A Mantra For Recession

Recently, some very close friends of mine had to cancel a long-planned trip to Greece, for the reason that the hotel in Athens where they had booked accommodation had gone out of business. The staff had simply left en masse, apparently to return to long neglected homesteads in the country where olive trees still grew, and the oil from those olives was still a highly marketable thing.

This little anecdote brought to mind the following statement from Tommy Douglas, the father of Canada's universal health care* system:

"A recession is when your neighbour has to tighten his belt. A depression is when you have to tighten your belt, and a panic is when you have no belt, and your pants fall down."

Today, Greece is in a panic, and a number of countries are watching others tighten their belts, or are tightening their own. Which begs the question -- how did this come about?

Pondering these two queries over a very good vino barolo, it was not difficult to identify the culprits at the bottom of the mess. To wit: greed and incompetence.

The horror story of the Great Depression of the Thirties well illustrates both qualities at work. Greed in the purchase of shares with money you did not have (the 'on margin' aspect of the market) in order to make money without risking any, and incompetence to thinking that all this would work out well. At a later date, the sub-prime mortgage nonsense was also illustrative of the two qualities at work, mainly (but not solely) on the part of banks.

So it is with Greece, where way too many public servants argued for and got good-paying jobs, excellent benefits and gold-plated pensions while forgetting that all this was being laid at an ever-diminishing number of taxpayers. And like a Ponzi scheme, eventually the whole thing collapsed, and the call went out to the European Union for a bailout. And austerity. And a further bailout. And so on. And so forth.

The only thing that is crystal clear in all this -- greed and incompetence are terrible things when wedded together. And to correct the situation is going to demand wisdom. Here the words of former political commentator Walter Lippman come to mind: "It requires wisdom to understand wisdom; the music is nothing if the audience is deaf."

Does Greece have such wisdom?

Or, for that matter, Ontario?

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* From every sensible American, "Sigh."