The following are just some of the systemic problems that led to the IMF-EU austerity regime in May 2010, a regime continuing to this day.
First, "baksheesh capitalism" characteristic also of other countries like Egypt under former president Mubarak, rested not so much on internal production and distribution of products and services, but on foreign products and services. Therefore, consumption of imports was driving an economy that was under-producing and sustaining a huge balance of payments deficit financed by foreign loans.
Second, the level of corruption in the public and private sectors had an enormous parasitic impact, for it drained capital from productive projects into the pockets of those in both private and public life. it was impossible to conduct business without bribery. Everything from medical products to submarines entailed bribery of different officials. No project could be carried out, no matter how large or small in the absence of bribes that of course lined the pockets of officials but drained the economy.
Third, the economy had no built-in incentives for productive investment, resting instead on subsidies coming from domestic or EU sources. For example, when an EU packet of half a billion euro was designated for agricultural development, a tiny amount actually went for that purpose. Instead, money went to politicians and public officials approving the designated funds, to inspectors overseeing how the funds were utilized, and to the recipient farmer who instead of using the money for fertilizers, new seeds, machinery, etc, used it to buy a new home, car, etc. Productive investment was very low largely because the culture of consumption that the corrupt two-party system established had filtered down to the entire society that simply assumed there would be no end to perpetual borrowing to finance consumption of imported products and services.
Fourth, the two political parties ruling Greece in the last forty years, the conservative New Democracy and the more liberal PASOK, both neo-liberal in their approach to policy and both supporting the IMF-EU austerity, built a massive clientist political system that contractors, bankers, TV-radio-newspaper owners, and of course shipping tycoons whose interests they served by also distributing some of the spoils to trade union leaders and bureaucrats. The media covered up the clientist political structure and to this day refuses to accept that there is such a thing as s structural problem, atributing corruption only to those very few individuals serving a prison sentence.
However, the two ruling parties have legislation that provides immunity to ministers of government, and the legislature passes laws that extends such immunity to bankers, contractors, m,edia and shipping tycoons who are implicated with politicians in money scandals. In short, the law never reaches the politician or businessmen. The legal system as a structural impediment to a productive economy is designed so that the few thousand families who own roughly half of the wealth in the country retain their privileges along with the two ruling political parties protecting them.
This deadly combination sent GDP growth to negative territory, with Greece losing more than 25%, while its public debt rose from 120% of GDP in 2010 when the IMF promised to lower it below 100, to the current 180% of GDP. Both Germany and the IMF kept promising that austerity would deliver low unemployment rates, higher growth rates, higher investment, low balance of payments deficits and much lower debt. The exact opposite of what they promised has taken place, and the IMF admitted that along the way "mistakes" were made. In its entire sixty year history austerity policies deliver exactly what has taken place in Greece which is hardly the exception, but rather the rule to such policies intended to concentrate capital.
Under EU, US and Israeli pressure, the prime minister had to crack down on the neo-Nazis, especially after they assassinated a popular rapper, and had engaged in assassinations as well as other criminal activities before the rapper’s incident. Targeting mostly foreigners, but also Communists and gays, the Golden Dawn dreamed of creating a Nazi-style regime that would rid society of foreigners, gays and leftists of all types. There have been reports that behind the neo-Nazis were not just conservatives inside the government, but the police and judges as well as millionaires in the shipping business.
Although the government tried to find a way out of the IMF and EU austerity oversight so that it can have national sovereignty reestablished over policy, the financial markets immediately reacted by raising 10-year bond yields close to 10% before that number retreated a bit. The only way that they returned to the "respectable" 8% level - astronomical for a government and a signal that it must stay under austerity regime - is because the prime minister announced strict adherence to all IMF-EU austerity measures agreed so far. Moreover, it now seems certain that there will be a new package of austerity measures, but they will have a label that the public finds more acceptable to endure.
The contradictions of the austerity measures that Greece has pursued are found in the consequences of a society that in 2014 resembles the era of the military Junta of 1967-1974. Never before has any government behaved in an authoritarian manner as the neoliberal administrations (both PASOK and New Democracy) except for the colonels of the US-backed Junta. Destroying collective bargaining, destroying the right of workers to strike because the courts declare strikes illegal, destroying the ability of people to demonstrate because anti-austerity protests are deemed synonymous with anarchism if not terrorism, the government has done everything in its power to return Greece to the good old days of pre-WWII era when Great Britain dictated policy and the Cold War when the US did the same thing.
A mere semi-colony without a trace of sovereignty left, Greece has lost the illusion of pride rooted in the classical world. The neo-liberal regime tries to revive Greek nationalism and inculcate a sense of pride into the public by pointing to some new archeological findings from the post-Alexander the Great era, and by bringing to the country the new wife of actor George Clooney to say that the Elgin Marbles, stolen by the British and housed in the Birtish Museum must now be returned. Nothing wrong with a society immersed in classical culture and myth, but the reality of mass emigration of college-educated young people, poverty, high unemployment, and suicides due to absence of hope for the future cannot possibly be countered by the Elgin Marbles and new archeological discoveries that glorify ancient civilization. Joseph Campbell was correct about the power of myth in a culture, and it is true that Illusions keep humans beings balanced, but life's essentials for survival are even more important.