Dr. Periklis Gogas, Associate Professor, Department of International Economics, Democritus University of Thrace, Greece.
The issue of the Figure 1 presents the government debt as a % of the GDP of 11 EU countries. Greece tops the list with 175%. This fact is very worrisome by itself. What is also a problem is the percentage of the debt that is held by non-residents. One issue for Greek citizens is of course that the creditors being non-Greeks can afford to be more inelastic and strict in any negotiations. They are only exposed to the default risk and the cost of the capital they borrowed that may be lost. But they have a limited exposure to the country, political and macroeconomic (from the perspective of the Greeks) risk. Another more important, but often overlooked, issue is outflow of that the interest payments. For a principal of €315 billion and a weighted average interest rate of 3%, an amount approximately €10 billion is fleeing the county every year. This represents approximately 6% of the Greek GDP. As a result this is spent outside Greece and provide no increased domestic demand, no taxes for the Greek government and are not deposited in the crisis-stricken Greek banking sector. The picture as we can see in Figure 1 is different in other countries.
Click on the figure below to enlarge it.
Ever since the communists lost the civil war way back in the late 1940’s, a significant % of the Greek population has been pushing for a radical left government.
Well those people got their wish when in last January SYRIZA the radical left party with Alexis Tsipras at the lead won the election and Tsipras became Prime Minister. He formed a government and the last seven months he showed the world once again that those radical left demagogic ideologies belong in history’s files of negative and distractive experiments. As a consequence, Mr. Tsipras resigned last week and called for new elections, the third election in the last 8 months!!!!!
He has demonstrated that he is strictly a politician caring only for his political interests and not of the Greek people and the Country.
Even though he is young it seems that he is cut from the same cloth as those that have governed poorly for the last several decades!
Unfortunately he has turned out not to be different.
Greece is not functioning today as a State!!! Mr. Tsipras has abdicated his responsibilities and showed complete incompetence in negotiations with the Europeans for the national debt obligations. He has devoted his energies and abilities to his self-centered arrogant decision making!!!!
Only God can help Greece if Mr. Tsipras gets back to govern Greece.