Episode 380: An Austerity Wedding : Planet Money Does Greece have any alternatives to austerity?
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Episode 380: An Austerity Wedding

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Episode 380: An Austerity Wedding

Episode 380: An Austerity Wedding

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You know how couples often have a routine they perform for other people. Catarina and Elias' schtick is really basic. She says something hopeful and optimistic, and he craps on it. She laughs and then ignores him. They'll do this with small stuff all the time. The weather is nice, she'll say. No, it's cloudy, he'll grumble. It's like the worst day all month. What are you - blind? Laugh, ignore, repeat. But it's not just small stuff. They do this routine at dinner with friends with stuff that seems kind of intimate, like their dreams for the future.

KATERINA MARGARITOU: He was married twice. I'm going to be his third.


JOFFE-WALT: Elias is mumbling no from across the room. And then he turns to the friends to say the Greek Orthodox Church only lets you have three weddings.

TILLIGADAS: I haven't decided yet if I'm going to waste that with her.

MARGARITOU: (Laughter, foreign language spoken).

JOFFE-WALT: I met Katerina and Elias in January of this year in Athens, and things were already bad in Greece when I met them. Katerina had not been paid in months. She's a chemist, and she works for a company that has one main customer - the Greek government.

MARGARITOU: They don't pay us because they have no money.

JOFFE-WALT: So what keeps you going to work?

MARGARITOU: Well, I like my work. You see every day we work, we bring money to the company. So every time we bring money, we are increasing the possibility to get paid.

JOFFE-WALT: Do you think that you'll get paid the back pay?


MARGARITOU: Yes. Yes, I'm sure.

JOFFE-WALT: Elias, again, shaking his head from the corner at Katerina. So last weekend, there were pivotal national elections in Greece, and I kept thinking about Katerina and Elias because the country essentially mimicked their dynamic. It was split. Katerina voted for a far-left party, Elias, far right. And that's pretty much how the Greek electorate voted. Nearly a third went radical left, a third went right. The only thing every one of those parties agree on is that the Greek economy is dying and that the thing that is killing it is austerity.


JOFFE-WALT: Hello and welcome to PLANET MONEY. I'm Chana Joffe-Walt.


I'm David Kestenbaum. It is Tuesday, June 19. Today on the show - what do you do when you've messed up so badly that the only people who will offer you help, they want your pain and suffering in exchange - they want austerity?

JOFFE-WALT: Do you have to accept that? Do you have to pay the penalty? And what if it turns out that the penalty is a 20-year detour into economic collapse?

KESTENBAUM: Greece is basically bankrupt. Europe has bailed out the government of Greece twice. And when Europe did that, Europe said, there are some strings attached to this. We're going to give you the money, but we're going to put you on an austerity program. You have to promise to spend less money, and you have to raise more money in taxes.

JOFFE-WALT: Austerity makes sense. It's pretty straightforward. If you were in debt, you know, you'd stop going out to dinner, you'd cut back until you could pay off your credit cards. For the Greek government, cutting back means cuts on education spending, health care and chemists. This is essentially why Katerina has not been paid. And because Katerina hasn't been paid, she's not going out to dinner, and she's not paying her car insurance, which means the car insurance salesmen are losing their jobs. Now, to the Greeks, all of this just looks like an insane plan.

UNIDENTIFIED WOMAN: I think that this plan is not correct. I'm not an expert, but it's not working. It's wrong. You don't have to be an expert to realize that it's wrong. It's completely wrong.

KESTENBAUM: Things are bad in Greece. Just to give you one statistic - for people under the age of 25 in Greece, nearly 50 percent are unemployed.

JOFFE-WALT: But the thing is things would be bad in Greece even without the austerity plan. The truth is that without Europe and their money with the strings attached, there would still be austerity because Greece would still be broke. The government wouldn't be able to pay for education or health care or chemists in that situation either. There would be austerity even without an official austerity program.

