Tragedy of my beloved Greece

My passion for Greece began the day I first went on holiday there 30 years ago, and has intensified ever since. I have been at the "party" that Greece once was. Now I am sharing the hangover. And it is desperately painful and sad.

I travel to Greece most months, to give talks on my novels, to work on adapting The Island into a 26-part miniseries for local television, and to research writing projects.

I have learnt the language well enough to appear on live television, and over the past five years have become so much part of this country that on arrival I do not always have to show my passport. I also have a house on Crete, which means I pay taxes. I can't vote - which, in some ways, I am glad of, as I would be torn between a series of equally nightmarish scenarios.

The problems have been brewing for years, but what feels like potential meltdown arrived in Athens very suddenly. Last week, I went to a favourite restaurant in the city centre. It used to be heaving with customers until 2am.

At 10pm on Thursday, the place was almost empty. Restaurants where you once had to book tables a week ahead are now struggling to survive. The bouzoukia, live venues that are a quintessential part of Greek life and where musicians used to play four nights a week, are now mostly open for one. I never thought the Greeks would stop going out. Staying in isn't in their DNA.

The bars are still full, as these are where people go to argue about politics and the future of the country. There does not seem to be any other conversation worth having. One friend, a leading Athenian journalist, told me how at least half of her friends are without jobs and money, and how anger is growing. Many people, in Athens at least, are at breaking point. "We don't care any more," she told me.

Suddenly I can feel how dangerous the mood has become. My friend Maria who voted for Pasok, Greece's main party on the centre-Left, in the recent election will shift allegiance to the communists; she has been driven to this after her salary dropped from euros 2,500 a month to euros 1,000. She is weary and disillusioned.

A 40-year-old fashion writer for a glossy magazine, Maria has seen the quality of her life disintegrate. She feels broken and angry. "For the next issue, we're focusing on punk - because that's where the country is at. Anarchy could happen." At least the riots have stopped, for now. As the country waits for new elections, Athens is strangely quiet. When I was last in town three months ago, I joined a peaceful march to get a feeling for the popular mood.

Up close, it was scary. The Greek police are quick to fire tear gas, and I felt things could erupt at any minute. The quiet on the streets now is even more eerie.

The Greeks are a very proud people, and feel humiliated by what has happened to them. At least once a day, someone will bring up the national debt and, in the same breath, how much Germany still owes Greece in outstanding reparations for their occupation during the Second World War.

Many people have lost their jobs, but the statistics do not reveal the thousands who still have jobs but have not been paid for many months. They are stuck: they have no income, but if they leave, they have no hope of recouping what they are owed. It has left a huge proportion of the country with no money to spend. As a result, retail businesses are going down all around us.

I've watched men in suits fishing in bins. The worst thing is when they do not take anything out, because someone has beaten them to it. People I know report of their children's poorer schoolmates fainting in class from hunger.

There is now an urge to end the corruption that has helped to destroy this country. Friends with businesses tell me that bribery has long been an assumed part of business life. I have listened, open-mouthed, to stories of tax evasion, often in the form of brown envelopes full of cash given to government inspectors to reduce a bill; sometimes, the pressure to hand over these bribes is tantamount to blackmail.

On a very small scale, I have witnessed it in restaurants when the credit card machine is "broken". "We can only take cash," says the owner. Dozens of times, I have watched a euros 20 note slip into a pocket, knowing that the government will not see a cent of it in tax.

The past few months have seen new taxes being imposed as existing ones rise. People are exhausted and confused by it all, and if their businesses survive at all, it is down to their determination.

Greek children are all too aware of the crisis into which their country has plummeted. Apart from having parents who are constantly anxious and talking about the "krisi", schools are running short of money. I have discussions over Skype with a school in northern Greece, and during the winter I noticed the pupils were wrapped up in coats and scarves. There was no money to heat the classrooms.

There was no budget for schoolbooks either. When I heard about the problem eight months ago, I asked my Greek publisher if we could start an initiative for authors to donate copies of their books. Even though I wanted to help, it has not been possible. There are layers of bureaucracy, but often very little organisation.

The mood in places far from Athens is not quite so bleak. I have been given so many gifts on my current trip (books, wine, pieces of embroidery, pens, olive oil and more) that they have had to be sent home by ship. Even when Greeks have very little, they give - and their generosity is humbling. In a city in the north, Alexandroupolis, I was given a vintage necklace, with old beads and coins. "Ah," said the woman who had made it, touching a drachma coin. "I might need that back."

Most Greeks are not making jokes about the currency. I have to keep a sum of money in my Greek bank account, which I was obliged to open when I bought the house. The hefty taxes that are randomly imposed on home owners these days are removed by direct debit, so the funds need to be there. It seems disloyal to remove them.

With eurozone banks on the brink, friends have asked me to help take their savings out of Greece. Three friends offered to fly to London with their life savings in suitcases - euros 40,000 in one instance - so I might keep it in my account. I wanted to help, but then I considered the consequences if something happened to me: the money would be lost under my name, and they would be left with nothing.

Tourism could help save Greece, but the Greeks need to nurture and treasure the assets that the gods gave them. This is a country with beautiful landscapes, blue sea, azure sky, culture, history and wonderful food. But one of the problems now is that the mood is so glum that when tourists come, they will not see the best of the country.

In Athens, they will be driven from the airport by a taxi driver who spends the journey on his mobile phone (illegal), smokes (illegal), and breaks the speed limit (illegal). If they live to tell the tale, they will see boarded up shops, graffiti-covered walls and people going through the bins. I hope that visitors can see past the dilapidation to the eternally ravishing aspects of Greece that are beyond politics and time. This could help the country to survive. I have been touring Greece this week talking about my novel, The Thread, which describes the traumatic, often dark, events of 20th century Greek history - occupation, civil war, earthquake. It is a tale about the Greeks' ability to survive, and they need to brace themselves now, just as they have before.

Unusually for May, it poured with rain last week. From my balcony, I could see the crowd that had gathered in the ancient marble stadium for the handing over of the Olympic flame. After several hours, the clouds parted and an intense rainbow appeared.

Greece always delivers drama. It is always larger than life. I hope for the sake of everyone in this extraordinary country that the rainbow was symbolic and that Greece will soon find its pot of gold.

Victoria Hislop is the author of The Thread, published in Britain by Headline Review