The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do. Maybe hairdressing should not be considered a 'dangerous profession', thus unlocking various benefits. Maybe Greek train drivers should not be paid $130,000 a year to drive near-empty trains. Maybe Greece should be able to grow its own food instead of importing more than half of it.
Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country. The EU is desperately trying to make it a few percent less screwed up, and mostly getting nowhere. Greece absolutely isn't hosed because of those awful European creditors who deserve to be punished for their naive belief that maybe Greece would improve.
I mean, just go take a look at the garbage that has been pouring out of Greece and ordinary Greek people about German in recent times. Allusions to Hitler seem to fall from their mouths every single day. The idea that maybe Germans should not be paying for Greeks is not fascism, yet they routinely act as if it is.
Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.
No reforms in the world will allow Greece to meet the current liabilities, even the IMF says so. The bigger the surplus the Government runs (to pay back the creditors) the more the economy will shrink and the further more they will miss their target by.
Germany isn't paying for Greece, it (well the troika but Germany is significantly calling the shots) is effectively governing Greece by a series of manufactured crises every 6 months in which they can impose conditions (detailed policy requirements on internal issues including pensions and taxes) for the next payment (which is 90% transferred to creditors rather than going to Greece itself).
Whether fascism is the right word or not there is something profoundly undemocratic about the situation and there are several valid comparisons with fascism. Singling out a groups as scapegoats for all blame and the aspect of collective punishment. Sensible people trying to maximise the return on their loans would restructure them to take some loss but to enable Greece to recover to be able to pay the bulk of them. Instead the focus seems to be punishment for irresponsible lending.
Singling out a groups as scapegoats for all blame and the aspect of collective punishment
In line with many on the right, you are singling out Germany as a group as a scapegoat! Indeed Syriza's approach to the negotiations was to run a divide-and-conquer on the EU, trying to pit the rest of the EU against Germany. This backfired badly.
Germany isn't paying for Greece
In what sense? Greece owes Germany €88.7 Billion.
Sensible people trying to maximise the return on their loans would restructure them to take some loss but to enable Greece to recover to be able to pay the bulk of them.
Which is of course exactly what the troika is trying to do (however imperfectly), and much debt has already been written off or rolled over, but the Syriza government is blocking this as much as possible.
there is something profoundly undemocratic
Greece is perfectly free democratically to decide to ignore the troika, and default on all debt. Greece is also free to other other countries to pay for its debt, e.g. Japan, the US, Venezuela. But Greece has no unconditional right to other people's money. Why should Latvia and Lithuania, who are much poorer than Greece, finance a ridiculously bloated Greek military? There are much poorer countries still, Cambodia, Malawi, Niger, Angola. Why is it so vital that the rest of the world blows billions on fairly wealthy Greece, rather than these much more needy countries?
This happens all over Europe. All unionized and high profile workers successfully demand earlier and earlier retirements.
Check the numbers. Greece' average retirement age is above the EU average age.
> Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.
Greece has a perfectly workable alternative in a Grexit. It would help them enormously and not require austerity but there are political reasons that won't allow it.
If Greece was using the drachma, this would not be a problem.
The other problem with austerity measures is that they have a tendency to inhibit growth or even shrink the economy; shrinking the government further certainly doesn't help that situation.
EDIT: I forgot to add that Greece has a primary budget surplus - meaning that if it wasn't for the debt they owe, they'd be doing fantastically budgetarily.
As a purely economic solution, a Grexit combined with a default might work. However, who would step up and finance the ongoing deficit? Interest rates even for short term borrowing would be unsustainable. What would happen in the meantime, until such a Grexit could actually be performed? The banks don't have money any more, there's no infrastructure to print new bills, there's no plan on how to actually do that. It's the choice between austerity because the lenders want it or austerity because there's no money left.
On top of that, would Greece leave the EU? There's a lot of greek living and working abroad under the EU residence/work rules. Would such a vote not be perceived as a "No" to europe, effectively pushing greece out of the EU at least on a temporary basis?
I'm not convinced that the Grexit is a workable alternative in a larger context.
> As a purely economic solution, a Grexit combined with a default might work. However, who would step up and finance the ongoing deficit?
As I added in my edit, Greece has a primary budget surplus. There would be no ongoing deficit.
