Need To Know
For many, there is an understandable lack of interest in reading about what's going on in Greece. There's something about the words “debt crisis” and “euro zone” that seems to incite boredom. For those people, it's going to be a long week.
Greek Prime Minister Alexis Tsipras announced over the weekend that Greece would hold a referendum on whether or not to accept the strict terms being offered by its international creditors. Those international creditors are the International Monetary Fund (IMF), members of the euro zone and the European Central Bank. They want Greece to pass more budget cuts and increase taxes, among other things.
To do such things would be politically crippling for Tsipras, so he upended the negotiations and threw the world into a tizzy on Saturday by announcing he'd hold a referendum. That means the people will decide whether or not Greece accepts the deal being offered by its creditors — and the people are very unlikely to accept the deal. So it's possible Greece will not make its next loan payment. Anyone who has missed paying a credit card bill or two or three knows the consequences can be serious. Financial difficulties compound with interest and penalties; your credit worthiness goes down. You could end up in court, or worse. It's a mess.
The referendum will be held next weekend, so the next five days will be full of news about negotiations with creditors, the potential for financial and political instability in Greece, and the potential for that financial instability to spread to the rest of Europe and the world. It feels like 2008 all over again. Hopefully those protections the European Union has since created hold up.
Want To Know
So it is probably a good idea to start paying attention to what is happening in Greece. It matters to everyone. Already this morning, markets are opening lower than normal. Here is a very basic rundown that will bring you up to date and allow you to pretend you know what you're talking about at parties:
After the global financial crisis in 2008, we found out that Greece was really a pretty corrupt place run by a financially irresponsible government. It had essentially been lying about its deficit for years. That made everyone nervous and by 2009, Greece's debt had doubled. So — like a few other countries in Europe — it needed a loan so it could pay its debt and not go bankrupt.
Fortunately Greece had joined the European Union, and the group wasn't about to let one of its own members go down in financial flames. Together with the IMF, it eventually approved a total of about $260 billion in loans and bailed out Greece.
That was 2010, and those loans came with some strict financial rules for Greece otherwise known as "austerity." They forced the Greek government to spend much less money. That meant budget cuts and more taxes. Lower government salaries, no more early retirements. That kind of thing. The kind of thing that makes regular people really unhappy. Protests — sometimes violent ones — would continue off and on over the next few years.
While the loans prevented immediate financial ruin, they only enabled Greece to pay back its other loans. Few if any of those billions of dollars were going back into the economy. So the economy suffered and unemployment rose to near 25 percent. That led to more unhappy citizens.
As a result, a new left-wing government that ran on a popular platform of standing up to international lenders and reversing austerity was elected at the beginning of this year. The new prime minister, Alexis Tsipras, immediately began negotiating with lenders. Despite his campaign rhetoric, he made numerous concessions, raising taxes and privatizing certain companies.
In a politically precarious position, Tsipras appeared to have reached his limit over the weekend. He was unwilling to make any more concessions during this latest round of negotiations. And now no one knows what will happen next.
Strange But True
An Egyptian court has sentenced three people to a year in prison, with hard labor, for making a kind of racy music video. The video caught the attention of the authorities after it went viral on the internet. At last check it had been viewed nearly 2 million times on YouTube.
The three were sentenced for the apparent crime of “inciting debauchery.” One of them, however, has managed to flee the country. The sentencing follows a trend in Egypt of jailing people who probably shouldn't be jailed. It's a trend that really took hold when the current military-led government grabbed power in a coup in 2013.
The standards for something inappropriate in Egypt these days are different from much of the rest of the world. Every pop artist in America would be in jail by Egypt's laws. The dancer in the video is wearing a short, low-cut dress. But that's about it. You can watch it here, but beware it's not exactly safe for work.