If what both Tsipras and European leaders have said can be believed it looks like Greece will leave the Euro–the positions are too far apart. But politicians have a strong tendency to lie so both may back down substantially from their current positions. I don’t think we will know for a couple years as they will do negotiations.
Thoughts? Will they? If they do is it a good idea? I think Greece would be better off leaving.
Austerity is unpopular because, to borrow an expression, nobody likes to have to eat their vegetables.
Austerity is unpopular because it’s pointlessly destructive and creates a great deal of suffering. And I bet that the Greek kids looking through garbage for food would like some of those vegetables.
Greece will rue the day it leaves the EU.
The masses are ignorant, petulant children.
The masses are desperate and hungry, and have little to lose.
No one knows. What we really have here is a massive game of chicken with the fate of the Euro and much of the world economy on the line. Tsipras and his party believe that European leaders are unwilling to consider a Greek exit from the Euro under any circumstances. Thus, if he holds strong and refuses to go along with the austerity measures, the European leaders will have to blink and renegotiate the terms of the bailout.
Is he correct? I guess we’ll all find out.
Fiscal discipline, self-control and restraint is always unpleasant to a certain extent.
I would like to be able to spend $200 per week on groceries, but my budget only allows for around $120-$140 a week. I would like to be able to buy a thousand-dollar smart phone, but I realistically can only spend a few hundred dollars on one. Any more than that and every other financial category of my budget would be in trouble.
Financial restraint and self-control is not fun and it’s not supposed to be fun.
If the masses give a little on their 20-hour workweek and 6 months of requisite paid vacation, they will be just fine. Greece is not North Korea.
I presume that you mean this in the sense of Keynesian Economics, where there are reasonable arguments to be made in favor of big spending, in times of hardship. But that’s sort of like prescribing antibiotics to a man with lung cancer. It’s reasonable advice for a completely different situation. Granted, I wouldn’t say that austerity is an answer either. Likewise, it’s a solution that doesn’t have much to do with the problem.
But Greece does need to do something along the lines of “reasoned finance” if they want to continue to be a business and/or political partner with the rest of Europe. Being able to demonstrate that they can budget in a rational manner is really the key point. Austerity isn’t necessarily the best form of that, in a purely economic theory sense, but it probably is the path that will keep them in good stead with Germany and the EU, which is ultimately more important for their economy.
Austerity isn’t about restraint, it’s about the systematic abuse of the general population. It’s about grinding them into poverty and desperation to punish them.
Financially however it’s purely destructive.
And what about the people who haven’t had work in a year or more? What about the children suffering from malnutrition? How will they be “fine”?
Austerity will destroy them, as it is in the process of doing. And the new people keeping to it especially after they got elected saying they won’t would likely result in the population giving up on democratic solutions and kicking off a revolution. That’s what a starving, hopeless population does.
And austerity makes it impossible for them to budget in a “rational manner”.
I don’t think so. If someone has $25,000 of credit card debt, he has little choice but to tighten his belt. Or he could, of course, choose not to do so, but that would probably worsen his debt situation or, at the least, fail to improve it.
If you feel like you know what’s what, then I encourage you to make an economic argument. Going all Jack Bauer, “Millions of people are GOING TO DIE!”, isn’t an economic argument.
Yes, maybe a large number people will die of starvation. But let’s take the example of inoculation. When you give someone a shot to immunize them against a virus, some percentage of the people who get the shot actually contract the virus from the shot (since inoculation is a weak version of the virus), and some of those people die. By inoculating, you are actively and knowingly killing people. But you still do it because you know that the alternative would be that an even greater number of people die.
So I could explain to you what Greece could and should do, but instead I’m going to tell you that you’re championing the side of greater destruction, death, and hardship. Don’t do that.
He’s hardly going to be able to pay back that debt when he’s been fired and the economy of his country systematically destroyed. Austerity and paying back debts are mutually exclusive.
At which point it stops being about economics, and starts to be about politics and violence. Whatever economic threats Germany makes, they aren’t going to outweigh the threat of the political leaders of Greece being dragged out their offices and killed by starving mobs. Or the military shooting them and taking over.
Nonsense. Austerity is pure malice, helpful in no way whatsoever; it’s about collectively punishing the targeted nations for their perceived sins It has no similarity to inoculation. It’s “the beatings will continue until morale improves” taken seriously and imposed on a national level.
And they can’t do anything while they are being systemically ground into collapse.
The question is, would Germany be better off and the very clear answer is ‘no’, so Merkel will find a way.
Perhaps true, but if it’s what’s necessary to save lives, then I’m for it. Are you really going to tell the people of Greece that more of them have to die, because you personally feel that the choices being trotted out aren’t 100% about math? If so, I’d have to say that that seems rather…ironic.
Syriza has moderated many of its views over the last months. It’s now in favour of keeping the euro, and will likely keep moderating and find a solution whereby it can fulfil some of its election promises within the ez.
Also many of the people who voted Syriza didn’t so much do it for its policies, as a way to toss out the old corrupt bunch of politicians of the other parties.
Greece was absurdly corrupt, had a bureaucracy of byzantine complexity, impossible taxation laws that (with the corrupt tax officials) would let anyone with money pass on paying, an overstaffed unproductive public sector, a democracy that could best be described as clientelism, an absurdly hostile business climate, etc. After years of working on it, some of those issues are now relatively better. If those changes are what you call austerity, then they need more.
‘Austerity’ is an economic cult largely run by non-economists. And a national economy is nothing like a household’s budget. In a household, 99.99% of the economy is outside; if you spend less, it simply means you have more money or less debt, but your chances of being able to work are unchanged.
In a national economy, if everybody spends less, then there are fewer jobs, and now everyone has to spend less. You’re worse off than you were before. One person’s spending is someone else’s income, and if nobody’s spending, then everybody’s screwed.
Sure, some of a nation’s economy is still outside, i.e. international trade, but even in a relatively small country like Greece, most economic transactions are strictly within-country. Greece had problems before the Great Recession made things even worse, but euro-induced austerity has made things yet worse on top of that. It’s basically “I need to dig myself out of this hole, but I can’t afford a shovel.”
Exiting the euro would be tricky, though - for a country in as bad shape as Greece, it might even be worse than austerity. I always figured the best candidate for a euro exit would be a country like Spain, which has unemployment nearly as bad as Greece’s, but had a healthy economy pre-Recession.
Greece had no option other than to implement Austerity when the Euro crisis hit. It’s not as if Greece was in any position to borrow and spend more. If it had then it’s borrowing rates would have been eye wateringly high.
These results are to be welcomed imo. The undermining of the Euro continues.
You always have a choice. What Greeks decided last time was to not default on sovereign debt and to remain in the Euro.
This time Germany and others will have to take a haircut, assuming Mrs Merkek still has some respect for democracy in its satellites.
Defaulting and leaving the euro would also have meant austerity. And of a much harsher sort since they wouldn’t have had the loans to smooth it out. They’re in a much better position today, since they actually have a primary surplus.
Germany and the rest already took one haircut, so I suppose you mean “this time also” Can’t really see what it has to do with democracy though. If democracy means one country can vote for another country giving it money, then my next vote will be on the USA paying us more. You guys are filthy rich and if you’re opposed to giving us money you’re pro-austerity.