Following the Greek Parliament’s emergency decision to approve a second round of austerity measures in the country, gold prices, the Australian dollar, Asian shares, the value of the euro, and instances of rioting and violent crimes have increased dramatically.
The Parliament’s move was made in response to European Union and International Monetary Fund (IMF) demands that the Greek government display a “clear commitment” to enforcing the repayment of its debts. Should any doubts of such motivations linger in the minds of these international lenders, they have threatened to withhold the bailout money from Greece altogether. Without receiving the massive loans being proposed, which amount to a grand total of roughly $170 billion, Greece will inevitably cross the threshold of debt into default status and be rendered unable to make good on repayments of the money it has borrowed.
The EU and IMF have recently expressed dissatisfaction with the Greek government’s present level of austerity enforcements, and in turn have issued the ultimatum that has prompted the decision by Parliament to further reduce government spending and social programs, meanwhile increasing its rates of taxation tremendously. Referencing the allegedly lax enforcement of the austerity measures already in place in Greece, Socialist Parliament member Sofia Yidannak had this to say: “The delays [in enforcement] have our own imprint…we have finally learned that you have to pay back what you have borrowed.
The new measures, passed on Monday, February 13, 2012, seek to cut 15,000 public sector jobs, as well as lower Greece’s minimum wage by a whopping 22%. The reception by the people of Greece to the program’s proposal has been overwhelmingly negative, and mass demonstrations, looting and rioting, and countless altercations between police and the protestors have begun as of Sunday, February 12, due to the public’s discontentment and government-induced oppression. In Athens, over 100,000 protestors have taken to the streets, and the scene has quickly turned ugly as demonstrators have begun looting and militant police forces have been deployed, resulting in numerous and predictably violent altercations.
Described as the worst riots in Greece since 2008, the casualties have unfortunately been numerous. At least 55 protestors have been arrested, and police have reported that around 150 shops have been looted and that 34 have been set ablaze. Dozens of police have been injured in clashes with the mobs, perhaps justifiably in response to their efforts to stifle the people of Greece’s free speech and outward dissent. Tear gas, among many other crowd control tactics, have been utilized by Greek law enforcement, and the scene is undeniably chaotic.
Despite the backlash prior to its passing, the bill was urgently approved the following day amidst the social unrest, perhaps in order to ensure that the measures could be enacted as law before the people of Greece could prevent this from happening. Of the 278 members of Parliament who voted on the issue, 199 voted in favor of passing the new austerity measures. Those who opposed it have since been expelled permanently from the ranks of Greek Parliament.
Strangely enough, however, some have found the promise of a second bailout of Greece to be reassuring. The idea that Greece will accept the bailout rather than default on its debt has restored many investors’ confidences for a variety of reasons. The primary origin of this boost in financial morale stems from the possibility that a Greek default could very likely jeopardize the status of the entire euro itself as being a viable currency. Prior to the passing of the bill, investors have been leery about the stability of the euro, dumping many of their euros into the market in exchange for other assets and currencies that appear to be more stable in the long-term. The same has happened in gold markets; consequently, gold prices fell as wary investors sold their reserves and decreased both the price of and market demand for the precious metal. However, the decision by Parliament to move ahead with the new austerity program, as well as the second bailout, has apparently reassured investors into buying again, and the sudden spike in gold prices is reflective of this subsequent new wave of gold purchases.
But gold is not the only financial instrument that has suddenly seen an increase in market value following the enactment of the Greek austerity bill. Asian shares, silver prices, and the value of the Australian dollar have also started to climb. Again, this is as a result of the restored confidence in the euro now that it is no longer threatened by the potential of a Greek default. As unnatural as this ego-boost in the world of finance may be, having resulted from the actions of government interventions in the market and made possible through centrally-controlled and printable fiat currency enforced at gunpoint and mandated to be the EU’s sole “legal tender”, countless individuals accept these irrational practices wholeheartedly. Many even advocate them.
To quote Phillips Futures analyst Ong Yi Ling’s reference to expectations of how high the price of gold will manage to climb, “For gold to break the $1,800 level, we need more [austerity and bailout] measures, I would say.” Tragically, it is obvious that many people, including respected investors and analysts, expect this sort of market meddling, value distortion, crackdown on freedom and personal finances, extension of debts, and generally fraudulent economics and even it. Most importantly, however, the people of Greece are continuing to express contrary sentiments, and rightly so.
It is both challenging and interesting to speculate for how much longer the euro and other printable, governmentally-enforced curriencies (including the United States’ own dollar, the Federal Reserve Note) which lack a foundation of assets to back them will continue to be valued in the marketplace. I suspect and hope that it will not be for very much longer.
For inevitably, as the bubbles that are made possible by such volatile, exclusively-controlled, and essentially worthless currencies continue to be created and are then subsequently unraveled–undoubtedly leaving economic destruction and poverty in their wake–I anticipate that individuals all around the world will continue to catch on to the understanding that these (and many other) problems have been devised and perpetuated by those who created and enforced the use of manipulable currencies in the first place: central banks backed by government force. Greece, for instance, has already discarded the insane notion that bailouts and the further increasing of debt in general could ever provide a solution to their woes. And while it is most certainly unfortunate for the people of Greece that they should come to serve as the early recipients of an invaluable (if cruelly delivered) lesson about the destructive consequences of meddling money with the coercive and illegitimate “authority” of government, it is regrettably necessary.
Perhaps a positive outlook to take on this issue could be that as additional bailouts are imposed by the IMF, various national governments, and other similarly corrupt institutions, the people of the world will begin to witness the failings of these tactics to revive a national (and/or global) economy. The people of Greece are already well aware of the fact that another bailout isn’t going to save them, especially if it comes at the cost of their personal financial stability and individual liberty (as they have already experienced and presently expect will happen if another bailout is successfully imposed upon them). But when will the time come for the remainder of the people of the world?
My hope is that it will be sooner rather than later, and that if nothing else, the tragedy in Greece will serve to accelerate such a much-needed transition to more rational ideas about money and freedom. As the world continues to take notice of the futility of the proposed “solutions” being rationalized and violently imposed by the Greek government (and predictably, various other governments in the future), I am confident that people everywhere will inevitably come around to understanding the importance of liberty in the marketplace. And as their very prosperity, happiness, and quality of life and freedom depends on it, it is irrational and pessimistic to feel otherwise.