[Marxism] Independent's Wren-Lewis puts Greek bailout in perspective
shalva.eliava at outlook.com
Tue Jul 21 17:48:39 MDT 2015
..."Unfortunately, this was wishful thinking. The structural reforms were never going to have an immediate impact on the Greek economy. Acute austerity, on the other hand, had a completely predictable impact. GDP fell by 25 per cent and youth unemployment rose to 50 per cent. As the economy collapsed, the ability to repay the Troika decreased.
All this stemmed from irresponsible decisions by French, German and other countries’ banks to lend to Greece. Imagine if the global financial crisis had been dealt with this way, with borrowers who couldn’t pay – US sub-prime borrowers, say – being lent money by the US government to pay off their debts. That might have kept US and UK banks solvent, but the problem would now be that taxpayers would not get their money back from these borrowers. Perhaps some would be made to attend self-improvement lessons and do community service – which would have had the same effect on their ability to pay as the “structural reforms” and austerity imposed on Greece. Eventually this might have led to heated debates in Congress, with some politicians saying it was time to revoke the US citizenship of the debtors."
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