Greek Austerity Measures and What They Mean for the Greeks -and The Rest of Us

Greek Austerity Measures and What They Mean for the Greeks -and The Rest of Us

June 29, 2011. With the slow and continual collapse of economies around the world, all eyes have been on Greece over the last few months. This is as they are the first of the members of the European Economic Union to possibly default on their repayment of loans. At present, Greece owes approximately $ 340 billion euros, roughly 1 and a half times its annual output.

If Greece does default, it will no longer receive any more funds from the EU or from other financial institutions, such as the IMF. As of this morning, the Greek Parliament has voted to implement the very strict economic measures which will curtail spending. The following highlights but some of approximately 30 sweeping changes that will face this small yet important nation.

The Primary Changes

Taxes.

Taxes will be raised on the small Mediterannean nation over the next 3 years or more. In a socialized nation, this often means an inordinately high tax rate.

Wage Cuts

A vast proportion of Greeks work for the Greek Government (such a position has long been a point of envy by others). By working in such a secure job, it is almost impossible to get fired or laid off. However, government workers will now be bringing home 15 % less money each month.

As well, given the rise in taxes, the private sector (which is quite modest in Greece) will almost surely follow suit for its employees. Coupled with the higher taxes, lower wage cuts mean that more Greeks may face destitution, even penury. At present, about 20 % of the populace is in dire straits.

Defense Spending Cuts

The cut to the military will be to the tune of around $200 million euros. This is one of the more sound cuts, given that Greece has no true enemies. While there has been enmity with Turkey for over 500 years, this has been reduced greatly over the last 20 years. In fact, a few years ago when it came to a vote as to whether or not consider Turkey for EU membership, Greece voted in the affirmative.

Social Security Cuts

The social net that Greece has in place for its elderly and retired will be cut by $ 1.09 billion Euros. This is truly disheartening for both the beneficiaries and the young, who must pay into the system to support their elderly retired. Perhaps not ironically, the demostrations in Athens today and in weeks past was primarily represented by these 2 demographics: the elderly and the young.

Luxury Levies

Tax the rich; the call has always existed, and so it shall now be. High-end luxury items will now be taxed quite heavily.

The Average Greek

The average Greek will suffer, like everyone in that fine nation. This is from the perspective of a person who lived in Greece for 2 1/2 years and maintains a relationship with its people and the country itself. Simply put, Greeks will have to change their ways.

Thrift shops

Greeks have always found it anathema (a nice Greek word) to purchase used clothing at thrift shops (which basically don't exist in most parts of Greece). Greeks purchase only new clothes or (God forbid) hand-me-downs from relatives. This will surely (and hopefully) change.

Sin Taxes

So-called "sin taxes" will probably be in order. Greeks, like most Mediterraneans, are very heavy smokers. By taxing cigarrettes, the Greeks might save a billion euros a year.

Alcohol. Greeks are rather heavy yet responsible drinkers (unlike most Americans and Mexicans, the Greeks only drink while eating). A tax on this product will also raise a considerable amount of revenue for the nation.

Food. Food is no "sin," by any means. However, a peculiar habit of Greeks occurs when they go out to a restaurant or tavern to eat. They generally purchase lavish amounts of food, eat between half and 3/4's of the food, and abandon the rest. To take food home in a "doggie bag" or container is considered almost a sin in itself. This too, will surely change.

The Rest of Us

Alas, it may be too soon to tell. Greece has passed the belt tightening (strangling?) austerity measures. Yet the Greek Parliament's vote is only the first step. Unions and conservatives there are highly opposed to the austerity measures, though there is little other choice for the nation.

As for the rest of the world, if all goes well with Greece, all else will continue to float, at least for awhile. The reality is that all nations are linked by debt. The nature of modern Capitalism, Socialism, and even Totalitarian-based Communism is credit and debt: we're all in this mess together.