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Wednesday, 29 June 2011

General satisfaction after Greek ‘yes’-vote. The world, however, should not forget that really nothing is solved. This is called a Pyrrhic victory.

Today, June 29th 2011 will be remembered (at least in the coming weeks) as the day of the Greek vote on the austerity measures. A positive result to this vote was vital for receiving a new tranche of financial aid from the Euro-zone countries, the IMF and the ECB
The whole financial and news community was watching eagerly for the result of this vote and now the score is set: 155 of 300 Greek MP’s voted in favor of the austerity measures.
The euro jumped immediately on the news, as if the Greeks and the Euro-zone were saved from financial doom and gloom a la Lehman or even worse. But people should not forget: in my opinion, this is only a Pyrrhic victory for Europe and the Euro-zone. All it bought was time for Greece and the banks to figure out how to move on.
Today an economist on Dutch Business News Radio stated that Greece needed a budget surplus of 5% for the next 30 years to get out of financial trouble. That isn’t going to happen.
So the next tranche of financial aid will be used to roll over some maturing credit and thanks to the special arrangements that will be made by the German and French banks, some extra credit will be rolled over.
But will this vote in favor of the austerity measures:
·    solve Greece’s long-term financial problems?
·    take away something of the unsustainable Greek debt?
·    make Greece less corrupt?
·    increase the tax yields of Greece?
·    cause structural growth in the industrial, agricultural and services sectors of this damaged country?
·    do something for the normal Greek citizens that are more victim than perpetrator in this Greek drama?
Most people will agree with me that all questions can be answered with ‘No’. That is why I call it a Pyrrhic victory.

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