscal dominoes. Ireland and Portugal are looking increasingly bollixed, and Spain's not too good either.

More importantly still, for the evangelical believers in the European project, this scenario could lead to an economic state of affairs known to city traders as "tits-up for the Euro". This would not look good on the CV of the Brussels Gnomes, nor would it help the wider European project, i.e. the United States of Europe, complete with European Government, common currency, common laws, same rules on doner-kebab stalls, care of goats, the lot. This is not going to seem an appealing prospect to member states if they can't even get the dosh sorted.

Most money traders and independent economists say that Greece will default. There's no way it can be avoided. The EU is desperately trying to find a way of pumping enough money in to stop a default, despite the fact that lending more money, at high interest, only makes things worse. The very best that might be achieved will be to postpone the inevitable for a bit, and hope that in the meantime all those banks magically find themselves with so much real money that they don't mind losing a bit on the Greek debt. Frankly, even this will take some doing.

So there you have it. The QO's guide to the Greek crisis. Oh, and I have a solution, too, and it's really quite simple. Sell Greece - lock, stock, barrel and goats - to Rupert Murdoch. He can make money out of any old tat, as his TV stations and newspapers prove. I have every confidence in his ability to make millions out of goats. Sorted.