dagblog - Comments for "Austerity in Greece leading to Civil War, not a good economy"

I don't see how Greece's

acanuck — Thu, 19 Aug 2010 19:30:28 +0000

In reply to I don't buy that rendition at

I don't see how Greece's historic grievances with Turkey can in any way be compared to the impact of a huge economic meltdown. Are there troops massing on the border? Military incursions? No, the two countries are NATO allies. They have even been talking quietly about potential points of friction like Cyprus, and about increasing trade and travel. Turkey is a red herring in this issue.

The difference is that Greece

acanuck — Thu, 19 Aug 2010 19:22:05 +0000

In reply to I'm not sure what the core

The difference is that Greece entered voluntarily -- eagerly, in fact -- into a monetary union with the rest of Europe for the perceived advantages it would bring, cooking its books, apparently, to present a rosier resume. Then it failed to meet its budgetary commitments. Even post-crisis, the Greek government agreed to the austerity plan in exchange for billions in French and German bailout funds. Taxpayers in those countries still feel snookered.

If this were happening 10 years ago, the rest of Europe would look on impassively as Greece defaulted and the drachma collapsed. The IMF would offer to help, but the austerity it would demand in return would be way more draconian. The IMF cares only about keeping global trade functioning. Europe today has the stability of its own currency at stake, so it needs a viable Greek partner/member. That's why Greece is getting off relatively lightly.

Leaving the EU would be

Michael Wolraich — Thu, 19 Aug 2010 16:58:16 +0000

In reply to I don't buy that rendition at

Leaving the EU would be wrenching--economically and psychologically. It's a last-resort solution, and I don't blame the Greek leaders for trying to avoid it if they can.

I'm not sure what the core

Michael Wolraich — Thu, 19 Aug 2010 16:56:17 +0000

In reply to I tend to agree about the

I'm not sure what the core difference is here. The IMF and World Bank only demand austerity measures when countries are on the verge of default. In Greece's case, it's the European finance ministers not the IMF, but the main idea is the same--intervention to prevent default on condition of drastic austerity. And it seems equally wrongheaded.

I don't buy that rendition at

Anonymous — Thu, 19 Aug 2010 16:38:58 +0000

In reply to I tend to agree about the

I don't buy that rendition at all. Reneging on what they owe stops the credit flowing yes, but the amount of money being siphoned from the economy to service debt interest is enormous. One could easily argue that their economy is much better off with no capital inflows but also with no debt service. In other words, what is being done in Greece is being done to preserve European solidarity in a quid pro quo. Thi way, the German and French banks don't suffer huge losses on Greek debt, while Greece preserves its place in the EU. Remember, Greece still has huge national and political problems vis-a-vis Turkey, and those problems trump even a huge economic meltdown. Greece would rather preserve its political relationships than go it alone. This means they've agreed to devastate the country economically to preserve their EU status. Otherwise, I'd argue that the massive outflow of money puts a real crimp on the economy. Think of it this way: you have $50,000 in debt at 25% interest on credit cards, you get paid $30,000 a year. If you declared bankruptcy and no longer had access to credit cards or loans, could you better get by on $30k a year even if you no longer had access to more funds?

I tend to agree about the

acanuck — Thu, 19 Aug 2010 06:04:03 +0000

In reply to To me, it's a great mystery

I tend to agree about the IMF's kneejerk tough-love prescriptions, but I think Greece is a special case. It's not the recession/depression that's strangling the economy; it's the fact that the recession/depression exposed the country's fiscal house of cards. As I understand it, Greece faces drastic austerity or total default on the national debt, which would see it booted out of the euro and be an even tougher pill for the population to swallow.

To me, it's a great mystery

Michael Wolraich — Wed, 18 Aug 2010 21:34:14 +0000

In reply to Austerity in Greece leading to Civil War, not a good economy

To me, it's a great mystery why finance ministers and IMF types still push austerity programs during economic depressions. Wasn't this approach thoroughly discredited in the 1930s? If these economists were doctors, they'd treat TB cases with fresh air and leeches.