Tuesday, July 24, 2012


The sagacity and foresight of that fount of all economic knowledge, the 'Troika' of lenders to Greece, is there for all to see. With confidence and self-assurance they predicted that as a result of their stern but necessary policies:
Greece' economy would contract by 2.6pc in 2010 under the austerity regime, before recovering with growth of 1.1pc in 2011, and 2.1pc in 2012.
The critics scoffed, but the results of their policies were that ... er ...
In fact, Greek GDP has been in an unbroken free-fall. It did not grow last year. It contracted a further 6.9pc, and is now expected to shrink 6.7pc this year ... Roughly speaking, the Troika has misjudged the scale of economic decline over three years by 12pc of GDP.
This from a superb, angry piece byAmbrose Evans-Pritchard in the Daily Telegraph, please read it all.

The response from the policy makers is, of course, more of the same, with a scribbled note added to the bottom of the prescription; "must try harder." And if Greece fails to comply, they will be duly punished. I have stopped thinking that the policies were a product of an ideological fixation that might respond to reality, instead we have gone way beyond even wishful thinking into magical thinking - that if we want something to happen enough, it will - underpinned by the fear that decisive action may cost them real money.

Now the Troika appear to be quite relaxed about letting Greece go. As they wipe away a crocodile tear from one eye, I would recommend that they keep the other on Spain. Already deep in difficulties, the remedies being applied are identical and still the EU think that the results will be different. And if you think the Greek crisis has been a problem - you ain't seen nothing yet.

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