Greece, like other countries in Europe, had given up its own currency in exchange for the euro, so it did not have the option of printing more money or devaluing the currency to pull itself out of the mess created in part by politicians who gave voters what they wanted without troubling to bring up the unpleasant fact that someone, sooner or later, would have to pay.
Today, the Greek people are enduring economic pain that makes America look like a paradise of prosperity. Unemployment stands at 21%, wages are collapsing for both government and private sector workers.
A series of new taxes have been imposed, including a "solidarity" tax, new property taxes and higher self-employment taxes. The VAT, a national sales tax on all transactions, has jumped from 13% to 23%. The minimum wage has been been sharply cut. Poverty has increased dramatically.
After all that, Greece is still required by European rules to cut another 4.7% of gross domestic product from its budget, equivalent to the United States suddenly cutting more than $700 billion.
Even if it achieves those goals, or rather because it will enact such draconian cuts, the Greek economy is expected to sink deeper.
I think what gets lost in such discussions is the historical reality that made the societies we live in possible. After WW2, much of continental Europe and Japan were devastated. Canada and more so the US, became rich as a result of coming out of the war with our industry and infrastructure intact. We were able to make astronomical amounts of money by being the suppliers for the reconstruction of Europe and other parts of the world.
This vast wealth provided these nations with the resources to move forward in terms of societal and social infrastructure begun in the New Deal by Roosevelt. The problem is that the New Deal was economically untenable in normal times but because of war and the massive economic boom that followed the economic realities were blurred.
So we had a whole generation, the largest in the history of North America, grow up with false economic ideologies and believing that government can and should provide for everyone. A noble aim to be sure, but then the rest of the world caught up by the 70s and the traditional sources of NA wealth began to fail and so you see the decline in manufacturing and the rise of the service and banking sectors over the course of the 80s and 90s.
People were struggling to maintain the wealth that created the society they wanted, at relatively little cost to the average citizen and were doing anything they could to see it done. Now even these sectors have begun to fail but generations of people have been raised with the notion that this is how a society should function (not saying that its not) but they came to this conclusion in the midst of vast economic prosperity that made such a society possible.
As the economic reality changes so too will the ability for these societies to continue to meet the demands of the people. An unfortunate thing is that the ruling political class has created a system in which they promise the moon, provide a sandwich and are rewarded for it because they've ensured that money is the prime component of political power.
As such people having been raised to think that the government should provide will be faced with the reality that it can't. This disillusionment will lead to frustration and anger that will tax the system of control that the political elite have created over the past few decades to protect themselves from what they knew was coming.
Hence you see the empowering of state controlled systems of control such as police and surveillance and the reduction of civil liberties and the abandonment of principles that once defined a nation but are now no longer politically tenable. This of course will lead to further civil unrest and can be seen in current movements such as Occupy and the recent warning from Anonymous to world leaders. A cycle has begun that, while in its early stages and possible to curtail, is one that pits the powerful against the powerless and as the economic realities continue to decline the pressure will increase.
