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Acropolis Now! An Economic Tragedy of Greek Proportions

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Page 1: MBMG Acropolis

Acropolis Now! An Economic Tragedy of Greek Proportions

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MBMG Group Research Paper

Paul Gambles, Bangkok, January 2012

Additional research provided by Leigh Pearson

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Greece is not the word

Executive Summary

Greece has been and remains at the centre of a sovereign debt crisis in the EuroZone that looks set to escalate from a firestorm into a regional conflagration fuelled by the billions of Euros in bailout packages that have failed to address the problem. On the face of it the problems appear to have started in Greece. However, it is certain that they will not end within its borders. Regional inter-linkages will almost certainly result in the shockwaves from the Greek economic tragedy reaching Ireland, Portugal, Spain and Italy (the „GIPSI‟s). This could well see all five of the so-called GIPSI nations teeter off the debt precipice into full-blown default. The larger problem is that the creditors of the various bailout packages may end up being hit hardest when the EU‟s debtor nations start to default. After the GIPSI nations descend into the quagmire, intermediate economies such as Belgium may well start to falter and act as conduits transferring the problems back to Europe‟s economic hard-core, namely Germany. Historically, Germany has seen the biggest gains from the European single currency. But the current crisis could see the position reversed as the country is landed with the bill for underwriting the rescue packages for the EU‟s peripheral and failing economies. The raft of austerity measures and cutbacks that will be necessary, if Chancellor Merkel hopes to stand a chance of containing the region‟s debt, will only further fuel local protests against growing income disparity and the “1%” who have become the target of the popular “Occupy” movement, especially as national sovereignty is being usurped within the EuroZone and a deficit of democracy spreads. Just as we have seen a global protest movement against corporate greed emerge over the past several months, the destabilising of the Eurozone‟s economy will have a significant knock on effect, one which has the potential to undermine the entire global economy as the likes of Britain, the US and Japan accompany the EU down the path to potential ruin in the short- to mid-term. It is hard to see a positive outcome to these growing problems. The roots of the current sovereign debt crisis in Europe and the broader economic upheavals in the UK and the US have their roots in the various socio-political interventions of the past three decades. Research shows that growing income disparity has a disruptive effect on economic growth. Countries where wealth distribution is more evenly balanced can experience periods of growth that last up to three times longer than US can expect, given that the gap between rich and poor in the country has increased by more than 20% since the 1980s. This redistribution of wealth to the richest corporations and individuals has led to a level of disparity that has, in part, forced large sections of the less wealthy population to accumulate crippling debts in order to continue participating in the global consumerist society. Less competitive and poorer sovereign nations have similarly assumed debt as a part of the mechanism which has led to the transfer of wealth to the top 1%.

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To mask the consequences of escalating sovereign debt, individual countries, regional groupings such as the EU, and international financial organisations including the IMF and the World Bank have provided short-term relief by pumping huge injections of rescue capital into flagging economies. The problem with this policy of kicking the can down the road is that one day the road runs out. At this point we are forced to deal with the problem. The end of the road is now is sight. Consequently, governments need to come up with some sensible answers quickly. Otherwise, the growing inequality and increasing chances of sovereign default will knock the entire global economy out of kilter; an event with the potential to usher in a global depression of a magnitude which has not been seen for 80 years. GREECE IS NOT THE WORD – OVERVIEW Investors are currently apportioning unprecedented levels of blame on Greece for causing the current volatility that has beset global markets and weakened the global economy. There has always been a risk that the entire Euro project would collapse – and the European Central Bank (ECB), EU and French and German banking systems and economies along with it – if the Greek sovereign debt crisis was not handled effectively. There were basic four policy choices that the national politicians, Eurocrats, bankers and financiers could have taken in response to the situation:

Create adequate liquidity to recapitalise and provide sufficient funding for European banks

Try to buy time by kicking the can down the road

Vacillate and hope

Write off debts and address imbalances

Either of the middle two options would have essentially led to the same outcome – markets might initially stabilise but simply burying the toxic mess would see the problems resurface at a later date. Unfortunately, EU policymakers managed to combine these options because of a combination of weakness and negligence by the periphery in the face of cynicism and exploitation by Germany accompanied by desperation and collaboration by the soft core such as France.

Several years ago a small rural town in Spain was twinned with a similar town in Greece. The Greek mayor visited the Spanish town. When he saw the palatial mansion belonging to the Spanish mayor he wondered how he could afford such a house. The Spaniard said, “You see that bridge over there? The EU gave us a grant to build a four-lane bridge, but by building a single lane bridge with traffic lights at either end this house could be built.” The following year the Spanish mayor visited the Greek town. He was breath taken with the Greek mayor‟s house, which was resplendent with gold taps and marble floors. When he asked how this could be afforded the Greek said, “You see that bridge over there?” The Spaniard replied, “No.”

