By By John Pritsiolas, Special to The Chronicle
As a Greek-American at Hofstra, it's hard to watch my fellow Greek natives destroy property and fight amongst themselves amidst the chaos of one of the roughest economic recessions in recent memory.
For those of you unfamiliar with the situation, witnessing a once great fountain of intelligence and prosperity collapse into economic shambles is fairly depressing.
This economic shot heard around the world should not be downplayed as it has been by European politicians who seem content on just kicking the can further down the road. The European Union is currently in dire straits and at the time when the integrity of this union is being tested, there truly seems to be no definitive solutions coming forth from any major European country.
All European citizens are left with empty promises that will most likely never come to fruition, while a handful of European countries continue to deteriorate economically. As a result of political inaction, the standards of living will most likely drop even more as access to basic services like mass transit and other government programs are cut off. Not to mention the fact that the average European citizen simply can't afford to pay higher taxes with rising food prices and ever increasing fuel costs. Furthermore, the banning of "naked" Credit Default Swaps has only increased market volatility, in a counterintuitive attempt by lawmakers to try and control the situation. There is also the potential for a complete financial fiasco, if there is in fact a substantial Greek "haircut" in the works. Back in June, notable investor Jim Grant stated that the European Central Bank (ECB) was "factually insolvent." Evidently, Grant's assessment proves accurate as the ECB currently holds 15 percent of Greek debt, equal to 55 billion Euros, whereas the central bank only has 5.3 Euros in capital. Even if the debt was reduced significantly, the ECB would most likely still be in the red, putting it at the will of the National Central Banks (successfully removing any independence the ECB has left). In laymen terms, this would be outright disastrous for the overall health of the Eurozone as retaining a somewhat strict monetary policy would no longer even be an afterthought. Which begs the question, is a genuine Greek default even likely given the circumstances outlined above?
Murray Rothbard, an intellectual known in college classrooms for his work on ethics, once stated, "It all began, as usual, with the Greeks." How ironic that a nation once known for its profound thought and influence has pushed the European Union towards the brink.