November 5, 2012
Two years now Greece is doing nothing more than increasing its debt, its recession, its unemployment rates, its poverty, and the desperate feelings of a society that has nothing to hope for other than gathering in the streets for at least once a week in order to protest with no effective outcome. Is this ever going to work?
This week is one of the most crucial ones for Greece these two years. On Tuesday and Wednesday the new austerity measures will be introduced for voting to the Parliament in order to be processed as common laws. On Sunday the Parliament will vote for the annual budget of 2013 accordingly. In other words, if the measures pass by majority, Greece will implement the new austerity plan and the Greek government will afterwards endeavor to achieve the prolongation of the period necessitated for the full payment of loans in the EU Summit of November 12 in Brussels.
On Tuesday and Wednesday labour unions of Greece, Spain, Italy and Portugal are going orchestrically on strike giving the clear message that austerity can no longer last and that is doomed to failure. All four countries will paralyze these days under the wider fear of constant joblessness, the lack of growth policies, and the ever-increasing fiscal measures.
Coming now to the political analysis part, I believe that austerity is not doomed to fail, but it is already failed in terms of real economy. There is actually no production and no growth and money received from loans is not invested in the market. The majority of the loans is destined to soar up banks whereas what is left is used for partially paying back special accounts. In this respect, even if billions of euro have infiltrated the banks, liquidity is not achieved and the European Central Bank is soaring Greek banks on daily basis so that savings can be secured. In other words, if the ECB was not soaring up Greek banks, account holders could not withdraw money.
The Greek government should not vote the new austerity package as it simply serves to nothing. It is only necessary for the next loan package that will come inevitably in the next semester as recession will continue to devastate Greek economy and the market. Greece should displace the burden of solution to the European Union in the forthcoming Summit and stop immediately negotiating with the IMF. The European leaders and the Eurogroup should start debating upon resolving this deadlock with no interference of the IMF as any solution ahead has to be based on literally European hands.
In addition to that, let us simply consider what the cost of a Greek exit would be for the Union. The so-called “Grexit” will cause an incessant dismantling of Eurozone and of the EU subsequently as the cost of exit will not be affordable for the rest short-term. In this respect, Grexit can be consequently followed by the exit of other overdebted states like Spain, Italy and Portugal mid-term which will have an additional reason for doing so under the burden of bankruptcy. Long-term, Eurozone will collapse and the generated wave will directly hit the European establishment altogether.
Austerity does not work and this is a fact. It took two years to realize it and all means have been exhausted. Greece and the other overdebted states have to finally realize that they have the upper hand in negotiations. And if that is to be realized, conditions will change and a new plan of development will get elaborated in a mutual basis, even if it might take a tough transitional period of hardship and patience. But at least there will be signs of hope, progress, and mainly, solidarity.