Monday, August 27, 2012

Crisis time is here again

Not that it ever went away. Samaras has been begging for time to get some sort of growth in the Greek economy, but the need to maintain the Franco/German alliance now seems to be standing in the way of French support for a less insane economic policy. Both countries are now putting pressure on Greece.  Much of this pressure is played out as a piece of theatre that consists of the stern authorities demanding obedience from the recalcitrant Greek child.  This article is well worth reading as it unpicks the moral drama without denying the need for reform. The point it makes is that,
To suggest that Greece is in a constant struggle to meet the troika’s fiscal goals because of indifference rather than due to the deteriorating state of the economy or because of the political difficulty of passing unprecedented -- by eurozone standards -- austerity measures is pure subterfuge. 
Pointing out that austerity has most certainly been implemented by Greece, and at immense economic cost, the article continues by saying,
The structure of the Greek bailout ensured that nobody in the official sector has lost money and the creation of an escrow account earlier this year guarantees that everyone who has lent to Greece will be repaid. In fact, when one factors in the interest and lower borrowing costs countries like Germany have benefited from as a result of weakness in other areas of the eurozone, the bailouts have turned a tidy profit. If Greece is a bottomless pit, it is the first in the world to return the money thrown into it with interest.
And then we come to yet another conclusion that says that the Troika have got everything wrong,
A crisis that is eminently solvable is instead being tackled in such a perverse manner that it threatens to erode Europe’s very foundations ...Greece is essentially being asked to pull even more of the rug from under the feet of its teetering economy, and risk the fragile political balance in the country, to receive further loans, which will be used to pay back existing debt. As Nomura Research Institute’s chief economist Richard Koo, who argues that the eurozone is experiencing a balance sheet recession, put it in a recent note, “it is as though a team of doctors insisted on administering the standard treatment for one disease to a patient suffering from an entirely different disease about which they knew nothing.”
And still they are not listening.

1 comment:

Anton Deque said...

I am a European; an Anglo Saxon which makes me a European through and through. Yet I have never believed in, nor wished for, a United States of Europe (perhaps a century ago not a bad idea, but such is hindsight). I believed that it would inevitably lead to dominance by the powerful over the weak. The old view that there is no dictatorship to match common sense seems nearer the truth today. Germany has to shoulder the blame for this debacle; it will turn millions away from what is sensible and consensual by seeking to maintain what is unfair and partisan. A Europe of separate states deciding for themselves how far to go in matching and blending policy has been superseded by one where centrist technocrats without need of electorates wage an internal war against the masses who are set impossible goals.