STAFF NEWS & ANALYSIS
Greece's Futile Austerity
By Staff News & Analysis - March 12, 2013

Greek Prime Minister Antonis Samaras on Saturday promised his recession-weary nation that there would be "no more austerity measures" as international creditors prolonged an audit of crisis reforms. "There will be no more austerity measures," Samaras said in a televised speech to his conservative party's political committee. "And as soon as growth sets in, relief measures will slowly begin," Samaras said. But he noted that Greece's ailing economy was "out of intensive care, not out of the hospital." – France24

Dominant Social Theme: We've swallowed the medicine and now we are going to get well.

Free-Market Analysis: So there will be no more austerity? To continue with the horrible metaphors surrounding the Greek situation, now that the patient is dead there will be no further attempts to cure him.

The Greek situation is beyond wretched. Top earners are being pursued by helicopters and spied on by satellites over non-payment of taxes; there are regular riots in the streets and, as in Argentina a decade ago, middle-class people have been reduced in some cases to picking through garbage bins to survive.

Retirement income has disappeared, savings have vanished and jobs are difficult or impossible to find. This is austerity, EU style. It would have been relatively easy to give Greece back its drachma. The country would have devalued, the pain would have been spread out and Greece could have limped along with its two-hour lunches and tourist-based economy.

Instead, the Eurocrats in Brussels exercised their immovable rigor and insisted that with the proper application of austerity, Greece could become a mini-Germany, prosperous, dour and industrially efficient. If PiGS could fly …

The suffering has been needless. The result is not going to be of benefit to anyone except perhaps some of Europe's largest banks, and they are getting plenty of help already.

There is little money in Greece but there is plenty of anger. And Samaras, taking note of it, announces there will be no further austerity measures. This doesn't even make sense. The article, above, informs us that under the bailout conditions adopted last year, "Greece needs to cut public sector workers by 25,000 in 2013 and a total of 150,000 by the end of 2015."

How is Samaras going to do that without further austerity measures? Perhaps he will simply call them something else. The next payment to Greece, of 2.8 billion euros, is due at the end of March.

In Germany, we hear of a solution. According to the UK Telegraph, "Greece should still leave the euro." According to a close ally of German chancellor Angela Merkel, "Greece still remains the biggest risk for the euro and would be better off to leave the single currency."

Here's more:

Despite the eurozone's economic and political crisis abating over the last six months, Alexander Dobrindt, the general secretary of the Christian Social Union (CSU) said Europe should continue working on an exit strategy for Greece. "The greatest risk for the euro is still Greece," he told German newspaper Die Welt am Sonntag.

Mr Dobrindt, whose political party, the CSU, is Bavaria's sister party to Mrs Merkel's Christian Democrats (CDU), urged the European Commission to prepare the legal ground work to allow a eurozone member to become bankrupt and exit the common currency.

Ahead of Germany's elections in September, Mrs Merkel has tried to quell market turbulence about the eurozone. The CSU and the CDU are very close with the CSU is tipped to win Bavaria's state election in the autumn.

Last year, Mr Dobrindt said Greece should start paying 50pc of its pensions and state salaries in drachmas – the Greek currency before the euro – as part of a planned withdrawal from the euro zone.

So we see, once again, that what has occurred in Greece hasn't really changed anything. The issue plays out politically as well as economically. And Ms. Merkel is under pressure. A new party is reportedly forming to lever Germany out of the EU before the bills that it has guaranteed come due.

Some 25 percent of Germans now voice the opinion that Germany is better off out of the EU than in it. Austerity has had an effect on the Germans as well as the Greeks.

The Greeks have suffered enormously from Brussels' determination to continue with the "magnificent experiment" of the euro. The longer it continues, the more Europe pays in blood and treasure – and eventually it will be for naught regardless. The Greeks have been Greek for thousands of years.

After Thoughts

The idea that culture is some malleable thing that can simply be ignored or cast aside is an elitist presumption, and an arrogant one.

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