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Greece is not the word

It‟s not Greece, but Germany and maybe France that are the watchwords in the current crisis. French fears about its banking system have allowed Chancellor Merkel to extract concessions from the rest of the EU that will inevitably store up greater problems down the road. France already looks like a dead man walking, but we think Germany needs to be watchful too or it could end up carrying the can alone. I saw my problems and I'll see the light We got a lovin' thing, we gotta feed it right There ain't no danger we can go too far We start believin' now that we can be who we are - Greece is the word They think our love is just a growin' pain Why don't they understand? It's just a cryin' shame Their lips are lyin', only real is real We stop the fight right now, we got to be what we feel - Greece is the word This is a life of illusion, a life of control Mixed with confusion - what're we doin' here Greece is not the word! The chart below shows how much interest the Greek government now has to pay in order to borrow money and the meteoric rise of the yield of Greece's 10-year government bonds to more than 30%, default risks are gradually priced in.

Source: Bloomberg

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It all started in Athens How did the leading civilization of the ancient world find itself in this situation? Athens emergence as the world's first truly successful democratic city-state some 3,400 years ago marked the dawn of human urban organisation as we know it today. This, in turn, spurned successive rivals such as Rome, while tribes of Celts, Angles, Saxons, Franks, Goths, Lombards, Nordics and innumerable others divided the post-Moorish invasion map of Europe into a few empires and a few hundred kingdoms, city-states and principalities. Many of these gradually formed strategic, trade or military associations and affiliations which, following turmoil in Europe during the Enlightenment, Napoleonic conquest and various revolutions, spawned nation states whose inability to recognize each other's place in the new industrial world resulted in World War One. The European map was then redrawn by the victors in a way that would never be acceptable to the vanquished. Resentment whipped up during the Great Depression led to the breakout of World War Two in Europe in 1939. Since the end of the war in 1945, these young and in some cases nascent republics, along with the few remaining kingdoms, have been trying to find ways to live in harmony. The EU and its precursors have been laudable attempts to transform common trade interests into a harmonious Euroland where different tribes, histories, traditions, beliefs, languages, cultures and religions would somehow rally behind the flag. The bigger the disparity between economic reality in a country and EU qualifying rules, the bigger the lies that had to be told to be allowed in. Greece, therefore, had to lie the most. The falsehood that underpinned the inception of the Euro project allowed wealthy core nations to lend ridiculous amounts of capital to the continent's weaker developing ones so those less robust but aspirational nations could spend more on branded luxury goods manufactured by the wealthy countries. This virtuous circle of vendor finance made everyone feel good until it became starkly apparent that the GIPSI nations could not afford to meet their debt obligations. The risk of pan-European contagion means that the EU and Switzerland would need to raise an unprecedented 4-5 trillion Euros of additional permanent capital to ensure banks are fully and adequately capitalized after all bad debts have been written off or fully provisioned. However, that would do nothing to address the competitive disadvantages of the periphery going forwards and similar crises would recur in the future. How will the ECB, EC, EU, EFSF, Eco Fin, G20 handle it all? The 400 billion Euros or so borrowed to create the European Financial Stability Facility, which was created in 2010 by Euro area member states to safeguard financial stability in Europe by providing financial assistance to those member states, can now be used as security to borrow a further one trillion Euros to shore up banks who will now write off half of Greek debt. Assuming that Greece can pay back the other half and that no other Euro zone country defaults or writes down its debt that just leaves the European banking system with 1.4 trillion Euros to repay, as well as finding 2-4 trillion Euros to adequately re-capitalize the banking system and hope that this kick starts growth. No one really believes that this will happen because of German phobia about the inflationary consequences of such monetization. This fear entirely explains the chicanery that has led the EuroZone to the brink, dragging the global

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economy with it.

How did we get here?

Making money? Wikipedia states: “Money is any object or record that is generally

accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Nearly all contemporary money systems are based on fiat money. Fiat money derives its value by being declared by a government to be legal tender for 'all debts, public and private'. The money supply of a country consists of currency (banknotes and coins) and bank money (the balance held in checking accounts and savings accounts). Bank money is usually far the largest part of the money supply.”

“Could money, generated out of the 'thin air' of fractional banking, really lead to economic growth?” John Stuart Mill asked more than a century ago. “Isn‟t the 'something-for-nothing' arrangement in blatant contradiction with the basic laws of nature and common sense?”

“When goods are carried to the market, what is wanted is somebody to buy,” quipped Mill. “But to buy, one must have the wherewithal to pay, which comes from the ability to produce. Thus, it would appear that the demand of a nation is always equal to the produce of a nation, nothing more, nothing less. An exchange of nothing for something can‟t work.”

By the beginning of the 20th century almost all countries had adopted the gold standard, which backed their legal tender notes with fixed amounts of gold. At the Bretton Woods Conference in July 1944, most nations moved over to fiat currencies which were pegged to the US dollar. The US dollar was in turn fixed to gold. In 1971 the US government suspended the convertibility of the US dollar to gold.

After this, many countries de-pegged their currencies from the greenback, and most of the world's currencies became backed by nothing more than the governments' fiat of legal tender and the ability to convert the money into goods via payment which is fine until people distrust the governments and central banks.

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Currently, the US Federal Reserve's solution is to print more money and increase liquidity or money supply to offset the impact form the collapse of the US housing market. It seems the European Central Bank will now follow course, just as soon as it can change its own rules to permit this.

The aim of this approach is to keep everyone in the life they have become accustomed to. Inflation is the inevitable consequence of the unsustainable printing of money although generally only after a significant delay.

