timppu: ...What should have been done differently in the help packages? To which sectors should more money have been channeled, how much, and what good should it have achieved in the long run?...
The ideas as far as I know them are the following one:
Problems
- Greece had a lot of debt
- Greece had a governmental budget deficit
- Greece had a trade deficit
Solution
- Greece must save money (must have permanent budget surplus to repay debt, aka the reverse of the past)
- Greece must export more and import less (must strengthen competitivity)
This implies
- Greece wages must fall
- The government must spend less or raise taxes
- The economy must grow
Greece wages fall if
- Unemployment is high and/or
- You devalue the currency
- Inflation is strong and/or
- Non-wage costs are cutted
Too high unemployment however
- decreases demand and income, increasing the debt burden
- results in social unrest
Greece could not devalue the currency or increase inflation because
- it doesn't control the currency (see optimal currency area theory in economics).
Non-wage labour costs are
- taxes (income)
- social security
- pensions
Lower income taxes would
- increase exports, due to higher competitiveness
Higher VAT taxes would
- decrease imports, due to higher prices
Cutting pensions is indeed
- a good way to have less burden on the work and increase competitivity
So what you should have done is lowering income taxes (also corporate income taxes) and increasing VAT taxes (they did it partially).
Additionally you must limit unemployment (probably to something below 20%). You could have subsidized investments, for example in research and development or in high tech industries. High tech industries could be for example: IT, pharmacy, chemistry, cars, airplanes, electronics... basically everything that has a large export part. I would have made a programm where every business that exists in Greece or elsewhere and wants to expand in Greece could have 50% (or more) of its investments in the high tech sectors have paid by the EU.
I hope this is clear enough. The aim would have been to qualify and keep several 100,000s of Greek people in work. This would have given the government enough space to cut down their expenses even more (yes, military, pensions, fight corruption, ...) and made it much easier to have a surplus and to repay the debts while still the unemployment would be high enough to cut down the wages.
So the trick is here that giving them money then (for investment) and them doing all the right things would have resulted in lots of more money back now and in the future. A win-win situation. The benefits of cooperation, if you want to see it this way.
Maybe the faster way out would have been to additionally devalue the currency and endure inflation but Greece didn't want to do this so far. But it may (probably is) the only way now to really recover because everything else is just too slow and the help packages just were not strong enough and indeed a bit one-sided (for example they only ever asked for tax increases, never for tax decreases).
blotunga: ...The EU tolerates a cold ware between Greece (because of Cyprus which is EU member yet the north of it is occupied by Turkey) and Turkey (which incidentally is a NATO member together with Greece). ...
Shouldn't it be clear that if Turkey would have invaded Greece there would be Italian, French, British, German, ... you name them, soldiers seizing Turkey in a second? I mean do you really need that big of a military to keep Turkish threats away or was it just an oversized, useless money hole? 1700 tanks for such a small country. Are they really necessary?
And also there was way more more spending than just military going on in Greece. Without the military Greece would still have had most of the trouble it has, wouldn't it?