Greece was a financial basket case long before it joined the EU in 1986 and the European Monetary Union in 2001. For a complete monetary history on Greece, see Unravelling the Greek basket case. Greece paid 1.7 billion euros to join the EU but got back a whopping 6.5 billion euros, an astounding 270% return according to The Guardian that did a detailed report on the EU relative to who pays and who receives, here.
If anything, Greece is a case study in the failure of statism, powerful public sector unions and the wholesale destruction of the economy by Keynesians, socialists and Marxists of all stripes. Greece has been milking the EU for years and the EU has gladly piled on mountains of debt that can never be repaid. As Greece is now spinning out of control with a devastated economy, the EU is losing patience with Greece. It keeps loaning the Greeks more and more money backed by the promise to cut public spending and fire public employees that it can no longer afford.
Public services have been cut, the garbage isn't always collected, public sector employees are constantly on strike to protest austerity and the Greek socialized healthcare system is being denied access to medical supplies and drugs because it cannot pay its bills. While the situation is indeed ugly, it's about to get a whole lot uglier.
The awful thing about debt is that it requires debt service and minimal debt service is interest only. The Troika doesn't care about the Greeks. The Troika does however care about getting paid and guaranteeing that banks and bondholders also get paid because preserving the European Monetary Union is its only goal. As tax receipts dwindle due to the ailing Greek economy, the interest on the debt is piling up and the situation is so dire that loan proceeds are going to debt service, not government services. A Greek blogger reports:
Greeks gets 1.6% of bailout loans – 98.4% goes back to Troika
Only a tiny 1.6% of the bailout loans goes to Greece’s state budget, the real economy and the people. The rest 98.4% goes to serve the international creditors International Monetary Fund, European Union member states and European Central Bank.
For the years 2010-20124, from the 236.8 billion euro bailout money and the 25.5 billion euro from privatizations, only 1.6 percent benefits the state and the economy.And that my friends is precisely how governments die. The irresponsible spending builds such a gargantuan mountain of debt that just about all revenues end up going to debt service. It doesn't matter if its Greece or Italy or Spain or Detroit or numerous debt ridden US cities and states that are perilously close to a Detroit styled bankruptcy. The debt game does end and statist dreams get flushed.
98.4% is allocated for obligations to creditors.
Folks who support governments and taxation do so because they perceive some level of value or a return on their 'forced' investment. However, the value and returns on the taxpayer investments dramatically dwindle with debt because debt service starts eating up bigger and bigger chunks of taxpayer cash and at the expense of public services. Ultimately, nearly all tax dollars go to debt service.
In the case of Detroit, Zero Hedge explained this phenomena in an article titled The Death Of A City: Detroit's Eulogy As Delivered By Kevyn Orr.
Currently, more than $0.38 of every tax dollar that the City collects goes to service legacy debt and other obligations rather than toward providing services for the City's residents and businesses. If nothing changes, that number is expected to grow to almost $0.65 of every dollar in less than five years.When public services start disappearing, when the street lights go black because there is no money to pay the electric bill, when the parks become weed infested crime scenes, when storefronts are boarded up and when the garbage is rotting on the streets, these are things that folks definitely notice. At this point, the decrepitude and decay become clearly obvious which is why photos of Detroit resemble a bombed out war zone rather than a vibrant and flourishing city. It's a tragic death for a city that was once the most prosperous city in America.
When the blame game and finger pointing starts, there are plenty of valid reasons that document the economic decline of a city or nation but at the end of the day the only reason economic death occurs is because of government corruption, the growth of the public sector, draconian anti-business regulations, the accumulation of mountains of unaffordable debt and high taxes. Statism at its finest is indeed a big fail and a recipe for disaster. But that won't stop the statists and bureaucrats and they are determined to scream for higher taxes and more debt, even when economic decline transitions to the death of city or nation.
Does anybody profit from such carnage? Only the banksters who somehow manage to extract their pound of flesh from the corpses of humanity.