Saving Bond Holders at All Costs (To Other of Course).
One has to admire European policy makers, really one does. In the face of overwhelming evidence that their austerity policy towards
is not working they just keep piling it on.
Policy makers who have this much faith, this much belief that they are
right when the evidence just keeps mounting against them must be praised for
their consistency. Of course they must
be condemned for their ignorance, stupidity, short sightedness, cruelty and
Greek lawmakers narrowly approved a multibillion-euro austerity package early Thursday in an effort to win more bailout funds, but the measures also threaten to deepen the country's brutal recession and destabilize its fragile politics.
In the hours leading up to the vote, violent clashes erupted between riot police and protesters as tens of thousands gathered in the square outside Parliament to voice their opposition as politicians inside debated legislation that would impose deep cuts in pensions and public-sector wages and clear the way for laying off thousands of civil servants.
Exactly how firing thousands of workers will decrease an unemployment rate that is already one of the highest in the history of any developed nation was not explained. What was explained was the necessity of European aid so
Greece can pay interest and
principal on its debts.
Prices of Greek government bonds have been relatively stable, as investors bet that the country's new austerity measures will pass, easing fears of a renewed standoff between Greece and the EU of the sort that prompted fears this year that Greece would leave the euro.
But some experts are still trying to impose logic in the arguments over policy that the policy is self defeating and will not accomplish its goals of restoring the Greek economy.
At issue is what economists call the fiscal multiplier: in this case, how much an economy will contract for every euro in spending cuts or tax increases. The issue has once again called into question whether the draconian austerity programs prescribed for Europe's vulnerable states—from
Greece to Spain
the right recipe for getting ailing economies up and running again. Some
economists said Portugal 's
economy could shrink by between 6% and 9% next year after the new measures are
"In trying to fix the economy we are severely damaging society and causing political instability," said Panagiotis Petrakis, an economist at the
. That instability, in turn,
"further weighs on the economy." University of Athens
itself, it is a long lived civilization and it should survive this attempt to
kill it. But unless the policy is
reversed soon that will not be in the lifetime of any living today.