The real intention of the Austerity measures, can´t be they delayed? Why not?

Hello,

The Troika (IMF, EU and the ECB) has imposed austerity measures to Greece , after lending to the Greeks 300 billions of Euros.

I am wondering many things about all of this:

1. The money the Greeks are receiving from the Troika is going to help Greece to grow economically? . That´s the intention I suppose, so that Greece can catch up with the other countries, and the Eurozone works fine again.

2. Many people claim that not to be the case, that Greece is going to be worse off, much worse, but that, anyway, the German and French banks will get the money that the Greeks owe them. I mean: The Troika does not care about Greece´s future whatsoever, but to receive the money that tha banks lent to the Greeks years ago. Can it be so?

3. Wouldn´t it be wiser to lend the money to the Greece (roughly 300 billion Euros) to let them grow and then, within two year, say, in 2015, impose these austerity measures?

Some claim too that this is what they (the Troika), intends:
-To receive the money from Greece from the austerity measures so that the French and German banks take the money (it is their money anyway, I can understand this)
-To let them fall, default after this austerity measures, and having the money back the French and German banks, the Greeks will have to leave the Euro because they won´t be able to catch up with Eurozone anymore.


Thanks in advance!.

 

Troika says: We are going to lend you 300.000 million Euros, but, you have to do this:

-Raise VAT up to 23%
-Lower the minimum wage from 720€ to 600€
-let´s fire a lot of civil servants (I don´t remember the figure)

Expecting for the government to have more revenue from the raise of the VAT, the minimun wages lower and the layoffs of many civil servants. This is the expected outcome: MORE REVENUE.

I say: If people have to live now with 600€ rather than with 720€ and on top of it the VAT is raised, they are going to consume much less, only milk, bread and such. So, the income from the VAT will decrease rather than increase as expected for the Troika. Moreover, the civil servants that will be fired, will havve to survive with the allowance, that is, say, 500€? , I don´t know the figure either but it is clear that these families will only now consume bread and milk and alike, and, by consuming much less, the VAT that the government will collect, will be, a lot less than expect, I should think.

This is the chain: people consuming less=> small businesses close=>unemployment grows=>these new unemployed people will consume a bit, very little, so, again that will led to=> more small business shut down=> less revenue from the VAT to the government.

That is why I guess they are claiming that austerity measures don´t work.

I wonder, where will those 300 billion Euros will go, what do they are for? to boost the real, daily economy, to help unemployed people, to help people to start new businesses, to do what?!!

 

It's mainly about Germany buying time to contain the Greek crisis so it doesn't spread... They failed, Spain it going down too, and as it is larger than Greece it's started to drag down the larger players in the EU.

Meanwhile tbar fascist dogs are at it again, Greece's only hope is a genuine worker's movement. You will not be saved by either the Troika or fascist scum like golden dawn.

I wouldn't trust the KKE either, they've been collaborating with police - they ARE Stalinists after all. I advise anyone in Greece to look for a genuine worker's party and join your local antifascist group before it's too late.

 

Austerity is indeed just a political movement designed to use the current crisis to push through an agenda, despite the economic irrationality involved. Given neo-liberalism delivered this crisis (which was also delivered through right wing coercive dogma), we're into a vicious cycle of ideological splurge which is hindering long term economic result

 

I concur. In fact, basic Keynesian fiscal policy typically prescribes the exact opposite of austerity in a period of inadequate global demand.

 

This just all operates from the assumption that Greece needs to be bailed out for reasons other then they were robbed by complicated financial tools!

You want to know how to fix Greece?

The Greek people just need to tell the banksters to suck their collective D#ck's, and they aren't going to get a dime from the Greek government!!

 

The EU is a zombie, and it cracks me up that people want to pretend it isn't!

Its kind of like pretending that financial deregulation hasn't been a abject failure I guess.

 

The EU is dead? As a dedicated Europhobe (not a little englander cretin mind you), I'd love that to be the case. It isn't. The political investments made will ensure that the economic folly generated is not the primary behavioural determinant

 

I am vehemently against the notion that Keynesian policy can work if a government is already deeply in debt.
Even in cases where Keynesian policy has the potential of being beneficial, it can still be much worse than doing nothing at all if it is poorly and improperly implemented. Whenever you have the government under urgent pressure to spend large quantities of money, there is plenty of potential for waste and misallocation.

 

A silly comment given, without Keynesian policy, the reality is often greater debt

 

Many economists would not agree with that assertion.