Existing debt would be paid off with the expedient of default and currency devaluation, just as other countries have historically done. A little rough patch and then things look up. Seems a much healthier alternative than decades of economic suffering due to more and more austerity and the consequences thereof.
> there's no infrastructure to print new bills
I can't imagine that is a very hard problem to solve.
> On top of that, would Greece leave the EU? There's a lot of greek living and working abroad under the EU residence/work rules. Would such a vote not be perceived as a "No" to europe, effectively pushing greece out of the EU at least on a temporary basis?
Does leaving the Euro mean leaving the Eurozone? That's an honest question. I don't think it does, but I've heard this said before.
On your final point, I don't disagree: at least right now leaving the Eurozone is politically untenable. But I suspect that economically it might be the most sensible thing to do, and not just for Greece. Unless Europe forms a real fiscal union, this kind of madness will happen over and over.
> Existing debt would be paid off with the expedient of default and currency devaluation, just as other countries have historically done.
All current debts are held in EUR or other foreign currencies. Currency devaluation won't help with the existing debt. I doubt a single creditor would accept exchanging EUR denominated debts to New Drachme.
> I can't imagine that is a very hard problem to solve.
Even the greek finance minister considers that a major roadblock.
> As I added in my edit, Greece has a primary budget surplus. There would be no ongoing deficit.
Greece had a primary surplus, it's tethering on the edge of not having a surplus any more. Greece desperately needs money to invest and kick-start its economy. And then there's still the IMF debt and the IMF always wants and gets its money. Even Argentina treated the IMF debts preferential. Who would step up and cover that?
At this point the European contracts are such that a country can only leave the Euro if it leaves the EU.
However, I think it would be possible for the EU to agree to amend the contracts to allow Greece to leave the Euro while staying inside the EU, if Greece so wishes.
> How will a country that has no money and terrible credit do when it needs to import 50% of its food?
Greece, and Greeks, do have money. I am not sure what you mean. It's not as if Greece is the only poor country which imports most of its food.
Food prices have already been skyrocketing. As the article points out, austerity has tanked the Greek economy despite repeated predictions by European 'experts' that any minute now, austerity would cause Greece to turn a corner. Why do you think food prices would get substantially worse?
> has a perfectly workable alternative in a Grexit
Its not "perfectly workable" in a country that imports >>50% food, has practically zero foreign currency reserves, and is already considered a bad lender.
The reforms may be a long term solution, but pushing austerity to far makes the end solution push out in time and actually make it less likely that the loans are able to be paid back in a reasonable time frame.
> The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do.
What's the retirement age of the other people in Europe, excuse me?
62 like in Germany? 67+ like in Italy?
> Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country.
Japan is often ranked as the most corrupted country in the world, but still is going fine. It resisted many crises, and it's one of the most powerful economies in the world. You may guess that corruption is not part of the equation then. Isn't USA corrupted? Isn't China? The whole idea that economies fall down because of corruption is non-sense. As long as money stealed by corrupted people stays in the country the economy does not suffer that much. Corruption issue is about social justice more than everything else.
I certainly don't think of Japan as corrupt in the more common way, but in terms of being institutionally compromised, the Japanese government is effectively in the business of maintaining and giving money to the institutionally corrupt construction industry, permanently and forever, no matter how unnecessary and unwanted the construction is. They have got some outstandingly unnecessary and unwanted construction programmes.
Certainly by no means one of the most corrupt, though.
I think you're looking at corruption in a one dimensional way. Corruption generally acts as a tax on the economy, a drag factor. Most countries experience corruption, but mitigate it with dynamic economies, productive work forces, abundant natural resources or whatever. Greece hasn't really mitigated corruption, and has compounded it with a range of other problems. Corruption is prt of the Greek problem, not the sum of it.
Maybe they could put some islands up for sale? They have tons of them. That kind of restructuring would make it easier to maintain their living standards.
Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country. The EU is desperately trying to make it a few percent less screwed up, and mostly getting nowhere. Greece absolutely isn't hosed because of those awful European creditors who deserve to be punished for their naive belief that maybe Greece would improve.
I mean, just go take a look at the garbage that has been pouring out of Greece and ordinary Greek people about German in recent times. Allusions to Hitler seem to fall from their mouths every single day. The idea that maybe Germans should not be paying for Greeks is not fascism, yet they routinely act as if it is.
Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.