Greece’s new austerity measures may prove to be enough—if they are fully implemented

A sad state of affairs after 30 years of EU membership. It is truly shocking that such 3rd-world attitudes have been tolerated by other EU contries for so long.

TE fails to suggest the obvious. The urgent removal of Greece from the Eurozone, and also from the EU. If after 30 years of membership Greece only has to offer chaos, it has to be kicked out of the EU, quickly.

" ... it may well have been better to have let the banks ie RBS and HBOS go under ..."

That is quite right. Market mechanisms it is called. Something The Economist does not believe in. The Economist believes in socialism for the elites and capitalism for the poor.

And it is the same with Greece. Stop the bail-out lunacy, kick them out of the Euro. It is a market mechanism.

@fotis

I think that the Euro will gain after Greece has left the Eurozone. A weak country has been removed, so the rest will be stronger.

Interesting - especially for the Germany-bashers in Greece - is that it seems to be France, not Germany, that connects a bail-out to buying its military equipment. I would say that it is typically French to try to force Germany to pay for Greece, in return for Greece ordering French equipment. If it were not so sad, it would be laughable. France has abused the EU as a means to exploit Germany for decades, and this is now becoming more than obvious.

Market mechanisms would have rid the world of Goldman Sachs etc last year. That would be fair enough for me to see these gangsters go down, yes.

I would say that Germany and the Nordic countries should leave the Eurozone. This scenario will repeat itself over and over until it finally breaks somewhere.

In addition Germany has pretty much been paying for the european union social experiment, just imagine what it could do for itself if it quit subsidizing the rest of europe?

Why do the Germans continue this? making the Germans feel guilty for their past is only going to lead them to be resentful when eventually they run into their own problems trying to save the euro, and the last time they were resentful due to outside forces was with the Versailles treaty...

The truth is that Greece was indeed encouraged to spend the last 30 years... Everybody loved Greek fat spenders. Gemany's, French, Italian, British Car makers, same countries' universities that warmly welcomed millions of greek students, same countries' -defence- (and not only) industries selling their products to greek state, companies, and civilians while not taking any measures to build a common defence policy and letting Greece fight all alone against Turkish offensiveness and flows of immigrants in its seas...

While Greece helped all these countries strengthen their exports and the demand of their products was good... Now due to past Greek Governments ineffectiveness, lack of remorms and consequent lack of competitiveness, Greek Wealth is flowing out of the Country... Demand is falling... Now Greece is bad...

If there was a more Charismatic European Leadership, a more austere integration of Eurozone's economies and policies and more strict paths of transformation, greek farmers and other inexpert civilians wouldn't need to make all these -in many cases insufferable- sacrifices...

Greeks and its politicians are for sure to blame... But it's not only them... The wrong path that Greek Economy followed the last few decades had to be foreseen long ago. European solidarity and integration is crucial if we want to have a vision of a united and strong Europen Union in the world.

Any lines written on Greece from now on rest on the assumption that the latest austerity measures will be fully implemented.

The Greek government has finally translated its strong statements into deeds.It shows remarkable political courage and resolve in the wake of overwhelming odds stacked up over many years.There are no options to spending cuts and tax hikes which should also be accompanied by a focused forceful drive to widen the tax base.
The government should and will know which other adjustments are long overdue in Greek society to promote social justice amid increased hardships.

The set targets to get the fiscal deficit down from 12.7% to below 3% within three years is nothing short of a huge challenge.

If Greece does succeed as I do hope it will, for its own sake, the country will be able to charter a new course on a clean sheet.
Current fortunes will be reversed while setting an example to countries worldwide facing similar tough choices albeit to varying magnitudes.

to La.viryty,

I am not easily offended, and as someone of Greek origin, I do feel Greece needs to take a lot of responsibility for this current mess, but when you start talking about "social intelligence" your comments are both absurd and extremely offensive, even if you claim to just be talking about "societies" and not individuals. Germans have a lot to be proud of, but at the "societal" level, they perpertrated some of the biggest - if not the biggest crimes afflicted upon humanity. The were indeed very "prudent" and mechanical as they devised the most efficient death camps ever invented.

As for modern history and "sociological" comparisons, Greek society, culture and norms have a lot of very positive traits - strong family structure, low suicide and crime rates and high life expectancy.

Please just stick to arguments based on hard economic and financial facts, and not broad-based aspersions on whole societies.

So realisim finaly comes to Alice in Wonder Land, Things do finaly have to be paid for, this is a lesson for us in the UK as well, The reason I have never liked or trusted the Labour Party is that through out their history they like to spend money and it is always other peoples cash that is spent, In the 70's it was they that brought in the 100%+ tax rate (97%income tax with a 5% surcharge on unearned income over £100,000)nowonder so much cash left the country in suit cases. It is much the same now, and although I could see the reason for all the help given to the Banks, I am appalled at the lack of planning that has gone into how to fund this huge whole, it is on a par with the planning that went into how to proceed in Iraq after the bombing stoped.
I am now left with the feeling that it may well have been better to have let the banks ie RBS and HBOS go under, all the other ones would almost certainly been able to get through, and the long term problems would have been less than those now promise to be.

