WHY WHAT HOW OF GREECE - PART II - A SOLUTION OFFERED BY ETHMOS

Mr. Nobody’s solution : are you brave enough to implement it???

Greece has been receiving the money/cash/financial help from European Union, International Monetary Fund [IMF] and the European Central Bank [ ECB ]. This holy trinity has just now sanctioned a fresh package of 7.45 Billion Euros. This package will be used towards payment of earlier loans sanction by EU and IMF so that fresh line of credit can be sanctioned in the near future.

The holy trinity had been trying their level best to avoid Greece bankruptcy. Why Greece bankruptcy  is such a big issue? We know that this might trigger the economic crisis in other EU member nations as well, but that is not an excuse  for the world fraternity.

Restructuring package has come up at the right time. Henceforth we will be using the term restructuring instead of bailout package because the third bailout is nothing but restructuring of the existing credit facility of Greece (Restructuring is nothing but giving a loan to repay the existing loan or just extending the repayment period of the existing loan). As Greece will not be paying anything, instead Greece has been sanctioned a fresh line of credit so that it might not default in its repayment commitments towards the holy trinity. This is a farce in the face of the world that Greece is paying to its lenders.

But this financial help is not going to solve the problem of Greece in the long run. Germany has been manipulating the EU decision with their pristine presence on the board. However, nobody has come out in the open to accept this elephant in the room situation.

The exports are at all time low, Greece is fighting the worst inflation and unemployment is at all time high. We at ETHMOS are of the view that “Spade is a Spade”. Nobody is going to pay the people for sitting idle. At present, Greece is fighting against natural calamity as well.

We at ETHMOS have come up with a pragmatic approach to the Greece problem.  But before we suggest our solution, just for our layman readers, we would like to simplify the solution a bit.  In our previous article, we had given the analogy that if you feed a person free of cost for 10-15 years and then suddenly tell him that you need to work for your food, there will be resistance from the person to do so.  The same has happened in Greece.  Years and years of free government support in the form of generous pensions and other public facilities without proportionate revenue sources have primarily led to this situation in Greece. Presently Greece is like a small household which is outliving its sources and means of income and has got into a debt trap just to maintain its standard of living.  But now the debt has increased to such a high level that the creditors want their money back but the people in the household are not willing to work to repay the debt.  In such a situation, what is needed is the WILL of the people to work hard towards generating income for repayment of the debt as well as sustaining the family.  Here is where the austerity measures are required.  When you don't have enough money, it is obvious that you need to reduce your unnecessary expenses drastically.  But who will pay the household for its services or work?  First the household has to find out its strengths as to what sort of work it is good at doing and focus on the same to generate revenue.  But whatever money will be generated, a major, say 99% portion will go towards repayment of the debt since becoming debt-free is the primary objective of the household.  Hence, only 1% will be left for consumption for the household.  But in such a situation, in order to avoid collapse of the household, it is incumbent on the creditors to provide minimum sustenance to the family like food and healthcare so that they can focus on their work and repay the debt timely.  This is what we are suggesting for Greece.  So, here goes:

1.  Pay in services – Old is Gold - Use the barter system

Greece can request EU members by offering its  maritime service for international trade and commerce. The payment of these services will be credited to the ESCROW account and the interest will be paid to the creditors first and later the money will be utilized for the general administration. At the same time Greece can offer its services to UN mission where the transportation of cargo is required. However this time it will not be a goodwill gesture.  For oil and other imports Greece will pay in services in the form of maritime services to the importing nations.

2. Mandatory use of public transport

 As an austerity measure the country should make it mandatory that public transport should be used. Other way of travelling such as cycling and walking can be promoted . As this will save the cost on fuel which will be a burden on the exchequer for importing the same. This will serve as saving for the government exchequer which can be used at a more appropriate manner.

3. Implement barter system within the country

As already mentioned - Greece does not have money, i.e. CASH to pay anybody.  So, is printing cash the problem.  NO - because printing more money will only increase the inflation and plus printing has its own humongous costs involved. The best way forward is to utilize the unemployed and jobless people in various areas where skilled/unskilled labour is required to meet the basic necessities of food, shelter, and clothing. Government should use the unemployed people to develop infrastructure, agriculture production, textile production, and any other ancillary services which are required for day-to-day sustenance of the economy but the payment will not be made in the form of cash but in the form of commodity such as food, clothes, and free shelter. The government should be firm that the food shortage should not happen in the country, as the food inflation at this point of time will destroy the whole economy.  A particular amount of ration will be sanctioned to each person [jobless people] depending upon the services they offer like doctors, engineers, teachers, lawyers, plumbers, etc.  but a minimum amount of ration needs to fixed regardless of the services offered and depending upon the members in the family.  Greece should do the MOU with other countries as well whereby these services can be offered by these professionals in other countries at a cheap cost and the much required Euro & Dollar currencies can be generated.

4.  Made in Greece

Government should request its people to use and consume the products manufactured and commodities grown in Greece as far as possible as this will directly increase the Gross Domestic Product (GDP) of the country.  This will also help in strengthening of Made in Greece as a brand.

5.  Restriction on Cash

Last but not the least - absolute and complete control of CASH by the Government.  As we have already explained in our previous article (click here to read why cash is the bane of all problems in the economy and how to solve it)  should encourage the people to use the e-payments, commodities, or services as a tool  to  purchase instead of cash.  This will drastically reduce the pressure on the Central Bank of Greece.

  

At the end, we would like to say that “ Tough time never last; tough people do. “

Happy Ethmos!