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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsGreece Austerity Diet Risks 1930s-Style Depression
(Bloomberg) Greece is spiraling into the kind of decline the U.S. and Germany endured during the Great Depression, showing the scale of the challenge involved in attempting to regain competitiveness through austerity.
The economy shrank 18.4 percent in the past four years and the International Monetary Fund forecasts it will contract another 4 percent in 2013 as Greece struggles to reduce debt in exchange for its $300 billion rescue programs. Thats the biggest cumulative loss of output of a developed-country economy in at least three decades, coming within spitting distance of the 27 percent drop in the U.S. economy between 1929 and 1933, according to the Bureau of Economic Analysis in Washington.
Austerity has been destroying tax revenue and therefore thwarting the intended effect, said Charles Dumas, chairman of Lombard Street Research, a London-based consulting firm. Theres no avoiding austerity, though, because these people have no borrowing power. The deficits are there.
Greeces restructured bonds have benefitted amid speculation that creditors are poised to release more bailout funds. Greek bonds maturing in 2023, which yielded more than 30 percent at the end of May, now yield about 16.4 percent. The next block of aid is slated to total 31 billion euros ($40.5 billion), mostly to recapitalize the nations banks. ................(more)
The complete piece is at: http://www.bloomberg.com/news/2012-10-22/greece-austerity-diet-risks-1930s-style-depression-euro-credit.html
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Greece Austerity Diet Risks 1930s-Style Depression (Original Post)
marmar
Oct 2012
OP
xchrom
(108,903 posts)1. Du rec. Nt
banned from Kos
(4,017 posts)2. Greece
1- can't borrow
2- can't collect taxes
3- has no central bank
They are fucked.
GreenPartyVoter
(72,381 posts)4. They need to talk to Iceland.
mmonk
(52,589 posts)3. Coming to a state near you.
dawg
(10,624 posts)5. They need to go ahead and tell the EU to go to Hell.
Re-issue the drachma and devalue.
The consequences would be horrible, but better to end in terror than to have terror without end.