Greece Over the Brink
If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
.. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.
.. This is, and presumably was intended to be, an offer Alexis Tsipras, the Greek prime minister, can’t accept, because it would destroy his political reason for being. The purpose must therefore be to drive him from office, which will probably happen if Greek voters fear confrontation with the troika enough to vote yes next week.
.. Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.
.. Greece cannot pay, therefore the debt must be restructured…end of story.
Let the banks eat their own losses this time... The global debt pyramid erected by the central bank cartel is imploding. States that cannot service debt when short term interest rates are zero are going to fold up like so much paper when interest rates shoot up as they’re doing in places like Spain, Portugal and Italy, today.
Again, *restructure* the debt and unwind the bad banks... But based on their behavior, not their words, it doesn’t seem the banks are truly interested in improving the situation, and are stuck in what B.F. Skinner called a “punishment syndrome.”
.. Skinner’s position was that punishment is not effective if the goal is to change behavior and resolve a problem. Punishment carries the risk of making a bad situation worse by creating a spiral of conflict. Emotions are heightened, & each aggrieved party loses focus, locks into its position, and the likelihood lessens of identifying alternative solutions & resolving the issue in a more constructive way.
A principal reason the punishment syndrome takes over is because the dominant party is more concerned about power and authority than about the well being of the other party.