With confidence in his country unravelling, the Greek Finance Minister Giorgos Papaconstantinou is doing everything he can to convince investors that his country will make good on its debts.
If you really want to understand bond vigilantes, or why Bill Clinton aide James Carville once said he wanted to be reincarnated as the bond market, so that he could come back and scare the crap out of people, then look at Greece.
A socialist government comes in, and two months later it’s forced to talk about its austerity.
So Papaconstantinou is doing the interview rounds, and he stopped to explain his situation to UK’s The Guardian where he made comments that should resonate well with American readers.
“Deep-seated structural problems in our society have come to the surface,” he added, referring indirectly to the unrest that has gripped Greece. “That is why we have put so much emphasis on the process of social dialogue and building consensus.”
Since assuming office two months ago, the socialists had been “truly shocked” at the scale of the economic mismanagement. Under the centre-right New Democracy party, government waste had skyrocketed, with out-of-control recruiting policies, a proliferation of public-sector committees and overpaid heads of state utilities. Ministries approved obscenely high phone and newspaper bills, while senior civil servants had spent lavishly on unnecessary foreign trips, he said.
“It was as if they regarded the national treasury as the spoils of war and raided it. And there was no single payment authority so the finance minister had no idea who or what was being paid.”
Gee, a centre-right party that blew through the bank after years of economic mis-management? Talk about hitting close to home.
Obama, of course, has been making similar noises since he came into office, and basically they’re all completely valid, even if his political opponents would like to imagine that heavy spending and debt is something that didn’t exist in the US until January, 2009.
For now, the US isn’t worrying like Greece — not because we’re in all that better shape — but because of the strength of our currency, and our ability to (seemingly) borrow and print it ad infinitum.