The inability of governments to force people to make use of the increased money supply results in high deflationary pressures in the short term but, ultimately, any small pick-up in the velocity of money (and that means when US and European banks have plugged the $3-4 trillion and $5-6 trillion holes in their respective balance sheets) will end up having a huge impact, because of the increased money supply, unless you believe that central banks can suddenly and painlessly take away all that they have created. Having experienced hyper-inflation in the Weimar period, this fear informs German thinking. However, it is worth noting, as the Lex Column in the FT recently observed, that while the hyper-inflation of the 1920‟s destabilised the German economy, it was the subsequent austerity that fuelled Hitler‟s meteoric rise to power. Faced with an unprecedented build up of debt, we are now in the situation described by hedge fund manager Howard Marks in a recent letter to his clients:

For the last several years, as I’ve visited with clients around the world, I’ve

described the typical American as follows (exaggerating for effect, of course): He

has $1,000 in the bank, owes $10,000 on his credit card, makes $20,000 a year

after tax, and spends $22,000. And what do lenders do about this? They mail

him additional credit cards.

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Most people laugh – perhaps uncomfortably – when they hear this. But no one

says it’s inaccurate or benign. The bottom line is that consumer credit has been

extended without any thought for how the full balance might ever be paid off. As

long as the borrower is able to make monthly payments covering the interest and

a tiny bit of principal, the situation is considered acceptable. But that’s not my

version of fiscal health.

So now let’s jump from the top of the above list of developments to the bottom.

In much the same way, credit has been available to governments deemed

creditworthy without limit and without concern for the fact that countries were

constantly spending more than they were taking in.

Their deficits were growing non-stop relative to GDP.

Their national debts likewise were expanding relative to GDP.

In other words, repayment of principal was absolutely unimaginable.

One of the most striking aspects of debt in the modern era is that little if any

attention is paid to repayment of principal. No one pays off their debt. They

merely roll it over . . . and add to it. Thus credit ratings are highly deficient

(shocker!) in a way that few people talk about. What ratings describe isn’t the

borrower’s ability to repay principal, but its ability to make interest payments and

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refinance principal. But the assessment of their ability to roll their debt – likewise

– isn’t based on an ability to repay, but rather to refinance again. So ultimately

the security of capital providers stems not from the borrower, but from the

continued willingness of other capital providers to roll debts in the future. (It was

their occasional refusal in 2007-08 that caused the worst moments of the

financial crisis.)

With no one asking how debt could be repaid, nations were allowed for decades

to increase their deficits and debt non-stop relative to their GDP. And then, in the

first quarter of 2010, the little boy stepped out from the crowd, took note of the

emperor’s non-existent new clothes, and said “Hey, wait a minute: Greece will

never be able to repay even the debt it has, forgetting that it takes on more all

the time. Its economy is non-competitive and stagnant, and tax compliance is

non-existent. They shouldn’t be able to borrow.”

That’s all it took. Greece was denied further credit. And then people took a look

around peripheral Europe and saw more of the same. Today, although the

situation is nowhere as dire, they’re also looking at the US and some of its

states.

In America, the focus has been on the debt ceiling and the failed super

committee. The problem isn’t the ceiling. The debt ceiling merely imposes a

discipline that national leaders should provide but generally haven’t. In a press

conference on July 15, when asked about conservatives’ insistence on a

balanced-budget amendment to the Constitution, President Obama replied, “We

don’t need a constitutional amendment to do that [balance the budget]; what we

need to do is to do our jobs.” But clearly we do need some enforced discipline,

because the years in which we haven’t run a deficit have been by far the

exception of late, not the rule.

However, it is increasingly difficult to see how already alienated electorates will accept unpopular measures from increasingly remote and unrepresentative political structures. This failure of politics is nothing new – it‟s as old as Greece itself.

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Cycling down a blind alley

In Plato‟s „Republic,‟ Kyklos originally described the political cycle of governments in ancient Greece. Polybius developed the cycle into three basic forms of government, monarchy, aristocracy and democracy, each of which has an ugly as well as a positive side:

Unorganized anarchic society becomes dominated by a single ruler, who establishes a monarchy. The power then passes through successive generations who, corrupted by power and privilege become despotic and descend into tyranny, which is overthrown by its most powerful opponents.

This aristocracy in turn becomes corrupted by power and privilege and descends into a corrupt oligarchy which is subsequently rejected by the people in favour of representative rule. However, when democracy becomes corrupt because of dissatisfaction with perceived rights and equalities this degenerates into the chaotic, anarchic mob rule of ochlocracy and the whole cycle starts over. There have been several variations on this theme but in most interpretations, republics or aristocracies are replaced by democracies and democracies decline to be replaced by dictatorships or empires. Aristotle used the term democracy as a pejorative – polity was his preferred term for effective representative rule which he felt was predicated upon a well-educated electorate who could intelligently and reasonably exercise their entitlement to vote. Whatever label we apply, the basic principle of democracy is that those affected by a decision will make it. The modern response to Aristotle‟s view that democracy is limited by the capability and understanding of the members of society, is to rely on "representative democracy" where the most supposedly outstanding candidates are chosen, whether as figureheads (Prime Ministers or Presidents) or vanguard bodies (Parliaments or Congresses) to make our decisions for us. However, there is no guarantee that this is free of negative outcomes - Lord Acton famously wrote that that representation centralizes power which, therefore, attracts corrupting influences to itself (are you reading this, American Congressmen?). Whether in Washington, Moscow, Rome, or Athens, public perceptions of cronyism and corruption scandals have started to destroy trust in political parties and public institutions although currently the bulk of the blame seems to be directed still at individuals. Politicians of integrity and better informed electorates are an essential requirement if democracy is to survive. Election year‟s stereotypical behaviour in America and the democratic deficit in Europe are immediate alarms that the leaders are still on the wrong track, whereas educational data and trends are an even bigger concern about the adequacy of understanding within the voting classes. Neither of these are easy challenges to face – globally there is a paucity of political will to do the right thing and society seems to place a wholly inadequate value on the worth of education. Data in the appendix to this report shows, in Dollar terms, just how little educators are valued relative to other professions.