Questions remain whether the government can direct resources more productively than the private sector, whether any benefit from the Keynesian policy would exceed the compounding interest of taking on more debt, and whether the future increase in taxation necessary to pay off the debt would be a bigger disincentive to economic production. And of course, the big question is whether lack of confidence is actually a bad thing. Hayek would have said that such corrective action was a healthy part of the ecoonomy. It just seams to me that Keynesians have a tendancy to want to prop everything in the market up, even when it is not inherently sustainable.

Economics has become very ideologically politicised, and Keynesian policy is not exception.

 

Austerity = disaster both financial and humanitarian .

The IMF already pulls out because "they were wrong" , Mrs Merkel has to present financial success in next year elections .

Capitalism wise economics are very simple : where there is demand supply can flourish , austerity kills the demand side and so you have unemployment , nazis and general misery. With unemployment in this astronomical heights and taxes biting hard there is no economic activity so tax revenue is decreased and as a result you are getting more loans at higher interest while your income is decreasing .
1st Greek "memorandum" (austerity) budget had a -15% effect in government revenues ....

 

They'd have to hide from empirical reality and the IMF

 

It is a matter of math, not opinion. Spain and Portugal are insolvent!

 

Shock Doctrine?

 

Teach yourself what "The EU" is

 

Better than getting into even more debt.

The idea that borrowing money to pursue Keynesian policy can somehow revive the economy to the point that all that borrowed money can be payed back seems illogical.
We have already been borrowing too much money - both the government and consumers - and look where we are now. Borrowing all that money "stimulated" the economy... to the point it caused an unsustainable bubble followed by the inevitible crash.

That is why getting into debt is such a bad idea. When we do finally go about trying to pay it off, all that necessary taxation will be damaging to the economy. And we will find ourselves in the type of quandary we are finding ourselves in now. But all those economists over the years kept telling us all this debt was nothing to worry about.

 

Austerity, by destroying economic recovery, does generate more debt. Bit obvious really

 

I am not for borrowing money but for printing money , if the money you print are equal with GNP increase then there will be no inflation but of course you need to use them to stimulate the economy not to bail out banks . Opening small countries to the markets only have disastrous effects for those countries , free trade should be limited and imports minimised , government can pimp private enterprises as partner or restore public monopolies - depends how you see it but keep in mind that the first one is very close to the definition of fascism.

Capitalism can not function with a cash starved market , i am all for passing into a real (not euro like) socialism but this is not on topic so if you really want to stick to it you have to realise that the buying and selling of hot air using fiat money (neoliberalism) leads nowhere , the financial establishment should be demolished , states must take control of their central banks and governments must actively seek for full employment . As a best move would be to deny paying back the debt and repeal the constitution so new governments can never ever loan from "the markets" .

 

I would claim that any economy that requires massive government expenditures in order to keep up demand is terribly sick and dysfunctional!!

We shouldn't be relying on our (*)(*)(*)(*)ing welfare mom's to be propping up the US economy! Especially considering they are getting to live a higher quality of life than I do working 40-50 hours a week!

 

But if there is no demand supply gets killed, this is the issue we face in Europe today . No demand means more unemployment and more people in food stamps , you call this functional ?
Say you have a store that sells cars for the middle class , who will buy from you if middle class has no money?

Eh people need welfare because there are no plenty of good paying jobs and this is because in the last decades finance has dominated labour , if those people are employed the government can tax them instead of supporting them .

 

Well done, you're getting to realise the inefficiencies associated with capitalism

 

You, of course, forget the fact that austerity should be done before you have a crisis, in fact, that is the entire purpose of austerity, to prevent a crisis in the first place.. However, we react after the fact so its accepted. Yes, we could get into what caused this entire problem and honestly I think I'd agree on a lot of what you say, however you've gone the wrong way in thinking this will be fixed. I guess if you think fixing means kicking the can down the road as a fix. All you have to do at this point is look at Hostess. If that doesn't tell you enough, just look at many small businesses around the country very soon, you will see.

 

No judgement can be made as austerity is part of a political movement, rather than being any sound economic policy. The idea it can prevent crisis is, however, clear nonsense. Government waste is a crucial aspect of demand stabilisation (we just need significant market concentration to deliver that result

 

I absolutely agree with this. This is what happens when government gets too large. It infects every aspect of everyone's life. Just look at this past election. The woman vote was a commodity and it was treated that way. Everything is political. It's all about power and money. You see, businesses and industries wouldn't have to pay off politicians if the politicians weren't in every aspect of what they do. Are there times when the government has to step in? Absolutely, but now its a "if you scratch my back I'll scratch yours" situation. But now it's global. I have no problem with Keynesian economics if it has limits, but with fiat money, Keynesian economics is a virus that spreads until it has infected everything.