How Everything Changed When Greece Joined The Euro

How Everything Changed When Greece Joined The Euro

Joe Weisenthal






As mentioned earlier, the forthcoming edition of the NYT Magazine has a great feature on life in Greece today, and the human side of total economic collapse.

The following passage really stands out:

“This is a country with 300 days of sunshine per year,” he began, proceeding into a rambling, fast-paced discourse, the central point of which was that in buying into the euro, Greece tried foolishly to mimic other countries and in so doing shifted away from its natural advantages and way of life. “Working in offices is good in countries where there is lots of rain,” he said. “Greeks don’t need to be in offices. Athens has doubled in size in a couple of decades — it’s now half the population of the country! Two-hour traffic jams, man! After we joined the euro, the mentality totally changed. Suddenly it was like if you still live in the small village where you were born, you must be retarded. So Greeks left their islands and their villages and moved to the city, and they became maniacs. They started expecting loans and handouts.”

The modern Greek mentality, according to Evmorfidis, is a hyped-up version of the debt-ridden American consumerism of recent memory. “Greek people would take out a loan to buy a luxury car so they could say, ‘I have money,’ ” he said. “Crazy! I would run into someone I used to know, and suddenly he’s talking to me about the stock exchange. I say: ‘Come on, man! What do you know about the stock exchange? Let’s talk about apples and olives!’ ”

There's a lot of meat in those two paragraphs, since this really gets at the heart of the problem. One of the premises of the Euro was that the peripheral countries could become competitive by mimicking other, wealthier countries. In theory, that mimicry was supposed to take the form of increased industrial competitiveness. In practice, the mimicry became an obsession with credit, cars, and the stock market. On the surface that looks like economic progress -- obviously it wasn't.

This also basically confirms a stereotype, which is that in a country with 300 days of sunlight a year, the inclination to "Go German" in lifestyle isn't realistic. That's often cited as oen reason the economies haven't integrated, so it's interesting to hear it on the ground from the Greek perspective.

And again, just the obsession with debt really explains a lot, as it undermines the idea that Greece faces a "fiscal" crisis.

We've called this chart, the "holy grail" for understanding Greece, as it shows nicely the connection between credit and buying imported cars.





Reuters




This is where the trade/balance-of-payments problems come in, and from there it was only natural that the debt would A) eventually wind up with the government and B) lead to a collapse.