Thursday, August 25, 2011

Greece to Europe: Your Policy is Not Working and It is Highly Damaging

Europe to Greece:  Our New Policy Won’t Work Either, And It will be More Highly Damaging

The Dismal Political Economist to Europe:  You Cannot Create Prosperity Out of Austerity

The Dismal Political Economist has earlier discussed the European policy towards Greece.  The policy’s goal is the restore the Greek economy and its fiscal condition so that Greece will not need to be bailout out by the European community and so that Greece can return to private debt markets to borrow the money to finance its government. 

The Dismal Political Economist called this policy “Non Lethal Suicide” because it not only doomed the Greek economy to prolonged recession, it also had the effect when implemented elsewhere to dragging down the European economy.  And it is not even accomplishing its primary goal, to balance the Greek budget. 

The response to Europe to the lack of success of their policy - keep doing it.  The result in Greece is a deterioration of  economic life that is becoming staggering to its citizens.  Greek Cuts Erode Livelihoods



One in four retailers in central Athens has closed, according to the National Confederation of Greek Commerce, a retailer group. Similar closure rates are hitting Greece's other urban areas.

The Athens Chamber of Commerce and Industry reports that some 80,000 businesses across Greece have gone bankrupt since the crisis erupted in early 2010, and it forecasts that on current trends, some 200,000 will close by the end of next year. "I'm beginning to fear that the 200,000 projection may prove to be conservative," said Chamber President Constantine Michalos.

There is also this scene

A Supermarket for some of Greece's

Visitors to Athens outdoor markets routinely notice older people picking over unsold fruit and vegetables that merchants have thrown into garbage cans.

From Germany comes this observation about the European policy towards Greece by Wolfgang Franz, Chairman of the independent Council of Economic Advisers to the federal government

These are hard measures that they are implementing and I wouldn't like to imagine the reaction if we had to implement them in Germany."

He said it may take "up to 10 years to get Greece back on its feet,"

Europe needs to change its policy, but that would require admitting they had the wrong policy in the first place, so to save face Europe will soldier on.  Greece may not.

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