Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Thursday, 9 February 2012

Greek political drama masks tragedy

Like rockstars making a fashionably late appearance on stage, Papademos and co. finally agreed to €3.3bn in budget cuts. Now we await the main act of Eurozone finance ministers. They are apparently working late into the night to structure a bail-out package to return Greece to a sustainable footing by 2020. Gratuitous piece of advice to them - go home and sleep. It is a pointless exercise. A look at these two graphs makes it abundantly clear.

Exhibit A: Greek unemployment is rising exponentially 

Exhibit B: Industry has all but shut down
(NB: The horizontal red line is zero growth)

Given this dire macroeconomic situation, austerity is not only wrong but also cruel. It takes away any chance of growth, impoverishes the citizens and does nothing to make the debt burden sustainable. At this stage, there is no alternative but to restructure debt to such an extent that even official creditors take a hit. Eurozone leaders have only themselves to blame for letting the situation get so out of hand.