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Greco-Roman Wrestling

Today, more Europeans live in democracies than ever before but despite this unprecedented and favourable context, there is a widespread dissatisfaction with the practice of “democracy”, with mistrust of political institutions and politicians on the rise as turnout for elections continues to decline.

The positive response of the media and the markets to the changing cast of characters in Greece and Italy (who have not yet managed to resolve any of the underlying problems) shows a total lack of understanding of the severity of the deep-rooted issues. The markets were very happy to celebrate the appointing of a different set of „ineptocrats‟ to saddle the Greek population with an impossible burden, yet descended into blind panic when faced with a populous demanding democracy.

The Italians have shown a greater reluctance to cede their sovereignty, but when Prime Minister Silvio Berlusconi aligned himself substantially with the Italian people against the EU, the European Central Bank, international financial organisations and President Obama, the sheer weight of international pressure, volatile markets and finger pointing forced Berlusconi‟s hand into a protracted month long resignation.

No wonder there is rising anger being vented at politicians, governments and political parties by a public that feels increasingly disengaged and disenfranchised, both politically and economically. Such realities are being manifested in low voter turnouts, declines in party memberships and an increase in the popularity of fringe and protest groups such as Tea Party and the Occupy movement. Added to this is the frustration of policy decisions imposed by unelected and unaccountable supranational bodies. The EU effectively tore up its own constitution when EuroZone members, along with 9 of the other 10 EU members, agreed to replace the existing treaties with a bipartisan arrangement whereby Germany, cast in the role of paymaster, will only sign cheques if it can secure side deals with

debtors who will cede all economic sovereignty to Germany in return for the cash. In a sense, both positions are understandable – the debtors desperately need the cash and will agree to anything today to get it, especially as in the past they have never been called to account on their false promises. Germany wants to keep the EuroZone benefits in place but feels that it needs to control the jurisdictions that have made the promises. The problems will come later – opposition on the streets of Athens, Madrid or Rome to austerity imposed by elected national governments has been violent enough. However, opposition to austerity imposed by a technocrat government installed to supervise German interests is a far more worrying powder keg on those same Greek, Spanish and Italian streets.

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Banana Republicanism

This transfer of sovereignty from poorer nations to the core is one further symptom of the biggest single structural defect facing the EZ economies night now - the widening gap between rich and poor, which is reshaping these economies, leaving them more vulnerable to recurring financial crises and making sustainable and significant growth less likely. This is also the biggest issue facing the US, UK and China. Issues such as record levels of debt, spiralling federal deficits, and a chronic lack of velocity in money circulation are all symptoms of the same disease. “Income inequality in this country is just getting worse and worse and worse,” James Chanos, recently told Bloomberg Radio. “And that is not a recipe for stable economic growth when the rich are getting richer and everybody else is being left behind.”

This point was recently debated on CNBC with Eric Rosenkranz –

http://video.cnbc.com/gallery/?video=3000056592

Since 1980, about 5% of the US' annual national income has shifted from the middle class to the nation‟s richest households. That means the wealthiest 5,934 households last year enjoyed an additional $650 billion – about $109 million a piece – compared to their earnings in 1980, according to Census Bureau data.

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Between 1993 and 2008, the top one per cent of families captured 52% of total income gains, according to a 2010 analysis of Internal Revenue Service tax data by economist Emmanuel Saez of the University of California, Berkeley, despite suffering disproportionate setbacks in the wealth destruction that took place during the Global Financial Crisis (GFC).

Disputes over what constitutes economic fairness are moving to centre stage amid a near-stagnant US economy saddled with 9.1% unemployment yet boasting record corporate profits. President Obama last month targeted “the wealthiest tax payers and biggest corporations‟ for higher taxes, saying they should pay “their fair share”.

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A lot of the anger over this dispersal of income which is more akin to what you would expect to find in a banana republic than in the world's most powerful nation is what is igniting global protests inspired by Occupy Wall Street, where demonstrators make claims such as, “We are the 99% that will no longer tolerate the greed and corruption of the one per cent.”