@Lafel

You are quite right. Resentment in Germany is building up.

Personally, I am appalled e.g. by my children's school appealing to parents to chip in for renovations because the government has not even paid for a re-paint for two decades.

I am also appalled by the decaying state of public infrastructure. It is now common in Germany for suburban streets to be as pot-holed and full of uneven patches as the kind of stuff we first saw when Eastern Europe became accessible in the 1990s.

German taxpayers are being exploited by a government funding infrastructure projects across the EU while not even offering decent school buildings to its own people.

I hope one day in the not too distant future the people will march on the Chancellery in Berlin and drive those traitors out.

@Carlos

Consider what you are writing. Greece is after 30 years in the EU now STARTING to behave responsibly - well, maybe.

I say, this is too little, too late.

Greece ought to quit the Euro and the EU, and if it is not willing to do so, it should be forced to.

@Kalamaria said:
"You must belong to a 'hardworking', 'smart' and 'intelligent' society!"

I am writing from the perspective of a similar "stupid" society, since I overlook my well earned property in the US midwest.

BTW, I've earned my fortune doing business (and hard work) also in prudent countries like Germany, the Netherlands and Austria . . . never in the Mediterranians (the PIGS countries, as the Brits say). That's why I can enjoy my life now . . . and "google" as much as I "please".

Thank you Greece for giving the corrupted governments here in Latin America tons of ammunition in the terms of “So you think that Europe is any better than us…”. I reckon that you guys alone have managed to turn off “Europe as a beacon of hope” for at least a year or two.

Again, thank you very much!!

@ "Make Love not War"
Reckless populism based on slogans does not a policy make.
If anything this crisis showed that the EU either needs a tighter political integration or it should be abandoned. It certainly cries out of the the removal of the UK from the EU so that a core of believers can create the United States of Europe. That kind of experiment on the other side of the Atlantic produced the world's most open and prosperous society.
Now the argument that 2.5% of EU GDP (Greece's GDP) threatens the Euro is childish. Northern Europe benefited greatly from open markets to the South and it should be ready bear more of the burden of balancing things out. Trade should be a two way street.

At the end of the day one thing is for sure: When the US is sneezing Europe catches a cold (or the flu as it now seems).

The thing is, to you believe that it is better to be kicked out of Eurozone?What would happen then to the currency?Do not be so small-minded.German officials proposed Acropolis or greek islands to be sold in order to finance their deficit.No sense of humour!Is this part of the principles of the EU.At the same time French are trying to sell them military equipment and overload their budjet.At last, do you believe that the market mechanism is fair enough?Do they operate effectively? speculators do not care about bail outs,loans and deficits.That is capitalism my friend.

As a foreigner living in Spain, I can see shades of Greece here too. The traditional Mediterranean dynamic of endlessly increasing salaries to buy votes does not work anymore in Euroland since their currencies cannot be periodically devalued everytime the country becames too expensive (as they always did in the past). Without the option of devaluation, the Med. countries have become too expensive and uncompetitve and their economies are suffering. The obvious solution is to exercise some discipline and cut salaries, protectionism, monopolistic practices, the bloated and overpaid government workforce and generally free up labor laws and business practices. But their leaders resist these necessary reforms because there will be protest strikes and they will lose votes. Instead the local media (which is usually dominated the government) sends out the message of "Don´t worry. Be happy! All will turn out fine soon, and-remember- our government is spending even more money to "fix" the economy". Most of the populace seems pretty content with the situation so reform usually remains elusive.

Here in Spain, the Socialist President Zapatero seems to be living in a fantasy land, where the countries abismal 20% unemployment rate, ongoing recession and soaring deficit are always about the be fixed (not by reforming its rigid labor laws, cutting the salaries of its ridiculously over paid government workers, or making the economy more competitive) by the latest debt fueled spending program. In Spain, Socialism is sold to the public as social solidarity and government assistance, but in reality it is about Tammy Hall style vote buying and patronage combined with crony capitalism.

Of course Obama and Gordon Brown also desperately need to start cutting budget deficits while understanding that countries get out of recessions by making the painful changes which force an economy to become more competitive, and not putting off the day of reckoning through debt financed "stimulus" packages and by rewarding and proping up uncompetitive companies.

Governments have been spending too much money trying to prop up the very entities and practices which got us into this mess. House values need to be allowed to fall to market levels, big banks and financial institutions need to go bankrupt, and counties which have and continue to mismanage their affairs (Greece, etc) need to be forced to make reforms if they want help. I am tired of the bailouts of the "too big to fails". A little discipline would do everyone a lot of good.

