barryqwalsh
Gold Member
- Sep 30, 2014
- 3,397
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The Greek government is also composed of people who have little or no previous experience of government, and who have thrived politically by agitating against the existing order without the necessity of explaining how things would work after they had obtained power. They had to survive and govern in the complex, interconnected reality that is the global economy of today.
That the Greeks would elect such people to office is explained by the desperation into which they had been led by the irresponsible policies pursued by successive Greek governments since the 1980s, who tried to win votes by promising a standard of living that was not matched by their productive capacity, and by the mistaken decision to take Greece into the euro before the results of these bad policies had been properly rectified.
The problem is that the activities of the new government has made things much worse than they were when they took office.
By creating doubt about whether they would honour the debts incurred by their predecessors, the new government created a crisis of confidence, and this loss of confidence led to a suspension of normal commercial activity. By looking for debt relief before reforms were implemented they put the cart before the horse.
The underlying problem of Greece is a lack of productivity and export potential, but the Greek government - and to a great extent the EU authorities too - continue to ignore this.
Greece's productivity problem will take years to solve, not least because Greece is an elderly society. The structural reforms urged by the EU will help, because they will clear the clogged arteries of the Greek economy and allow talent to be reallocated to where it can do something productive.
But the ageing of Greek society will remain an intractable problem. As a result of the drama generated by their new government, Greeks, instead of focusing on ways to invest to make more money, became in recent months obsessed instead with protecting what they already had.
Whereas the economy was on a path towards modest growth, when the old government left office, it quickly plunged back into recession as money was withdrawn from the Greek banks, thereby further weakening Greece's ability to meet its ongoing expenses and to pay its debts as they fell due.
The timing of the referendum, AFTER Greece has already run out of money, and on a proposal that has already been withdrawn, could not be worse.
It compounds the panic and uncertainty and it is probably in breach of the Greek constitution. Apparently the Greek constitution does not allow referenda on fiscal issues, and the bailout offer contains many elements that are fiscal.
If ever there was a case study that shows how important it is to have political leaders who understand and face up to their responsibilities, and who deal with the world as it is rather than as they might wish it to be, it is to be found in Greece today.
The lessons for Ireland are too obvious to be spelt out.
I wonder how economists like Paul Krugman and others, who were so free with their advice to the Greeks in the early months of the crisis, are advising the Greeks to vote in the referendum on July 5.
Panic and uncertainty in Greece shows its struggling leaders have lost all credibility - Independent.ie
That the Greeks would elect such people to office is explained by the desperation into which they had been led by the irresponsible policies pursued by successive Greek governments since the 1980s, who tried to win votes by promising a standard of living that was not matched by their productive capacity, and by the mistaken decision to take Greece into the euro before the results of these bad policies had been properly rectified.
The problem is that the activities of the new government has made things much worse than they were when they took office.
By creating doubt about whether they would honour the debts incurred by their predecessors, the new government created a crisis of confidence, and this loss of confidence led to a suspension of normal commercial activity. By looking for debt relief before reforms were implemented they put the cart before the horse.
The underlying problem of Greece is a lack of productivity and export potential, but the Greek government - and to a great extent the EU authorities too - continue to ignore this.
Greece's productivity problem will take years to solve, not least because Greece is an elderly society. The structural reforms urged by the EU will help, because they will clear the clogged arteries of the Greek economy and allow talent to be reallocated to where it can do something productive.
But the ageing of Greek society will remain an intractable problem. As a result of the drama generated by their new government, Greeks, instead of focusing on ways to invest to make more money, became in recent months obsessed instead with protecting what they already had.
Whereas the economy was on a path towards modest growth, when the old government left office, it quickly plunged back into recession as money was withdrawn from the Greek banks, thereby further weakening Greece's ability to meet its ongoing expenses and to pay its debts as they fell due.
The timing of the referendum, AFTER Greece has already run out of money, and on a proposal that has already been withdrawn, could not be worse.
It compounds the panic and uncertainty and it is probably in breach of the Greek constitution. Apparently the Greek constitution does not allow referenda on fiscal issues, and the bailout offer contains many elements that are fiscal.
If ever there was a case study that shows how important it is to have political leaders who understand and face up to their responsibilities, and who deal with the world as it is rather than as they might wish it to be, it is to be found in Greece today.
The lessons for Ireland are too obvious to be spelt out.
I wonder how economists like Paul Krugman and others, who were so free with their advice to the Greeks in the early months of the crisis, are advising the Greeks to vote in the referendum on July 5.
Panic and uncertainty in Greece shows its struggling leaders have lost all credibility - Independent.ie
