national debt

Dimitris Kazakis speach at Cass Business School 11/4/2013


Greetings to everyone,

Right from the beginning we need to clarify that the crisis which Greece is currently facing and has led the country to its 5th official bankruptcy does not originate from the actions of a prodigal government or from the effects of a fiscal problem which could be solved through the implementation of measures of re-adjustment and reductions in government expenditure. Greece has bankrupt due to its national debt as a result of the bankruptcy of its own economy which for the past decades has been suffering from the implementation of a model based on which an economy should grow through concentrating on being extrovert and as it follows that economy should obey to the decisions made by the international financial/capital markets.

In terms of the previous decades in Greece, it should be stated that as long as the international dogma of free markets and deregulation was applied, the Greek economy was becoming a parasitic economy which concentrated on providing cheap services. As a result Greece depended even more on the fluctuations of international financial markets and kept losing ground in terms of its international competitiveness. This result was expected as the Greek economy was formed around the basic principle that it should be serving the most illegal and extraordinary appetites for high returns and profitability as demanded from both external and internal investors.

A very characteristic statistic related to the previous statements is that the percentage of the private returns in terms of the total added value within the local economy during these years of the recession reached 59% in 2009. This is a record figure within the European Union as it is almost double in comparison to the weighted average figure which corresponds to the rest of the E.U. members. For decades, all the governing parties in Greece and their so-called protectors from abroad such as the OECD, the IMF and the E.U. did everything that could be done under their power in order to convert into a primary competitive advantage of the Greek economy the prospect of maximization of the private sector’s profits beyond any logical and reasonable limit which could be set by the economy itself due its capabilities in terms of productivity.

Due to all of the above the country’s productivity started to sink and that element of parasitism would be transmitted to all business sectors while at the same time the quackery of the issue and selling of financial derivatives was advocated as a solution.  A characteristic statistic indicating this is the fact that in 1992 for every 100 dollars of foreign private capital which was invested in the local economy, a 59% was associated with investments in the real economy, 31% was associated with real estate and just 10% was associated with financial investments. In 1995 the figures were 33% towards the real economy, 7 % towards real estate and 60% towards financial assets. Just before the outbreak of the crisis the figures were 10% for the real economy, 1% towards real estate investments and 89% towards financial investments. The result was that figure corresponding to 63% of the total private profit generated from the economy during the last 10 years, was interest. (more…)