Greece — the true cost of austerity

25 Jan, 2015 at 20:12 | Posted in Economics | 3 Comments



  1. Yet, not a single bank is held responsible for anything. They have been caught with fraud, but somehow people are still talking about paying the con artist what he’s owed.

    Odious debt should not be payed.

  2. What economists should have done…by By Merijn Knibbe

    “Government economists should have pointed out that these (see below) were the predictable costs of Troika-austerity in Greece and to spell out, again and again, that the unemployed are not particularly good at paying back debts. What government economists did was of course designing this kind of austerity which caused the damage. Mind that the independent weekly ‘The Economist’, not know for its left leanings, promoted a real debt write down for Greece in a very early phase of the crisis (the actual debt write down was somewhat of a scam, as the Greek government almost immediately had to re-borrow the money to prop up the banks which owned a lot of the debt). Aside – at this moment nominal income of Greece is going down because of deflation, which means that the burden of debt tends to become larger even when no new debt ia added and the economy is growing. picture here:

  3. Actually what has happened is that unsecure Greek debt was replaced by secure EU state debt and nothing went to the Greek economy from those packages to protect EU banks. In the process German banks made 60 billion profits and enjoyed a massive transfer of accounts from Greece. The austerity was implemented because the IMF thought this is the way to get the money back, by raising taxes and lowering wages. It is a big show of many groups with competing objectives that found bankers and politicians willing to let them do what they wanted in exchange for securing power for them and their generations to come. Suddenly, they were dropped like hot potatoes and the left came to power. The problem is Greece is high level corruption from the elite. People work hard, often 2 or 3 jobs and the tax receipts simply disappear in corruption tunnels. For example, medicine that in Germany cost 10 Euros , Greek hospitals were buying for 500 Euros. German companies were paying bribes to Greek politicians and overcharging for projects. These corruption channels are few but very powerful and no one managed to deal with them. IMF thought the solution is lower wages and higher taxes, a bunch of uninformed that is. Thus they reversed the blame on the average citizen instead of fighting the channels that benefited companies in their own countries. Very complex situation that needs heavy cleaning up.

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