Howard Buffett, director of Berkshire Hathaway Inc sympathises with this anger. The son of Warren Buffett recently told Bloomberg News, “There has never been such a large gap between earnings in this country…. There has never been a time in my lifetime when the government is going to cut an incredible amount of programs that support poor people and feed them.” Almost half Americans now see their country divided between “haves” and “have-nots,” according to a Pew Research Center poll . This evidence is being noted by many observers and pundits, who are shedding light on the long-term negative impacts of such inequality. “The large and growing gap between the haves and have-nots will tend to undermine growth, both directly and indirectly – including by reducing the marginal propensity to consume and by amplifying the political polarization that has already contributed to poor economic policymaking,” said Mohamed El-Erian, the CEO of PIMCO. To us this is the central issue right now in the Eurozone as well as in America, although much of the data and available commentary focuses on the U.S., highlighting the evolution of the gap in America. Following World War Two, the country unified around a programme to build a prosperous nation in the 1950s. This was so successful that the 60s saw radical social change and moves toward greater equality encapsulated by the promise of a “grand society”.

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When times became tougher in the 1970s, the focus on distribution of profit came to the fore. At that time economist, Art Laffer gained prominence during the Reagan administration when he demonstrated how tax rates became inefficient when they exceed the equilibrium point, as shown by the Laffer Curve (opposite). This construct enabled taxation to be used as the mechanism for the transfer of wealth to the super wealthy via the means of the increased indebtedness of the nation and its population. Although Laffer provided the tools to accelerate this trend, its origins can be traced all the way back to 1968. Since then, income distribution in the US has become steadily more unequal, according to the Gini coefficient. The US‟ Gini score rose from 0.39 in 1968 to 0.47 in 2010 – the higher the index the greater the inequality. Bloomberg points out that in the 30-nation Organization for Economic Cooperation and Development (OECD), only Turkey and Mexico have more unequal societies than the US, where the gap between rich and poor has widened by 20% since the mid-80s, a faster rate than in most developed countries. “Nowhere has this trend been so stark as in the United States,” the OECD concluded in a 2008 study. However, the OECD‟s report considers Eurozone income dispersion scores on a country-by-country basis rather than across the entire zone which would provide a better insight into the current crisis. In addition to the factors in the US that have increased inequality in recent years, such as globalization, technological developments and the decline of labour unions, alongside the main drivers of government trade and tax policies, the Eurozone has seen the added facilitation of a superficially more harmonised debt market exacerbating underlying economic differences, following the introduction of the single currency. Inefficient income distribution does not only have a serious economic impact, it can also destabilise entire political systems. It is also worth pointing out that the Gini co-efficient is not the only matter to be concerned about, there is also the issue of corporate wealth. By the end of the global financial crisis, in early 2009, total corporate profits peaked at $1.5 trillion, 6.5% above the previous highpoint in September 2006, according to Bloomberg.

Whilst personal income and wealth data are understood to have been volatile during the period since the credit crunch, corporate balance sheets provide an up to date snapshot of just how cash-rich corporate America is at a time when US consumers are drowning under seas of debt. The typical American household‟s median income of $49,445 at the end of 2010 remains below the 1997 figure.

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The long-term effect of this expanding wealth gap is that it will dampen economic growth. Societies with a narrower wealth gap enjoy more sustainable, longer-term periods of growth. In 2011, the International Monetary Fund stated that the wealth gap in the US had expanded to such an extent that further expansions may only be one-third as long as those experienced in the late 60s.

“Very high levels of inequality seem to be associated with slower economic growth,” agreed Michael Feroli, chief US economist for JPMorgan Chase & Co. This comment echoed Raghuram Rajan, the IMF‟s former chief economist who says countries with high levels of inequality tend to produce ineffective economic policies and that political systems in economically divided countries become polarized and immobilized by the type of zero-sum games now being played out between the Republicans and Democrats on Capitol Hill.

The 30.5 million American households that earned less than $25,000 in 2010 were almost seven times the number making more than $200,000, according to new Census Bureau figures. In 2000, the ratio was 5.6-to-1.

Even Ben Bernanke last year told CBS‟s “60 Minutes” that rising inequality was leading to “a society which doesn‟t have the cohesion that we‟d like to see.”

We do not want to see this either. Not in America, Europe or anywhere else. However, street protests against the so-called “1%” are gathering pace, right across the US, bridged the Atlantic and evolved into broader protests against government cutbacks and austerity measures in London, Madrid and Athens.

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Given the current and impending austerity measures, the perception of gross economic inequality looks likely to only increase. This will cause more political instability at the very time when governments need to find the strength to abandon the non-productive can-kicking and take decisive action that incurs a great deal of short-term pain.

No Spoonful of Sugar

This crisis is not restricted to Greece by any means. It is global in nature. There is a playbook for the solution to the global crisis. In the aftermath of the 1997 Asian financial crisis many of Southeast Asia‟s tiger economies were forced by the IMF and Washington to endure painful structural reform. This reform is why most of the region‟s economies emerged relatively unscathed from the 2008 global financial crisis.

However, it appears that the governments of the western economic powerhouses – the same economies that were devastated during the last global downturn – have little taste for their own medicine. Europeans will certainly lack the stomach for another dose of heavy-handed austerity measures at a time when many people feel their politicians are putting the whims of an exclusive cartel of the world‟s richest nations, corporations and families over the needs of the global populous.