KESTENBAUM: But in Greece, Elias and Katerina keep hearing from politicians and from economists that there is another way - a way around the pain.

TILLIGADAS: Oh, that half baldy guy, the economist. Varoufakis, the half baldy one - yeah, about 40 years old, 45 years old, right?

JOFFE-WALT: Wait, what are you calling him - half baldy?

TILLIGADAS: Half baldy - has a receding hairline.

KESTENBAUM: Half baldy's real name is Yanis Varoufakis. He's a Greek economist, and he is balding.

JOFFE-WALT: And according to Google images at least, he's very handsome. He kind of looks like a buff soap opera star. And Varoufakis is widely known in Greece, partially because he just wrote a really popular book.

YANIS VAROUFAKIS: It was a best-seller. It was actually the number one in the nonfiction charts throughout the summer last summer.

KESTENBAUM: This is half baldy himself - Yanis Varoufakis. He had written lots of economics books, but none were as popular as this one. It was a dictionary of the financial crisis. It defined credit default swaps, all those complicated financial terms that turned out to be important when you're trying to understand what has happened to your country. This was a best-seller in Greece. But being a best-selling author did not go exactly as he'd planned.

VAROUFAKIS: The bookshops, even though they sold a lot of copies, they did not have the capacity to pay my publisher because they are going under. So my publisher is effectively bankrupt.

JOFFE-WALT: Whoa, wait a minute. So you published a book that did really well and became a best-seller, but you didn't make the money off of it because...

VAROUFAKIS: I didn't make anything off it.

JOFFE-WALT: Nothing?

KESTENBAUM: Nothing at all?

VAROUFAKIS: Because the money fell through the cracks of the system of credit within the publishing industry that has broken down. No, nothing at all - absolutely nothing at all.

JOFFE-WALT: That is, being a best-selling author in Greece right now, it's just like being a chemist. Katerina isn't getting paid and neither is Yanis Varoufakis.

KESTENBAUM: So everyone in Greece pretty much hates austerity. What are the other options? Let's run through them. Option one is you could try to do what the U.S. government did - spend - spend a lot of money. We had a huge financial crisis here, like in Greece, and we did not go the austerity route. We did the opposite. We went with stimulus. The government spent money, fixed up roads, bridges, invested in infrastructure, education, gave money to people through food stamps. There was money for state and local governments. And instead of raising taxes, like Greece did, the U.S. cut taxes.

JOFFE-WALT: Basically, the U.S. followed the advice of John Maynard Keynes, the famous economist. And that advice is if the private sector isn't spending, the government should. And there's a debate right now about how effective stimulus has been in the United States, but it is an alternative.

KESTENBAUM: The problem for Greece in trying this is that the Greek government is broke. In the United States, we could borrow money to do the stimulus with. The world was lining up to lend the U.S. money - it still is. It is the opposite situation in Greece. No one will lend Greece money except at really high interest rates.

JOFFE-WALT: OK, but Greece does have some friends with money. OK, maybe friends is a little strong. It is part of the largest currency union in the world - the euro. So if option number one is to get strangers to lend you money, option two, get your friends to lend you money. Get Germany and France to pay for stimulus in Greece.

KESTENBAUM: And OK, say somehow they agree to that...

JOFFE-WALT: If somehow - somehow the German and French voters decide that they do want to bail out Greece even more than they already have...

KESTENBAUM: Let's say that happens. Then you have to ask - next step - what would happen to that money once it entered Greece? Nicholas Georgakopoulos is Greek. He's currently a professor of law at Indiana University. And he says, I'll tell you what would happen to that money.

NICHOLAS GEORGAKOPOULOS: Be used - it says, fine, Greece, we'll lend you this money for - to stimulate your growth. Go build things. And the Greek politicians get the money. And because they're corrupt and stupid, they build swimming pools and local recreation centers, instead of building real infrastructure projects that will have long-term, beneficial impact for the economy. Or they build - what they actually did. They built museums, right? The - this Acropolis Museum is having its third-year anniversary - big to-do.

