As we are all aware
Greece has agreed on a new round of austerity measures in exchange for another
bailout. To the dismay of Greek citizens, many EU ministers feel that these
measures aren't enough to keep the Greek economy afloat. German Chancellor
Angela Merkel has said that fiscal discipline is needed to keep the euro zone together
and she will maintain pressure on Greece to honour its debt-reducing promises
required for its second financial bailout.
But who is bearing the
brunt of this “fiscal discipline”? The ordinary tax payers like you and me.
While we have seen the
purpose for austerity measures, to raise needed capital, surely there is only
so much that can be squeezed out of the Greek people. Within this latest set of
measures there is a debt swap deal in which Greece will get €130bn loan, With
which they are required to pay out €100bn to bondholders (who have already seen
a 53% fall in value ). Seeing that Greece has already paid a vast amount of penal
interest on these bonds, it is difficult to understand why such an insolvent
country is still paying its bondholders half of face value, when in actual fact
they shouldn’t be receiving anything.
We can compare a “bubble”
to a child’s art of blowing bubbles, the bubble inflates until it can grow no
more and then BOOM (or should we say Bust), the bubble pops and we are left
with nothing. Putting this childlike comparison on austerity, we can look at it
as squeezing an orange. Once all the juice is squeezed from the orange, that’s
it, the juice you have in front of you is all you will get out of that orange.
So why are France and Germany insisting on squeezing all the life of Greece?
The negative externalities are seen is the riots on the streets of Athens (which
by the way are being controlled by the police force who are set for more pay
cuts), unemployment rates are at worrying levels and thus far, confidence has
not been restored in the Eurozone.
A recent article by the Washington post, they highlighted the cuts
that will be taken in regards to Greece’s latest set of austerity measures (see
link: http://www.washingtonpost.com/world/europe/a-look-at-the-new-austerity-measures-greek-deputies-will-vote-on/2012/02/22/gIQATDq1SR_story.html)
When looking at the wider economic picture
it is difficult to see how finance “experts” such as Luxembourg’s Prime
Minister Jean-Claude Juncker and head of the group of Eurozone finance ministers,
can be so confident about the Greek debt deal to say that it
“will preserve the financial stability of Greece”.
Is there even such a thing as “financial stability" anymore?
The following production of “Punk Economics” is an
illustrated set of opinions by Irish economist David Mc Williams and sets out
his views on EU measures in a contemporary form. (Warning: Content may cause
episodes of future economic worry viewers)
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