Sun | Apr 23, 2017

Let’s not go Greek

Published:Sunday | July 26, 2015 | 7:00 AM

My guess would be that there might probably be a dozen people in Jamaica who genuinely care about what's happening in Greece. They may come from there or know someone who does. But generally, we've been talking about Greece as a proxy for talking about ourselves, and most of us have been upfront about it.

In that conversation, there have been mutterings that Greece somehow benefited from its shenanigans with the European Central Bank, the EU, and the IMF. For instance, when the referendum was held, there was support expressed by the BITU and a few others with the idea being that the Greek people had established their defiance to the International Economic Order, sent the capitalist dogs running, voted power to the people, yadda, yadda, yadda.

Rubbish! It's getting difficult to overstate what an incomparable jackass Tsipras has proven himself to be. However, commentators have been trying to capture the political immaturity of this man who took a very bad situation and made it magnitudes worse while betraying absolutely everyone in the process.

Matt O'Brian, writing in the Washington Post, summarised it nicely:

"Greece thought it had leverage when it had none, and, as a result, it's crippled its economy even more than it already was for nothing ... . The bottom line, though, is that the referendum didn't give Greece more bargaining power, like the government said it would, and now Athens will have to do as much austerity as before, and possibly more ... . This isn't even a Pyrrhic victory for Greece. It's a Pyrrhic defeat.

"Syriza's strategy, insofar as there was one, couldn't have been much more of a failure ... . So Syriza has incurred a lot of the costs of leaving the euro - like a financial crisis - at the same time that it's kept the costs of staying in the euro. There have been no benefits ... . It's an appropriately Greek tragedy that its anti-austerity party is now all but begging for the chance to do austerity."

Now that Tsipras has utterly capitulated, and the Greek economy is in tatters, the IMF has come forward after midnight to suggest that maybe some debt relief is in order. LOL. I figure that's just the sympathy we all feel for a man who's thrown himself off a cliff.

I'll flog a favourite quote one more time. In response to some local praise for Greece's recklessness, economist Damien King said: "I find it astonishing that anyone can look at the situation in the two countries and think that Greece is an example for Jamaica to follow and not the other way around." Dr King will not have lacked cause to be astonished.

In fact, there's no question that if you ran a plebiscite here like was done in Greece, and asked if we would rather not pay the debts, it would be an overwhelming victory for default. I myself don't find that surprising at all, and for a number of reasons.

 

Fear drives repayment

 

For one thing, my observation is that people, or countries, generally don't pay bills out of any moral acknowledgement of debt. And if that's so on a personal scale, how much more so when the debt was contracted, in your name, by some politician who you no doubt already despise.

Debts are paid for fear of the consequences of non-payment, meaning, fear of what the creditor can do to you through the legal system or by other retaliatory action. And as much as we would dearly love to stop paying, we have that small problem that other countries and creditors would remember and retaliate.

A friend of mine is fond of telling stories about how when someone wants to borrow money from him they find him anywhere. However, when it comes time for repayment, he now has to be the hunter, and the debtor becomes suspiciously scarce, his phones keep dropping and missing calls.

Anyway, when you consider the sacrifices that Jamaicans have made to arrive at where we are today, it would truly be a tragedy if we were to turn back and suffer the consequences.

Pensioners have absorbed pain that the Greeks were trying to avoid. Public-sector workers have accepted some depletion of their spending power. Those few of us who actually pay taxes have had to reach deeper into our wallets. Bondholders have taken haircuts. It would be mighty stupid of us now, collectively, to go Greek and head off in another direction.

There are many valid criticisms of the Jamaican Government for its failure to foster and drive growth-inducing projects, but there are precious few valid criticisms about its success in bringing the runaway debt under control.

The confidence inspired by the sound economic policy is palpable. Confidence is up above its average level during the last 15 years. People are most optimistic about jobs since 2008. Fewer people are pessimistic about the economy. The ratings agencies are upgrading the outlook on our future. The balance of payment deficit is the lowest it's been in two decades.

NIR stands at about US$2.5 billion. Inflation is the lowest it's been in almost 50 years. Interest rates are declining, and since Government has been curbing its appetite, institutions are flush, hunting projects for investment. Foreign direct investment was US$700 million in 2014.

On top of all that, this PetroCaribe Eurobond deal is a US$4.5 billion coup that will reduce our debt to GDP ratio from 138% to 123% this year.

There's no question that it's been a difficult time. But it was going to be difficult any way we took it. There was bitter medicine and eucalyptus oil in our future. Having taken a lot of our medicine, let's not go Greek and, through political expediency, snatch defeat from the jaws of victory.

- Daniel Thwaites is an attorney-at-law. Email feedback to columns@gleanerjm.com.