Wednesday, May 16, 2012

More upheaval in Greece

Well, Ms. Merkel, it would appear that the Greek people just aren't having any part of your forced austerity measures.

Attempts to form a coalition government in Greece have failed miserably over the past week over the issue of the austerity measures imposed on the Greek people in order to funnel money back to European banks. The two establishment parties: New Democracy (center-right) and Pasok (center-left) are doing Ms. Merkel's bidding in trying to lead the Greek people into permanent recession by cutting government spending, wages and employment.

This is the same recipe the IMF has followed for the past three decades and there is not one success story the IMF can point to. Cutting government spending during an economic downturn is the best way to deepen a recession and cause a government to put the nation's assets up in a fire sale. The only beneficiaries of such a policy are the very banks lending the money to the government. The people suffer while the bankers dine on fine caviar, pate and sparkling wines.

With Syriza's refusal to participate in any government that refuses to reject the austerity measures the last government agreed to in order for the European banks to make more money, the country is looking at another general election next month. And that will be a general election in which Syriza looks to be the largest vote-getter.

The risk of default was priced into the bonds the Greek government issued to fund its day-to-day operations and, if the banks didn't stop to think about the risk (however unlikely) of a default, well, shame on them.

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