JOFFE-WALT: It's a beautiful museum.

GEORGAKOPOULOS: It's gorgeous. It's fantastic, but it's not an infrastructure project. It's not a road. It's not a bridge. It's just a museum.

KESTENBAUM: Couldn't you argue that would increase tourism which would help with growth?

GEORGAKOPOULOS: I don't think Greece needs to become prettier to attract people. It's plenty pretty. People already want to go to Greece. What they need to get - what's stopping them from going to Greece is not that the museums suck. They don't need to go to museums. They - just go and watch the Acropolis itself. They need safe infrastructure to feel that they can land with their plane and they won't - the baggage handlers will be there to carry their luggage out and the - there will...

JOFFE-WALT: There won't be a strike.

GEORGAKOPOULOS: ...Not be a strike and all that.

JOFFE-WALT: So option number two - borrow money from friends - seems unlikely because Greece's friends don't trust the Greek government to spend the money in a way that would actually stimulate the Greek economy.

KESTENBAUM: There is an option three. If you don't trust the Greek government, just cut them out, bypass them. Yanis, half baldy with the no-money-making-best-seller, he says there is a way to do this. The answer lies about 1,500 miles away in Luxembourg, home to something called the European Investment Bank. This is sort of like the World Bank that makes loans in the developing world. But the European Investment Bank is two times larger, and it could invest in all kinds of Greek projects, he says - maybe solar energy.

VAROUFAKIS: Think about it. Greece has a lot of sun, and Germany has a lot of technology. Put the two together, and you have something nice happening. Or let me give you another example. If you look at the map of Europe and concentrate on the transport hubs, now imagine a program for creating a super efficient high-tech railway system that connects Western Europe with the Balkans and also linking this with new port facilities. These plans - business plans - exist in Luxembourg, in the office of the European Investment Bank.

KESTENBAUM: But there's a problem with this. There is this rule which says that the European Investment Bank can only put up 50 percent of the money for a project. The other half has to come from somewhere else. And as we've mentioned, the Greek government is broke. The banks there are a wreck. And foreigners don't want to invest in Greece. I mean, these are sometimes very long-term loans for these projects. Who is going to want to lend billions of euros to build, say, a rail line in Greece, if you're not going to get all your money back for 30 years, especially if you're worried that the country could leave the euro? And then you really might get screwed.

JOFFE-WALT: OK, David, there's one fourth option - the last one. And that is do austerity, but just do it better. The way that the Greek government has implemented the austerity plan is not what the Europeans actually had in mind when they demanded to see austerity. The Europeans wanted the government to cut spending, but they wanted them to eliminate the bad, stupid things the government spends money on. They wanted them to eliminate unnecessary workers. They didn't want them to just cut everyone's pay across the board, cut education and health care.

KESTENBAUM: And when it comes to taxes, to raising additional revenue, they wanted the Greek government to figure out how to actually collect taxes, not just raise the tax rates so the handful of people who are already paying are now - have to pay extra taxes.

JOFFE-WALT: So the problem with option four is the exact same problem with option one through three - the Greek government.

KESTENBAUM: To work, all the options require a government that people can trust. And pretty much everyone who needs to trust the government has lost faith in the government - the investors, the European leaders, the Greek people themselves. Nicolas Georgakopoulos, the law professor, says just look what happened in the most recent election.

GEORGAKOPOULOS: The result is what we saw - that 38 percent of the Greek electorate, even in these crucial elections - and everybody was saying how important these elections - 38 percent of the Greeks stayed home. They didn't even vote.

KESTENBAUM: I read that in a news story, and I thought that must be an error.

GEORGAKOPOULOS: It is the highest abstention ever in Greece, I think. So this is - this says a lot.

KESTENBAUM: It says people don't know what to do.

