Europe is in serious crisis. Greece, a culture that has abandoned hard work and resents paying taxes, goes to the polls in the middle of next month to vote for its economic future. The decision voters in that southern European nation – the home of democracy – have to decide is if they remain in the 17-member Eurozone, or get out. Damned they do, damned if they don’t. The truth is that an economy which makes up only two per cent of the Eurozone could not, in normal times, be such a destructive threat to the single currency area, farless the global economy, but these are not normal times. Remember how a single wholesale bank, Lehman Brothers, disrupted the system? Banks in the other southern European economies – Italy, Spain, Portugal – and Ireland are also under enormous pressure, and the massive exposure of French and UK banks to the area also make them vulnerable.
But it is the German hugely successful economy that is in real danger, since, like the history of capitalism, German prosperity is build on exports – mainly to southern Europe. While this drama is being played out in Brussels and Frankfurt, most Barbadians would rightly ask what has all this to do with them. Well, the answer is far more than at first meets the eye. First, while global leaders, from China to the US, hold their breath, it should be remembered that the Greek tentacles stretch throughout Europe and across the Atlantic to the US, through the hidden workings of the global banking system. Also, unlike 2007/8, when China rescued the world, the world’s second strongest economy is also itself in trouble.
More important, Britain, our main tourism market, although it is outside the Eurozone, the 17-member economic union is its main trading bloc, with massive banking exposure to the markets. Already there is enormous capital flight from Athens, first corporates and the wealthy moved lots of cash out of the jurisdiction, corporates to bank elsewhere and rich individuals to buy property in Britain and other ‘safe’ havens.