Greece has passed its much-hated EU and IMF-dictated austerity package, which includes the oppressive requirement for a 22% cut to the minimum wage and pension cuts. The likely result will be a drastic lowering of the living standards of the Greeks.
ABC Australia provides this snapshot of the bailout terms:
Greece austerity plan at a glance
• 22 per cent cut in minimum wage
• 150,000 jobs cut from state sector by 2015
• Pension cuts worth 300 million euros ($370 million) this year
• Laws to make it easier to lay off workers
• Health and defence spending cuts
Look at the logic here. All this is being done specifically to protect the interests of financial institutions which should have known better than to lend excessively in the first place. Greece did drop the ball in terms of managing its bond obligations, and there is absolutely no doubt that government borrowing was overextended.
Why reduce minimum wages? What possible impact could that have on Greece's economic situation?
The reduction in pensions does relate to government expenditure, but on what are these people supposed to live? No government on Earth usually pays more than a pitiful insult to those entitled to pensions.
How do laws which make it easier to lay off workers help the situation, when Greece needs to generate more income and revenue, not less?
Surprise, surprise – health spending cuts. Presumably Greece’s financial situation will improve if more people are dropping dead. It's an interesting point that "economic conservatism" always involves removing services from taxpayers for which they have already paid.
ABC Australia, again:
Eurozone paymaster Germany ratcheted up the pressure before the vote.
"The promises from Greece aren't enough for us any more," German finance minister Wolfgang Schaeuble said in an interview published on Sunday in Welt am Sonntag newspaper.
"Greece needs to do its own homework to become competitive, whether that happens in conjunction with a new rescue program or by another route that we actually don't want to take."
Herr Shaeuble might wish to take note of the fact that flogging a dead horse is one thing; trying to ride it is quite another. What is required here is effectively the complete rebuilding and restructuring of the Greek economy and much better fiscal governance. Many of the measures proposed cannot possibly deliver either. All they can do is make life more difficult for Greek citizens without changing the actual economic position one iota.
If this is the best that the EU and the fabulous intellects which have given us four solid years of solid economic anxiety can do, perhaps it's time they actually employed somebody able to think and solve problems beyond looking at spreadsheets and coming up with simplistic solutions.
For example –
The EU has only so much money to bail out so many basket case economies. If the Greek model of the proposed solution, is the idea to trust to "austerity" measures indefinitely? Imagine the Greek model applied to Italy, Spain, Portugal and Ireland. The instant result would be to put a very large percentage of the European Union population into instant poverty with absolutely no indication of how and when the populations of these countries would recover.
The truly sickening thing about the EU/IMF "fix" is that almost the entire burden of suffering for economic mismanagement is placed squarely on the poor. These people did not contribute in any way to the Greek meltdown. They could barely be called participants in the Greek economy.
It's pretty obvious that the EU/IMF solution is a version of the American disease-"Let the poor pay for the blunders of the rich". The cuts to wages, health and making it easier to lay off workers could have come directly from any American neo-con hack formula. These things didn't work in America, can't stimulate economic growth, have no bearing on the actual problems and impact could make the situation increase considerably worse by suffocating employment and therefore reducing revenue.
The German expression “shauer bauer” means literally "cunning peasant". The caricature is of a pennypinching rustic mediocrity who thinks he’s clever. That, rather sadly, appears to be exactly the mentality which is governing the EU at the moment. The good news is that this level of stupidity can never be viable. The bad news is that takes a very long time for people to realise that idiotic solutions don't work.
Meanwhile, Greece burns. Presumably the EU/IMF forgot to make cuts in the Fire Brigades and emergency services but I'm sure they'll get around to it.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com