Austerity fails again. Who would have thunk it?

[Póg mo 1,749]

Alexis Tsipras, leader of the left-wing Syriza coalition, is about to become prime minister of Greece. He will be the first European leader elected on an explicit promise to challenge the austerity policies that have prevailed since 2010. And there will, of course, be many people warning him to abandon that promise, to behave responsibly.

So how has that responsibility thing worked out so far?

To understand the political earthquake in Greece, it helps to look at Greeces May 2010 standby arrangement with the International Monetary Fund, under which the so-called troika the I.M.F., the European Central Bank and the European Commission extended loans to the country in return for a combination of austerity and reform. Its a remarkable document, in the worst way. The troika, while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.

You see, the economic projections that accompanied the standby arrangement assumed that Greece could impose harsh austerity with little effect on growth and employment. Greece was already in recession when the deal was reached, but the projections assumed that this downturn would end soon that there would be only a small contraction in 2011, and that by 2012 Greece would be recovering. Unemployment, the projections conceded, would rise substantially, from 9.4 percent in 2009 to almost 15 percent in 2012, but would then begin coming down fairly quickly. Continued on link.

http://mobile.nytimes.com/2015/01/26/opinion/paul-krugman-ending-greeces-nightmare.html?referrer=

[Trumplestiltskin 5,791]

Seems to me the only choice they had available to them are rubbish or abysmal. The blame seems to be split between the EU for expanding too fast and exposing core member states to the debt of poor economies and corrupt Greek governments railroading the populace into something they hadn't voted for.

Austerity was the least worst of the options that were available. Of course, you'd be hard pressed to find any of Greek voting public who would have any enthusiasm for it,since they are the ones paying for something they never agreed to.