Tuesday, August 27, 2013

Debt of Sisyphus: Greek economy’s coma is a misguided political experiment

(RT) Austerity is destroying the free part of the Greek economy, leaving government more dysfunctional than ever. Worse news: it will need yet another bailout...

Seasoned economic observers remain shocked by recent events. Greece will soon need another bailout. That’s not remotely surprising. What shocks is that there remains some semblance of an economy to bail out after 6 years of depression.

Greece is bust, the political system broken, the nation dysfunctional. Tax still isn’t being collected. Government remains a bloated legacy of political patronage. Workers left in the private sector are desperately clinging to the hope their business can survive the insanity of a Euro made in Germany applied to the Mediterranean.

Margaret Thatcher wisely noted that when politics and economics clash, you bet on the economics to triumph and the government to collapse. A sound rule; it held true when she helped accelerate the suicidal downfall of the Argentine military junta and, of course, the end of the Warsaw Pact. The tax-free bureaucrats of Brussels in the Berlaymont bubble have convinced themselves it can’t happen to them. Anybody reminded of the Ceausescu family preparing for Christmas 1989? The euro may have survived to date but Thatcher’s Law invariably proves correct. Deluded eurozone leaders continue to prematurely claim that the crisis is over. Greece is stuck between a rock and a hard place. News of the bailout requirement comes just as Chancellor Merkel attempts to bore German voters into re-electing her on September 22nd. However, another Greek bailout plays badly with the German electorate, especially in the wealthy west where citizens paid to integrate (poorly) the ‘Ossis” and remain reluctant to subsidize generations of spendthrift Mediterranean incompetence. Then again Merkel’s latest remarks warn against further haircuts without explicitly ruling them out, so a third CDU term may mean debt relief for the Greeks regardless of her voters’ opposition.

Read full article here.


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