Greek Debt Disaster Bodes Ill for Daily Life

Pavlina Tcherneva | June 25, 2015

“There are red lines in the sand that will not be crossed,” Greek Prime Minister Alexis Tsipras said just weeks ago as he began the long negotiations process with creditors.

Some of these lines included no more pension cuts or value-added tax (VAT) increases, and a debt restructuring deal that incorporates renewed economic assistance from Europe. Tsipras has been working to complete the previous government’s austerity commitments, without any guarantee of a meaningful debt reprieve in the future.

Yet on Monday, he crossed his own previous red lines and offered a round of fresh austerity measures worth 7.9 billion euros ($8.9 billion) — the largest to date — which in turn prompted mass protests at home.

Crafted by the Greeks, an agreement seemed close at hand, but was nevertheless rejected by the International Monetary Fund and Greece’s euro partners at the European Commission and European Central Bank. The fiscal tightening that is currently being discussed is on the order of 2 to 3 percent of gross domestic product (GDP), comparable to that at the peak of the crisis in 2010.

If the creditors’ amendments are accepted, here is what the new arrangement will mean for the Greek people, especially those hardest-hit: …

Read the rest at Al Jazeera.


3 Responses to “Greek Debt Disaster Bodes Ill for Daily Life”

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  1. Comment by George J. Georganas — June 26, 2015 at 12:34 am   Reply

    There were no “mass protests” in Greece on Monday, 22nd June 2015, nor on the 23rd, 24th and 25th June. One can gauge the credibility of the rest of the news on that article, given this bit of information.
    It is important, however, to note why there were no mass protests. The Greek government was elected on a platform to maintain at all costs the non-viable, inequality-increasing Greek parastate of clientelist politics, of pandering to special interests and of parasitical economics. In essence, to prolong with more borrowed money (guaranteed by taxpayers in the rest of Europe) the privileges of the majority of the Greek population over the minority that still has a job. It is not so often that the exploiters protest against the exploited.

  2. Comment by Pavlina R. Tcherneva — June 26, 2015 at 12:26 pm   Reply

    The Greek people took to the streets this week in more anti-austerity protests. While the government still enjoys relative popularity, the pressure is on. They will likely agree to a fiscal tightening package equivalent to earlier austerity measures and the pain will be widespread, but especially felt by the most vulnerable. That is the point of my article, which you seem to echo in your comment.

  3. Comment by Kerry PechterJuly 15, 2015 at 9:38 am   Reply

    Does anyone know how much of the lending to Greece actually circulated and multiplied in Greece? How much of it was vendor financing, and simply went from a German bank to a German exporter, for instance? To the extent that was true, wouldn’t it make it very difficult for the Greeks to repay the money… money they never had?

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