The Ulf Nilson column in Nordstjernan, issue 12, June 2011

Is Greece on its way to ... well, you know where?
Is the same true for Portugal, Ireland, Spain and possibly, Italy? Has welfare gone wild?
The questions dominate television, radio, newspapers and a good deal of the conversations between people. The trouble is: Nobody has an answer.
Truth be told, neither have I. But I do know that the situation is serious and I will attempt to explain why.
The crisis has repercussions all over Europe and might, just might lead to a collapse of the euro (the dollar of Europe, used by most countries but NOT Sweden). If this happens (and I do not think it will), all bets are off and we are all in for a time of very, very serious belt tightening. It will be—in principle if not in detail—a replay of the 1930s, when bread lines were long and the unemployment lines clogged the streets all over Europe. The financial meltdown in the 30s, it should be noted, paved the way for Hitler, the Second World War and all the unpleasantness it brought (inclusive of the Soviet menace).
That will not happen again, thanks upstairs, not the least because that evil union no longer exists (as you might have noted, the East nowadays is grey, rather than red).
So, what happened and what should be done about it?
What happened is, quite clearly, that democratically elected politicians in the countries listed above (and a few others) spent money they didn't have to gain (read: buy) favors with as many voting groups as possible. In the case of Greece, the government managed to borrow no less than 340 billion euros—much, much more than the GNP, and in reality impossible to pay back. It borrowed from banks, pension funds and the ECB (European Central Bank) and spread the money out in the form of too high pensions and too much sickpay, for example.
In other words, it let the Greeks live way beyond their means. Governments in Portugal, Ireland, etc. did the same. It was the welfare state gone wild, and today, when the bills have been coming in for quite a while, all the lenders (the whole banking system), have realized we are heading for the big crash. Something like the Great Depression, or worse, with banks failing, pension funds empty, unemployment numbers jumping sky-high and people screaming in the streets.


How close are we to this?
In Athens there are already clashes in the streets. Tourists—major sources of income—dare not come, and businesses are closing. The government of Georges Papandreou tries, without much success, to get fresh loans, and with even less success to get people to tighten their belts, accept smaller salaries and save more.
So what should one do? There is only one thing: Stop the insane borrowing and see to it that people work, pay taxes (which they have been very good at evading) and tough it out.
Maybe it will work, maybe not. In the old days, Greece and a lot of other countries would have devalued their currency, leading to less import and more saving. Today, that door is closed. The euro cannot be touched by any single government. Today it does not liberate but constricts commerce in and between countries.
Politicians are meeting, experts discussing, bankers sweating and praying for answers that nobody seems to have.
We shall have to wait and see...

Ulf Nilson, Sweden in June, 2012