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MadHound Greek austerity isn't about the debt issue, it is about turning people into serfs again. Seriously, if this was about debt, then you don't lower worker wages across the board(not just once, but twice now). Lowered wages means lowered tax revenue and lower consumption, which means more debt, etc. etc. No, this Greek austerity is all about lowering labor costs, and tying the average worker to their employer with chains of steel. It is about creating a modern day, post industrial serfdom, and it will be coming here soon.
Yo_Mama8. No, it is about debtIt's about the fact that government revenues don't cover basic ONGOING needs of the population, and that the government was borrowing to cover those needs until the government had amassed such a big debt that others wouldn't lend to it any more. If the government revenues were sufficient to cover ongoing spending, then it would be easy for the government and the people to simply disavow the debt and go on. But they aren't. So regardless of whether the Greeks disavow the debt or the Greeks pursue this Euro course, the Greek economy will suffer a crushing wave of austerity. And yes, cutting minimum wages makes sense in this stark economic collapse we are seeing. Cutting minimum wages first drops necessary spending by the government (because the government or state-owed companies are a very large segment of employment in Greece), but also brings more employees onto the books. When minimum wages are too high for the market to bear, a lot of employees work off the books, which means taxes aren't collected, which means government revenues are suppressed. If the minimum wage in the US were $20 an hour, a lot of jobs would officially disappear, but those jobs would tend often to be replaced by off-the-book or contractual arrangements. The law will allow contractors to work more cheaply than employees, so that's what happens. This naturally drops returns on labor, but it also drops government revenues. It is very hard to collect tax revenues when 25% of the population is working on the gray market. IMO, the totality of what is happening in Greece will cause a revolution. The latest demand - the demand that the leaders of all the parties sign on to the whole austerity package - means that the next elections won't mean anything and that the workers have effectively been disenfranchised. The desperation and absolute need in the population can not be resolved by the political system, and I see a major upheaval ahead. I see nothing but disaster stemming from this latest deal, and I am awed and horrified by what is happening.
Ian62 (109 posts) Profile Journal Send DU Mail Ignore20. There are 2 root causesThe problem has been created and there will be a lot of pain for Greeks whatever happens. All that can be down now is to try and mitigate that pain a bit (not what Germany, the banks or hedge funds want). The root causes are twofold. The Greek government and the banks. 1. Greek government The Greek government lied - outright lied, about the state of their finances to gain entry into the Euro. Goldman Sachs played a large part in facilitating this. The Greek government promised more to the Greek people than could be afforded in order to get elected. You cannot have policies where civil servants can retire at 38 on full pensions. You cannot employ 5 times as many civil servants per capita as an average sort of Western country. You cannot say that hairdressing or TV presenters have a dangerous job and can retire early. You cannot have a retirement age of 58. You cannot not collect taxes in an efficient manner. You cannot still be employing 30 bureaucrats on a project that completed in 1957. Loads of other examples of incompetent government.
Ponies note delivered to Greece.
