Wednesday, February 15, 2012

All for nothing

Over the weekend, Greek politicians voted to sell out their people, burn their capital city, and drive their country even further into recession with another crippling round of austerity, all in an effort to get another "bailout" (for German banks, not Greeks) from the European Union. And now the latter has turned around and said "no". The reason?

Juncker said he was still awaiting written undertakings from Greek party leaders on pushing through the austerity package of pay, pension and job cuts which parliament passed on Sunday as rioters torched dozens of buildings in central Athens.

"I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme," he said.

Those "political assurances" are that Greek leaders will continue this austerity, regardless of what happens in the elections in April. In other words, the EU has a problem with Greek democracy. Which is what the rioters have been trying to tell them.

Meanwhile, the sheer pointlessness of this theatre is appalling. From Australia's MacroBusiness blog:

What makes the situation completely surreal are the numbers. Greek debt in 2008 was approximately 260bn Euro. The first bailout was 110bn, the current one, that appears to be tearing the country apart, is 130bn. Add in the PSI+ haircut of approximately 100bn ( after sweetener deduction ) and you realized that Europe could have simply paid the entire bill in 2008 and saved itself 80bn Euro. Ok, that is an oversimplification of the problem but you can see my point.

However now, after 340bn Euros, Greece is still has an unmanageable debt, is in a far worse position than it was 3 years ago and it appears the country itself is coming apart at the seams.

If modern economics was in any way reality based, this would be added to the long list of cautionary tales (including New Zealand in the 90's) about why austerity in a recession is a Bad Thing. Sadly, those running the EuroZone are still mired in NeoLiberal theology, in which economies must be destroyed and people impoverished in order to save them.