The Greek parliament, under the leadership of Prime Minister Lucas Papademos, has approved the new austerity budget for 2012, which promises further hardship for the average Greek citizen.
The Greek government approved the new austerity budget for 2012 in its midnight vote, with support from all three major parties. Prime Minister Lucas Papademos told MP's "Successful implementation of this budget will restore the country's international credibility and create the conditions to rescue the economy," as he opined "We can't afford to keep whining ... the targets are ambitious but feasible." ([i]Athens News)
Antonis Samaras, leader of the opposition party New Democracy, said "Our disagreements remain ... we are approving the budget because it is an absolute priority to safeguard the viability of Greek debt." He made it clear his support is for the transitional government measures, stressing "we do not give indulgence in the sins of the previous government." (Ta Nea)
The approval of the budget was crucial for Greece to continue to receive bailout euros from the EU. However Peter Tchir of the hedge fund TF Market Advisors analalyzed just how much of the bailout fund was actually being used in Greece. Ekathimerini reported Tchir assessed that the bailout money is simply recycling money from eurozone taxpayers to pay European banks, simply buying time before Greece defaults. Ekathimerini wrote "Greece will pay out a total of 5.8 billion euros to its lenders this month, which is exactly the same amount that it is borrowing from the eurozone."Thus all the emergency measures, tax hikes and cuts are simply being implemented so that Greece can pay the interest on her debts. "Greece will pay a total of almost 1.4 billion euros in interest for all the eurozone loans it received during the first year of the bailout. This is roughly equivalent to what the government plans to earn from the emergency property tax levied on all homeowners in Greece this year."The issue of tax evasion is real, but once again the average Greek person is being taxed into penury whilst the government fails to address the large scale tax evasion of the wealthy. It is little comfort for the citizen to struggle with an emergency property tax knowing every cent collected with simply furnish interest payments on debt.
The Greek government is biding its time and borrowing its way from the inevitable moment of default, failing to address the issue that a bankrupt nation cannot borrow its way out of debt. The passing of the budget reduces the option that Greece had of exiting the euro and devaluing her currency, as economic sovereignty has been signed away to the eurozone.