The economic situation in Greece is downright gruesome, and I have to wonder how bad the social unrest is to become there. The principal source of my pessimism is a piece from last October where Michael Lewis essentially argues that the situation is hopeless:
But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.
I saw a couple of updates to that unhappy picture this week. First up, James Surowiecki in the New Yorker gives an accounting of Greece’s rampant tax evasion, a point Lewis also makes rather starkly. Indeed, the Surowiecki piece reads like an Executive Summary of Lewis’s article, with each arguing that the social and cultural aspects in Greece are broken and are effectively impossible to fix.
The second piece is from Tyler Cowen in the New York Times, where he argues that the situation is pretty dire even without factoring in the social difficulties of implementing meaningful policy reform. Cowen’s piece discusses some of the difficult choices facing the EU, and reminds us that lurking in the background are the potentially large problems of EU members from Italy to Portugal to Spain. Cowen doesn’t have much hope, concluding that “There’s a lot of news on the way, but probably very little of it will be good.”
Well, enjoy your weekend!