It is hard to predict what the precise outcome of the current global economic conflagration will be. The warning lights are flashing and it appears that we are reaching the point of no return for the current socio-economic structure. We can be certain that there will be plenty of doom, gloom and political and economic instability over the next year or two.

Greece is not the word. Greece is merely an example of a severely imbalanced world where wealth and income are distributed in a way that excludes entire nations, marginalises the vast majority of populations and trivialises the value of education. The economic crisis is the symptom of a global society whose entire economic, political and social structures are perched on the brink of a terrifying precipice. No, Greece is not the word.

Paul Gambles, Bangkok, December 2011

Additional research provided by Leigh Pearson

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Appendix

US Graduate Employment Data showing lowest to highest paid

Source: Georgetown University Survey

No. Discipline unemp %

Min sal top sal Popularity

1 SCHOOL STUDENT COUNSELING 0.00% 18000 42000 172

2 VISUAL AND PERFORMING ARTS 9.20% 20000 52000 103

3 COUNSELING PSYCHOLOGY 5.20% 23000 42000 133

4 LIBRARY SCIENCE 15.00% 23000 49000 159

5 CLINICAL PSYCHOLOGY 19.50% 25000 61000 168

6 STUDIO ARTS 8.00% 25000 57000 84

7 THEOLOGY AND RELIGIOUS VOCATIONS

4.10% 25000 54000 46

8 ANIMAL SCIENCES 5.70% 26000 60000 67

9 BOTANY 6.90% 26000 55000 147

10 COSMETOLOGY SERVICES AND CULINARY ARTS

7.30% 26000 60000 115

11 MISCELLANEOUS FINE ARTS 16.20% 26000 49000 164

12 DRAMA AND THEATER ARTS 7.10% 28000 60000 45

13 EARLY CHILDHOOD EDUCATION 4.10% 28000 45000 50

14 EDUCATIONAL PSYCHOLOGY 10.90% 28000 51000 156

15 FINE ARTS 7.40% 28000 65000 22

16 GENERAL AGRICULTURE 3.00% 28000 68000 71

17 PLANT SCIENCE AND AGRONOMY

2.70% 28000 71000 85

18 HUMAN SERVICES AND COMMUNITY ORGANIZATION

6.90% 29000 50000 77

19 AGRICULTURAL ECONOMICS 1.30% 30000 99000 122

20 ANTHROPOLOGY AND ARCHEOLOGY

6.90% 30000 60000 55

21 BIOCHEMICAL SCIENCES 7.10% 30000 80000 87

22 COMPOSITION AND SPEECH 7.70% 30000 61000 99

23 ELECTRICAL AND MECHANIC REPAIRS AND TECHNOLOGIES

8.40% 30000 68000 134

24 FAMILY AND CONSUMER SCIENCES

5.10% 30000 58000 29

25 FILM VIDEO AND PHOTOGRAPHIC ARTS

7.30% 30000 71000 54

26 HUMANITIES 8.40% 30000 62000 118

27 LINGUISTICS AND COMPARATIVE LANGUAGE AND LITERATURE

10.20% 30000 70000 90

28 MISCELLANEOUS PSYCHOLOGY 10.30% 30000 71000 120

29 MUSIC 5.20% 30000 67000 37

30 PHILOSOPHY AND RELIGIOUS STUDIES

7.20% 30000 65000 42

31 PHYSIOLOGY 4.60% 30000 68000 113

32 PSYCHOLOGY 6.10% 30000 65000 5

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No. Discipline unemp %

Min sal top sal Popularity

33 SOCIAL WORK 6.80% 30000 51000 30

34 TEACHER EDUCATION: MULTIPLE LEVELS

1.10% 30000 48000 86

35 UNITED STATES HISTORY 15.10% 30000 96000 139

36 COMMERCIAL ART AND GRAPHIC DESIGN

8.10% 31000 69000 21

37 COMMUNITY AND PUBLIC HEALTH

4.10% 31000 70000 110

38 ECOLOGY 5.20% 31000 60000 109

39 GENERAL EDUCATION 4.20% 31000 53000 9

40 INTERDISCIPLINARY SOCIAL SCIENCES

6.30% 31000 50000 96

41 MISCELLANEOUS AGRICULTURE 3.70% 31000 67000 160

42 MISCELLANEOUS BIOLOGY 5.30% 31000 69000 125

43 AGRICULTURE PRODUCTION AND MANAGEMENT

3.00% 32000 71000 75

44 ART AND MUSIC EDUCATION 4.20% 32000 51000 48

45 COMMUNICATION DISORDERS SCIENCES AND SERVICES

3.30% 32000 50000 98

46 ELEMENTARY EDUCATION 3.60% 32000 49000 8

47 ENGLISH LANGUAGE AND LITERATURE

6.70% 32000 75000 11

