immi101: We also demanded a brutal austerity program. Which basically destroyed the greek economy.
timppu: I keep hearing that claim, but I haven't heard which were the exact reforms which "destroyed" the Greek economy, especially compared to the theoretical scenario that no bailout program would have been arranged at all, but Greece would have been left to try to cope with it alone. Would the Greeks be better off right now in that alternative scenario?
The Greeks would be better off right now if they'd defaulted in 2009 as they should have. They will default, they cannot pay the money back, ever, it is inevitable- and if they'd done it six years ago their economy would be 25% bigger than their austerity ravaged current one.
The ultimate reason why austerity has destroyed the Greek economy is simple, neo liberal policies target poor people, while poor people actually spend money while rich people don't in a recession. The thing about pensioners, those on a benefit or those making low wages is that they spend their money, they have to. They spend it on food, electricity, clothes, rent; they don't save it because they don't make enough to save; they don't buy a house in London to take advantage of the housing bubble, because they cannot. So, any money they get is spent in shops, and circulates in the
Greek economy. If you cut pensioners funding by the 200E as desired presently that money is taken straight out of the Greek economy, it's 200E less to be spent in shops and the like by every pensioner, so shops lay off staff or go out of business and you get a vicious circle where the economy cannot grow because of austerity, and the solution to that is... more austerity which just reinforces the circle more by removing more money from those who actually spend it. Crucially to this whole thing, and the real kicker as to why it is such a ideological stupidity: if you're a millionaire or wealthy you can simply take your money out of Greece and stick it in London or wherever, no problem for you, no need to spend much in Greece, your taxes aren't increased, there's no need to invest in Greece- indeed, why would you when you can invest in far more stable places that aren't mired in a depression.
Taking money off poor people is simple ideological moronism in a recession, you take money out of the economy and rich people are further encouraged to remove their money due to the recession. It is, however, great if you're Frankfurt and rich Greeks are sticking their money there instead...
So, fundamentally, austerity is not aimed at helping Greece or its people, it's ideological. Its aim, such as it is, is to protect the banks and others who lent to Greece, and to recoup as much cash as possible before the inevitable implosion. It's Tony Soprano loaning his 'friend' money, then running his business into the ground deliberately to extract more money, ending in his friend eating a shotgun anyway. If he'd eaten the shotgun two minutes into the episode his family would at least have a lot more than at hour's end.
It also has to be put in historical context. The Euro is stupid, stupid, stupid, a political mess designed to appeal to everyone and fundamentally unworkable as it stands. Currency union without fiscal union, and with countries regularly ignoring such stipulations as there are is asking for trouble. People often talk about Greece lying to get into the Euro in the first place. Well yes. Number of countries who didn't ignore the criteria? Seriously: one, Luxembourg, the smallest of the lot. Germany itself ignored the stipulations. Germany also benefits from the Euro because their currency is relatively devalued by it relative to the old deutchmark which helps exports and exports to poorer Euro nations; for a poorer Euro nation it's the exact reverse, their currency is suddenly massively overvalued and they're instantly uncompetitive plus cannot use the normal means to reduce and control debt because Germany is doing well and has a far larger economy so Eurozone policy is based on that. Again, it's a vicious circle where poorness is reinforced by the system itself, it's inherently skewed to make the rich richer and the poor poorer. Well, at least to the point it becomes impossible for the poor to bear any more.