@ la.výritý Mar 4th 2010 4:33 GMT

Greetings to the good ol' Midwest! Haven't been there since BJ's 55 point game few months ago.

You remind me of Greek pensioners. With so much time in their hands, they can afford to protest as much as they like, and in the end - in true democracy style- get what they want (raises, benefits, fun with other old people in the street).

I am a public servant but I almost fell from my chair when I read about Christmas, Eastern and summer vacation bonusses! I see the bonus as a compensation for increased productivity, more revenue, extra work and usually this happens in units geared for profit. This is not the case in governmental work, wich usually deals with the "maintenance", "monitoring", "enforcement", education/health fields.

The 6.5% rates are not that bad, compared with what individuals living on credit have to pay (18% minimum).

Christ! No wonder they're demonstrating. They live in la la land afaic. 19% VAT!(sales tax), Christmas...bonuses! I don't want to read anymore.

Again to la.výritý,

"Social Age" charts? Are you serious? You are denigrating whole societies based on some survey? Do you know how many surveys and frameworks there are out there that people propagate and claim to be the holy truth? You can use a survey or social theory to come to just about any conclusion. This a truly inept way to make judgements about whole societies. "Social Intelligence" itself is a fairly new concept, and currently it's just a concept and not much else.

I would suggest you put away these theories and actually intensely study Greek culture, history and society before making such sweeping statements. In fact, such grandiose conclusions about any country are both ignorant and arrogant. I have studied both Greek and German history, politics, literature and culture. Both societies are quite complex and have been shaped by many factors. Rating either one with some silly number is the ultimate in hubris. Giving credence to that number is the ultimate in ignorance.

@JoeSolaris

Thank you for addressing my posts.
Quick an advance-explanation about the “moral competence” that allows me to post my opinion here, since you said “you might accept that if you have chosen to live in the U.S. your perspective on the crisis is different from those who live … within the EU and Eurolandia.”

I believe that I am as competent as any contributor to post my perspective here on this thread, since my tax money is concerned too. I still pay part of my income tax in euroland, plus some of my taxpaying children live within the eurozone … and I chose purposely not to make business in one of the so called PIGS countries (a too “catchy” English phrase creation in my opinion, but still convenient for a quick reference; that’s why I am using this "term" here also).

I had good reasons why I never did business or settled permanently in one of those Mediterranean paradises: I tried it, but the business- and social- culture in these countries is too alien to me. The American Midwest is in its ‘social behavior’ (industrial or agricultural) much closer to what I am used to from my Mid-North European background.

What irritated me most was the commonly accepted practice that belonging to a certain family is already considered a ‘merit’. Public life is mainly based on this principle … different to what I am used to, where a position, respect and ‘authority’ have to be earned.

Back to the article: I agree with those who say that the crisis in Greece was ‘boosted’ by speculators, but it was triggered by fiscal and budgetary irresponsibility.

To underline the first claim, I would like to refer to a contribution I’ve made yesterday on a parallel article. Here is the Link: http://www.economist.com/node/15549449/comments?sort=desc

The second issue was widely discussed here. The Link above explains the first point: "Why Mrs. Merkel can’t bail out Greece”.

In the following I will explain why in my opinion it is not possible for the ECB to accept T-bonds from Greece (or Spain, or Portugal), as you seem to suggest.

My answer in short: Simply because the Maastricht Treaty called for a sovereignty transfer in the area of monetary policy. A sovereignty transfer in the area of fiscal policy does not exist and would not have been (and will not be) accepted by a large majority of citizens and governments, especially not by the citizens and governments of the PIGS countries. It was therefore the governments of these countries that insisted, also in Maastricht, on their fiscal independence, since only this ‘fiscal independence’ gives all the possibility for ‘fiscal dishonesty’ and ‘budgetary extravagances’ ... to express this mildly.

This is also why euroland does not have an EMU Treasurer, who would be needed in order to enforce taxes euro-wide and execute their collection, also with force and arrests (as e.g. the Federal Internal Revenue Service does).

Only backed with the eurozone-wide taxation rights has an "Euro treasurer" the necessary ‘collateral’ to issue IOUs to a eurozone European Central Bank.

Question: On what ‘collateral’ basis should the ECB accept T-bonds in your opinion? -- Please clarify.

This is why Greece, in my opinion, *must* turn to the IMF, if she is unable to raise the necessary cash (thru budget cuts or the the sell-off of state property) to make her next payments in April; unless Greece can agree with another country on a short-term low interest bridge-loan.

But this would need collateral too, since Greece faces a possible default later, if it can't make future payments. So, what can/wants Greece offer as colleteral to another country's taxpayers is here the main question.