48 FRENCH GERMAN LATIN AND OTHER COMMON FOREIGN LANGUAGE STUDIES

5.90% 32000 67000 43

49 HOSPITALITY MANAGEMENT 5.80% 32000 71000 38

50 INTERCULTURAL AND INTERNATIONAL STUDIES

6.60% 32000 71000 100

51 LANGUAGE AND DRAMA EDUCATION

5.00% 32000 50000 58

52 LIBERAL ARTS 7.60% 32000 71000 20

53 MASS MEDIA 6.90% 32000 69000 35

54 MOLECULAR BIOLOGY 5.30% 32000 76000 124

55 OTHER FOREIGN LANGUAGES 6.40% 32000 76000 111

56 PRE-LAW AND LEGAL STUDIES 7.90% 32000 69000 91

57 SOCIAL PSYCHOLOGY 8.80% 32000 60000 155

58 ART HISTORY AND CRITICISM 6.90% 33000 71000 81

59 COMMUNICATION TECHNOLOGIES

6.70% 33000 73000 89

60 GENETICS 7.40% 33000 99000 163

61 MISCELLANEOUS EDUCATION 3.70% 33000 65000 61

62 PHYSICAL FITNESS PARKS RECREATION AND LEISURE

4.80% 33000 61000 27

63 SOCIOLOGY 7.00% 33000 67000 19

64 ZOOLOGY 6.70% 33000 81000 119

65 AREA ETHNIC AND CIVILIZATION STUDIES

5.70% 34000 76000 66

67 GENERAL SOCIAL SCIENCES 8.20% 34000 74000 68

68 HISTORY 6.50% 34000 81000 18

69 JOURNALISM 7.00% 34000 79000 25

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No. Discipline unemp %

Min sal top sal Popularity

70 MATHEMATICS TEACHER EDUCATION

3.40% 34000 56000 108

71 MEDICAL ASSISTING SERVICES 2.90% 34000 71000 95

72 MULTI/INTERDISCIPLINARY STUDIES

5.50% 34000 50000 107

73 NEUROSCIENCE 7.20% 34000 76000 154

74 PHYSICAL AND HEALTH EDUCATION TEACHING

4.50% 34000 59000 39

75 SPECIAL NEEDS EDUCATION 3.60% 34000 50000 52

76 BIOLOGY 5.60% 35000 76000 14

77 COMMUNICATIONS 6.30% 35000 81000 7

78 COMPUTER NETWORKING AND TELECOMMUNICATIONS

5.20% 35000 76000 97

79 CRIMINOLOGY 5.20% 35000 71000 92

80 GENERAL MEDICAL AND HEALTH SERVICES

5.80% 35000 71000 74

81 MISCELLANEOUS BUSINESS & MEDICAL ADMINISTRATION

5.30% 35000 81000 64

82 MISCELLANEOUS HEALTH MEDICAL PROFESSIONS

3.30% 35000 62000 93

83 NUTRITION SCIENCES 6.40% 35000 71000 101

84 SECONDARY TEACHER EDUCATION

3.80% 35000 59000 57

85 SOCIAL SCIENCE OR HISTORY TEACHER EDUCATION

3.00% 35000 58000 83

86 ADVERTISING AND PUBLIC RELATIONS

6.10% 36000 74000 41

87 COGNITIVE SCIENCE AND BIOPSYCHOLOGY

4.50% 36000 91000 167

88 COURT REPORTING 4.90% 36000 81000 151

89 CRIMINAL JUSTICE AND FIRE PROTECTION

4.70% 36000 73000 13

90 GEOSCIENCES 3.20% 36000 71000 153

91 HEALTH AND MEDICAL ADMINISTRATIVE SERVICES

4.30% 36000 76000 63

92 MULTI-DISCIPLINARY OR GENERAL SCIENCE

4.60% 36000 81000 26

93 NATURAL RESOURCES MANAGEMENT

6.90% 36000 71000 78

94 PHYSICAL SCIENCES 2.50% 36000 68000 157

95 PUBLIC ADMINISTRATION 6.90% 36000 78000 112

96 SCIENCE AND COMPUTER TEACHER EDUCATION

5.00% 36000 58000 116

97 ARCHITECTURE 10.60% 37000 85000 33

98 BUSINESS MANAGEMENT AND ADMINISTRATION

6.00% 38000 85000 1

99 FORESTRY 3.10% 38000 73000 104

100 GENERAL BUSINESS 5.30% 38000 91000 2

101 INTERNATIONAL BUSINESS 8.50% 38000 87000 72

102 MECHANICAL ENGINEERING RELATED TECHNOLOGIES

6.60% 38000 87000 123

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No. Discipline unemp %

Min sal top sal Popularity

103 MISCELLANEOUS SOCIAL SCIENCES

3.80% 38000 85000 143

104 POLITICAL SCIENCE AND GOVERNMENT

6.00% 38000 91000 15

105 BIOLOGICAL ENGINEERING 6.80% 39000 94000 126

106 CHEMISTRY 5.10% 39000 85000 36

107 COMPUTER ADMINISTRATION MANAGEMENT AND SECURITY

9.50% 39000 75000 114

108 COMPUTER PROGRAMMING AND DATA PROCESSING

6.20% 39000 84000 121

109 PHYSICS 4.50% 39000 101000 70

110 ATMOSPHERIC SCIENCES AND METEOROLOGY

1.60% 40000 101000 146

111 ENGINEERING MECHANICS PHYSICS AND SCIENCE

6.50% 40000 101000 132

112 ENGINEERING TECHNOLOGIES 5.30% 40000 91000 117

