The rioting started December 6 after police shot and killed 15-year-old Alexandros Grigoropoulos. His death triggered a fierce reaction across the country.
But Alexandros's tragic death was simply the spark. The real fuel for the fire came from Greece's troubled economy.
Many of the people rioting are angry about the government's handling of the economic crisis. The unions want higher social spending, wages and pensions. Greece's two largest unions, the General Confederation of Workers of Greece (gsee) and the adedy civil servants union, had planned a public demonstration in protest of the failing economy before Alexandros's shooting. The melee caused by this huge demonstration merged with the mass youth riots to create chaos on city streets in Greece and grind the nation to a standstill.
The Greek government can do little to fix the nation's economy though. Greece's fate was, in many ways, sealed seven years ago.
In 2001, Greece adopted the euro, as a member of the European Union. At that point, Greece's succeeding economic boom and following bust became inevitable. Columnist Ambrose Evans-Pritchard explained the situation in the Telegraph: “[T]here is obviously a problem for countries like Greece that were let into emu [Economic and Monetary Union] for political reasons before their economies had been reformed enough to cope with the rigors of euro life—over the long run. …
“Greece's euro membership has now led to a warped economy. The current account deficit is 15 percent of gdp, the eurozone's highest by far. Indeed, the deficit ($53 billion) is the sixth-biggest in the world in absolute terms—quite a feat for a country of 11 million people” (Dec. 10, 2008).
Greece's foreign debt is a staggering 91 percent of its gross domestic product. Greece's banks are in crisis. The government has pledged to bail them out with €28 billion. But with Greece's economy in such bad condition, the Greek government will have difficulty borrowing the €28 billion it wants to give the banks. This could mean it will have to take the money away from its social welfare programs. That would make social unrest in Greece even worse.
There is no way out—and, according to some analysts, it was designed from the beginning to become that way. Those analysts agree with the brutal facts unfolding in Europe.
Bernard Connolly is a civil servant who authored The Rotten Heart of Europe, which exposed the evils of the European Exchange Rate Mechanism and the truth about the European Union. Over a year ago, he explained the process in an article in the Telegraph: “[T]he EU quite deliberately created the most dangerous credit bubble of all: emu. And, whereas the mission of the Fed is to avoid a financial crisis, the mission of the ecb [European Central Bank] is to provoke one. The purpose of the crisis will be, as Prodi, then Commission president, said in 2002, to allow the EU to take more power for itself. The sacrificial victims will be, in the first instance, families and firms (and banks and investors) in countries such as Ireland …. Subsequently, German savers (or British taxpayers) will bear the burden of bailouts that a newly empowered 'EU economic government' will ordain” (Aug. 20, 2007, emphasis mine).
When the current European economic union was formalized, it became inevitable that countries like Greece would eventually face economic crises. Through the inclusion of Germany, the economic union allowed for European-wide interest rates that were much lower in countries like Greece than would normally have been possible. Low interest rates encouraged massive borrowing and artificially stimulated a boom. But as with all bubbles, eventually it popped. What Greece and other countries in southern Europe in particular are dealing with now is the aftermath.
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