Eurozone: Greece must not sign the troika’s deal

6th February 2012

It was then found that a loan was necessary, and it was determined that the allied Powers should be the guarantees for its repayment.

There are all sorts of historical analogies here. For a start what is it with Germans and other countries Royal Families? And as I am typing this there is another type of Bavarian intervention as her Finance Minister has just announced that Greece won’t be able to avert default. Thank you to Joseph Cotterill for the historical information.

There is something very wrong with the new proposals for Greece

Last night the Greek Prime Minister issued a five point statement and claimed that a deal had been reached on these points with 3 opposition party leaders. This was to achieve 'an agreement with the troika on the new economic program in Greece that is a prerequisite for new financial support of the country'.

The troika is the name for the 3 bodies supervising Greece’s bailout namely the European Commission, the European Central Bank and the International Monetary Fund. But take a look at the proposals.

1) The measures in 2012 to reduce public spending by 1.5% of GDP.

2) Ensuring the sustainability of supplementary pension funds.

3) Dealing with the deficit competitiveness through measures that include adjustments in various areas, such as reducing the wage and non wage labor costs, in order to promote employment and economic activity.

4) the recapitalization of banks with combined resources to ensure the promotion of public interest and business autonomy.

There is an immediate glaring flaw which has run right through the whole Greek “rescue” episode and it is highlighted by the fact that wages will be cut but banks will be recapitalized! Sound familiar? It should as this drumbeat has been going all the way through and is a major reason contributing to the failures so far. Karl Marx would have had some thoughts on the relative treatment of labour and capital that is happening here.

Also exactly how do you “promote public interest and business autonomy?” Aren’t they contradictory aims?

Regular readers will no doubt have spotted that the same failed medicine of public sector austerity is being applied again which so far has led to a shrinking economy which has led to the need for extra austerity and repeat. So let us take a look at the underlying Greek economy to see how it would be impacted by this.

Continue Reading…

 

More on Mindful Money

Will a haircut help Greece's debt crisis?

Does 2012 spell suicide for the Eurozone?

Hungary could prove more damaging to the Eurozone than Greece

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