GEORGAKOPOULOS: People don't know what to do, and people certainly don't trust the politicians and the political system.

JOFFE-WALT: And for the people who did go out to vote, they couldn't make up their minds either. It ended up being a really close contest between two parties. And both parties were making an argument about what to do with the economy. Which of those four options were they choosing? None of them. They said there is yet another option, and it is this - we take Europe's money, and we don't do austerity, not now.

KESTENBAUM: They basically said we'll fix things on our own terms when we can. Trust us.

JOFFE-WALT: Do we even have to say what the problem with that option is? So the Greek people are basically left sitting at home having to come up with their own plans for how they're going to live without any money.

TILLIGADAS: Oh, right. Right, let's start - farming.

MARGARITOU: I don't like this. I don't like it.

TILLIGADAS: Yeah, we're alive. That's it.

JOFFE-WALT: Here's Elias and Katerina again sitting at a table at home trying to figure out what to do next. And remember, these two have not been paid their full salaries for more than a year. So Elias, a government safety inspection worker, wants to try to learn how to farm.

TILLIGADAS: Veggies, probably animals, as in, you know, chicken, geese, that sort of stuff.

MARGARITOU: Oh, no, no, no, no (laughter).

TILLIGADAS: I'm trying to survive and trying to sell a little bit of the things I'm going to produce to others, you know, to get cash or exchange products. And that's it.

JOFFE-WALT: So you're going to, like, have a barter economy.

TILLIGADAS: Yes. Can you rephrase that? Because it doesn't sound good.

KESTENBAUM: Katerina has a different plan.

MARGARITOU: Actually, I want to leave Greece, to leave from here, from Greece.

TILLIGADAS: No, I'm not going to leave Greece for the sake of (unintelligible).

MARGARITOU: I'd like to leave because we have no future here. I...

TILLIGADAS: No, no, no, no. If I leave now, there would be nobody else left behind to save this country.

MARGARITOU: I think that nobody can save Greece now. I'm so disappointed.

JOFFE-WALT: Austerity or not, every option on the table likely involves years of economic pain. So they have to figure out together what to do, also because Elias and Katerina are getting married. Elias has decided that he's going to waste his third wedding on Katerina.

MARGARITOU: I think he was drunk.



MARGARITOU: He was drinking ouzo with my father (laughter).


MARGARITOU: And then they told me that you're getting married (laughter).

JOFFE-WALT: It's going to be an austerity wedding. They've invited only about 50 people, and they're still not sure how they're going to pay for it.

MARGARITOU: Well, I'm very happy because I'm getting married. But I'm very sad because, at the moment, I cannot buy a dress. But my boss promised me that he's going to give me money to buy a dress, so I'm waiting.

JOFFE-WALT: Your boss that hasn't been paying you for the last year.

MARGARITOU: Yes. He told me - he promised me that he will give me a salary to buy a dress.

JOFFE-WALT: Do you believe him?

MARGARITOU: Well, I want to believe him.

JOFFE-WALT: David, that was a week ago. And Katerina sent me an email just last weekend with a picture of her in a very beautiful teal gown. Her boss did pay her a bit of back pay - half a month. And Elias and Katerina are getting married tomorrow.


IMPERIAL TEEN: (Singing) Turn it around, the seed in the ground, a vowel or noun, addicted to sound.

KESTENBAUM: As always, we want to hear what you think. Send us email at planetmoney@npr.org. Check out the blog. We have a picture of Katerina in her teal dress.

JOFFE-WALT: That's at npr.org/money. I'm Chana Joffe-Walt.

KESTENBAUM: I'm David Kestenbaum. Thanks for listening.


IMPERIAL TEEN: (Singing) No matter what you say. No matter what you say. No matter what you say. No matter what you say. With your foot on the ground, I can turn it around when we go to the sound. And I'm not coming down no matter what you say, no matter what you say, no matter what you say, no matter what you say. With your foot on the ground, I can turn it around.

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