113 ENVIRONMENTAL SCIENCE 5.00% 40000 76000 60

114 GEOGRAPHY 6.10% 40000 81000 62

115 HEALTH AND MEDICAL PREPARATORY PROGRAMS

5.20% 40000 86000 130

116 HUMAN RESOURCES AND PERSONNEL MANAGEMENT

6.60% 40000 85000 40

117 INTERNATIONAL RELATIONS 5.80% 40000 93000 79

118 MARKETING AND MARKETING RESEARCH

5.90% 40000 90000 6

119 MICROBIOLOGY 5.20% 40000 86000 94

120 OCEANOGRAPHY 3.30% 40000 79000 148

121 TREATMENT THERAPY PROFESSIONS

2.60% 40000 81000 34

122 ACCOUNTING 5.40% 41000 94000 3

123 EDUCATIONAL ADMINISTRATION AND SUPERVISION

0.00% 41000 89000 171

124 GEOLOGY AND EARTH SCIENCE 5.70% 41000 93000 73

125 ECONOMICS 6.30% 42000 108000 16

126 ELECTRICAL ENGINEERING TECHNOLOGY

5.50% 42000 91000 65

127 MATHEMATICS 5.00% 42000 95000 28

128 MISCELLANEOUS ENGINEERING 7.40% 42000 91000 106

129 TRANSPORTATION SCIENCES AND TECHNOLOGIES

4.40% 42000 98000 56

130 SOIL SCIENCE 4.90% 43000 81000 165

131 BUSINESS ECONOMICS 5.00% 44000 101000 80

132 COMPUTER AND INFORMATION SYSTEMS

5.60% 44000 86000 31

133 FINANCE 4.50% 44000 101000 12

134 MEDICAL TECHNOLOGIES TECHNICIANS

1.40% 44000 74000 51

135 BIOMEDICAL ENGINEERING 5.90% 45000 101000 137

136 INDUSTRIAL AND ORGANIZATIONAL PSYCHOLOGY

10.40% 45000 81000 135

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No. Discipline unemp %

Min sal top sal Popularity

137 MISCELLANEOUS ENGINEERING TECHNOLOGIES

6.00% 45000 91000 88

138 OPERATIONS LOGISTICS AND E-COMMERCE

4.70% 45000 97000 102

139 INDUSTRIAL PRODUCTION TECHNOLOGIES

3.10% 46000 91000 82

140 GENERAL ENGINEERING 5.90% 47000 101000 24

141 MANAGEMENT INFORMATION SYSTEMS AND STATISTICS

4.20% 47000 96000 44

142 NUCLEAR INDUSTRIAL RADIOLOGY AND BIOLOGICAL TECHNOLOGIES

2.20% 47000 81000 142

143 PUBLIC POLICY 2.20% 47000 101000 141

144 INFORMATION SCIENCES 5.90% 48000 95000 69

145 NURSING 2.20% 48000 80000 4

146 PHARMACOLOGY 0.00% 48000 101000 169

147 CONSTRUCTION SERVICES 5.40% 49000 101000 76

148 ARCHITECTURAL ENGINEERING 5.80% 50000 96000 140

149 COMPUTER SCIENCE 5.60% 50000 102000 10

150 ENGINEERING AND INDUSTRIAL MANAGEMENT

9.20% 50000 98000 127

151 INDUSTRIAL AND MANUFACTURING ENGINEERING

5.60% 50000 100000 59

152 METALLURGICAL ENGINEERING 3.90% 50000 110000 152

153 STATISTICS AND DECISION SCIENCE

6.90% 50000 108000 128

154 ACTUARIAL SCIENCE 0.00% 52000 116000 150

155 APPLIED MATHEMATICS 4.10% 52000 100000 131

156 ENVIRONMENTAL ENGINEERING 2.20% 54000 90000 144

157 CIVIL ENGINEERING 4.90% 55000 101000 32

158 MATHEMATICS AND COMPUTER SCIENCE

3.50% 55000 151000 158

159 ASTRONOMY AND ASTROPHYSICS

0.00% 56000 101000 170

160 GEOLOGICAL AND GEOPHYSICAL ENGINEERING

0.00% 56000 101000 166

161 MATERIALS ENGINEERING AND MATERIALS SCIENCE

7.70% 57000 105000 136

162 COMPUTER ENGINEERING 7.00% 58000 102000 47

163 AEROSPACE ENGINEERING 3.60% 60000 111000 105

164 CHEMICAL ENGINEERING 3.80% 60000 117000 49

165 ELECTRICAL ENGINEERING 5.00% 60000 111000 17

166 MECHANICAL ENGINEERING 3.80% 60000 106000 23

167 NAVAL ARCHITECTURE AND MARINE ENGINEERING

1.70% 60000 117000 145

168 MATERIALS SCIENCE 4.70% 65000 106000 161

169 NUCLEAR ENGINEERING 4.10% 65000 138000 149

170 MINING AND MINERAL ENGINEERING

4.30% 71000 121000 162

171 PHARMACY PHARMACEUTICAL SCIENCES AND

3.20% 78000 121000 53

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ADMINISTRATION

No. Discipline unemp %

Min sal top sal Popularity

172 MILITARY TECHNOLOGIES 10.90% 81000 126000 173

173 PETROLEUM ENGINEERING 4.40% 83000 178000 138

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