Αsides from negotiations concerning the private sector’s ‘voluntary’ participation in cutting Greek debt, the essence of Greece’s actual economy has been condensed into one phrase by the Troika.

By Nikos Chrysoloras

In its last evaluation report, the Troika wrote ‘the GDP reduction in Greece looks like it will have permanent characteristics.’

I think that anyone who wants to understand where all of this is leading should repeat the phrase above ten times a day, even though the fact is hard to digest. The truth is however that 250 billion in annual wealth must be forgotten. This is due to the fact that borrowed funds will not be around for much longer after the damage that private creditors have suffered and after the Troika gives us just enough to get by. Our GDP will be moving along in a similar perspective. This amounts to approximately 200 billion less (perhaps considerably less).

Everything else was literally a bubble which grew with borrowed money. And now that bubble has burst. Look at the media sector for example, which is on strike today. For years, thousands of people have worked on the printing presses, newspapers and TV channels. They were paid salaries and fed private consumption. This of course was a bubble. How can a country such as Greece with 11 million inhabitants sustain 20 nationally circulated newspapers, not to mention the plethora of athletic, financial and ten nationwide channels?  Theses peoples’ wages were paid, not by the few readers (Greeks read less than their African counterparts in countries with 90% illiteracy), but through loans. These loans were borrowed from banks, and from foreigners through state advertisement (the Greek State spent huge sums on advertising which it borrowed). Now that the loans cannot be repaid and new loans aren’t available, thousands of people are out of work. The wealth was literally based on ‘air’ and regardless of whether the Troika stays or leaves, Greece will never return to its former state.

Similar bubbles based on loans which fed private consumption also existed in many other sectors in Greece’s economy. This leads to the GDP’s downward path and it is unlikely to stop.
This course can only be reversed if Greece acquires a production base in order to export products competitively. Until then, we will have to live with less, rather than the 27,000 euro per capita income, but with 17,000 euro or even less. This is the situation and a reflection of how much Greece produces, we may as well get used to it…..