Wolf Richter: Greece – Disagreement Everywhere, Rift in the Troika

[abelenkpe]

Wolf Richter: Greece – Disagreement Everywhere, Rift in the Troika

http://www.nakedcapitalism.com/2012/01/wolf-richter-greece-%E2%80%93-disagreement-everywhere-rift-in-the-troika.html

Austerity measures are taking their daily toll on Greece. Suicides and attempted suicides have jumped by 22.5% since 2009. The unemployment rate rose to 18.2%. RTL, the largest radio network in Europe, lost 50% of its advertising revenues in Greece since the start of the crisis—and decided to leave. And now pharmacies are having difficulties obtaining medications.

The pharmacy problem is an unintended consequence of the austerity measures that the bailout Troika (EU, IMF, and ECB) is imposing on Greece. To cut its healthcare budget, the government has reduced the prices that the industry can charge state-owned insurers. So wholesalers are selling their limited supply outside Greece. And state-owned insurers, whose budgets are squeezed as well, delay payments to pharmacies, which then can’t pay their wholesalers for the medications they do get. Thus, wholesalers are even less likely to sell to pharmacies—and the system breaks down. A microcosm of the current state of the Greek economy.

Yet more cuts are coming. To impose them, Prime Minister Lucas Papademos even threatened private sector unions (and everyone else) with the nuclear option—disorderly default. For that whole debacle, read…. Greece’s Extortion Racket Maxed Out.

(more at link)

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Austerity doesn't work! We don't need it here.

[badtoworse]

1. So what would you have them do?

Nobody is going to lend them anymore money without the austerity. If they default and leave the eurozone, do you think any foreign suppliers would accept drachmas as payment? I sure wouldn't.

Austerity sucks, but as I see it, it's the best of some truly shitty options. What would you do?

[JackRiddler]

2. Default is the only way forward.

Last edited Fri Jan 13, 2012, 07:43 PM - Edit history (1)

For some time there will be devaluation, inflation, currency controls, and command economy. It will be ugly - not necessarily more ugly than austerity and debt slavery - and then better. Argentina defaulted more than 10 years ago, followed by robust growth and a restoration of international credit status. If they keep the debt, they'll be enslaved and thought to be dead beats forever. If they default, ten years from now no one will even remember it. (No one outside Greece, that is.)

Greece needs the protection of a controlled national currency and import restrictions to re-develop domestic industry. The immediate priority is food self-sufficiency. Enough resources are fallow, enough villages empty, to allow that to develop. The Greek people are among the best-educated in the world. There are plenty of engineers and chemists. They can make their own pharmaceuticals. They can make their own solar panels, and make use of the country's abundance of sun to end dependence on imported hydrocarbons (and start reversing the ecological disaster).

All that's really needed is the will and imagination to strike a different path. The biggest obstacle is in the prevailing habits and ideologies, not in the actual possibilities for a different world.

[badtoworse]

3. You're probably right and they may not even have a choice about it.

It will a rough next five or so years, in any case

[abelenkpe]

4. The should have defaulted long ago

Delaying it has only made it worse.

[JackRiddler]

5. Greece should have defaulted immediately after the Goldman Sachs scam was exposed.

Last edited Sat Jan 14, 2012, 11:52 AM - Edit history (1)

At the beginning of the Papandreou government in 2009, it was revealed that the outgoing conservative government had colluded in secret with GS and JPM to hide the size of the Greek debt using elaborate and high-interest credit swaps. Greek debt jumped overnight. This triggered the Greek crisis. The only reasonable and moral course was to default immediately at least on that part of the debt that had been concealed, and to start indicting every public and private official involved in the collusion - including Lucas Papademas, then the chief of the Greek national bank. Instead, Papademas is now the bankster-appointed unelected prime minister who has now replaced Papandreou. Let this be a lesson that Obama also should have learned: Punish the elite criminals, or live to watch them take over again and do even worse things. The conservatives, Papademas and the Wall Street banks had cooked the books, and to make the Greeks pay for it was insupportable. The government's moral and practical strength to default and justify it before the world, and to establish the uncontested sovereignty of the Greek democracy in Greece, was greatest in that moment. Tragically, there was never a chance of this; like any other politician in the neoliberal mode, Papandreou bowed directly to the will of the capital markets and moved to impose the crushing austerity they demanded, effectively justifying the big lies about how the Greek people were at fault because of their childish laziness and moral degeneracy. The ultimate result was that he was deposed by a government of fake technocrats with pedigrees as bankers and (in a couple of cases) fascists, the latter now in nice suits. Leftists seem never to understand the most important Machiavellian insight: the time to act is when you first come to power!