How Some Serious Thinking Could Have Saved Us From A Lot Of Trouble

The current crisis can be described by the triptych: Superficial Understanding, Uncertainty, Panic.

There is no excuse for the high-profile analysts, whether academics, bankers, or government advisors, not foreseeing the mess we are in at the moment. The methods employed to resolve the banking crisis, prepared the national debt crisis with mathematical certainty. The governments increased their deficits and public debts in order to bail out the banks and protect the banking system from collapse. This way, the problem was moved to a higher level, creating a global public deficit bubble that was ready to burst.

This means that the current crisis should have been forecasted. However, instead of analyzing things rationally, the markets were doing business as usual, assured in their dogmas that big countries don't go bankrupt, just like they were doing business as usual before the banking crisis erupted, assured in the dogma that big banks don't collapse. This irrational assurance, this superficial thinking led to awe and surprise when a country actually collapsed. When Dubai World announced on November a debt standstill, the markets run amok, and decided Greece would be next.

The pressure put on the Greek bonds made it impossible for Greece to borrow money from the markets. In this sense, the markets' fear became a self-fulfilling prophesy, and Greece would have to announce a debt standstill were it not for the high-level diplomacy of the Greek Prime Minister (and President of Socialist International) George Papandreou, who managed to get political and economical support from the rest of the Eurozone in an unprecedented 110 billion euro package.

While Greece took a reprieve, uncertainty rose with regards to the economies of Portugal and Spain, which led the Eurozone leaders to decide upon a historic 750 billion euro package, at the dawn of what would otherwise have been a Black Monday. The panic was averted, for now.

Yet many economists, instead of making insightful analyses of the crisis, they speak of a "Greek disease" or try to explain how the economies of the UK and the US are not like Greece's because they can devalue their currency. Their superficial understanding of both the Greek and the global economy is part of the problem. Instead of helping the markets form a rational approach, the lack of serious thinking adds to the fear and poses a danger to world economy.

The Greek problem

Greece faces grave challenges. A series of mistaken political decisions made by the previous government, along with issues that have been troubling the Greek State since its foundation in the nineteenth century, culminated in the recent crisis that threatens the stability of Europe.

How can Greece unloose this Gordian knot? Well, since it's political decisions that created it in the first place, it will take political decisions to unloose it. After all, it's not a metaphysical problem nor one of Fate's games. The Gods are not to blame for this sad state of affairs. It's about politics. And political problems are solved with the right political decisions.

Thankfully, the current government appears to have what it takes to deal with the monster the previous government created. It has already begun reforming a State on the brick of collapse. Let the wind of change blow! As long as Greece moves with determination and decisiveness towards the right direction, we need not fear the beast.

"If Norway's all right, that's enough for me!"

I took my staff, therefore, slung a rucksack over my shoulders, and headed for the mountains. It was the time when the Germans were forcing their way into Norway and fighting to subjugate it.

One midday I heard a savage voice high above me as I was traversing the foot of Psiloriti.

"Hey, neighbor, wait a minute! I want to ask you something!"

Lifting my head, I perceived a man draw away from a boulder and come tumbling down. He descended with giant strides from rock to rock; the stones rolled away under his feet, a great clamor began, the entire mountain seemed to be tumbling down with him. Now I could distinctly see that he was an immense, elderly shepherd. I stopped and waited for him. What could he want with me, I asked myself, and why such eagerness?

He came close to me, halting on a rock. His uncovered chest was hairy and steaming.

"Hey, neighbor, how is Norway getting on?" he asked with panting breath.

He had heard that a country was in danger of being enslaved. He had no real idea what Norway was, where it was located or what kind of people lived there. The one thing he clearly understood was that liberty was in danger.

"Better, grandpa, better. No need to worry," I answered.

"Thank God," roared the old shepherd, making the sign of the cross.

"Want a cigarette?" I asked him.

"Bah! What do I want with a cigarette? I don't want anything. If Norway's all right, that's enough for me!"

Saying this, he swung out his crook and climbed up again to find his flock.

excerpt from "Report to Greco", by Nikos Kazantzakis, translated by Peter A. Bien