Tuesday, June 28, 2011

New Greek austerity package up for a vote Wednesday

With polls showing up to 80% of the Greek public opposed to the draconian new austerity measures the Troika (EU Commission, European Central Bank, IMF) is trying to force onto the Greek Parliament, a 48-hour general strike is underway, along with big and often dramatic street protests.

Aljazeera English provides this short report, Greek protests turn violent 06/28/2011:

The self-destructive austerity measures demanded by the Troika are up for a vote in the Greek Parliament on Wednesday. The ruling social-democratic Pasok Party has a 155-seat majority in the 300-seat Parliament. From the reports I'm seeing and hearing on Thursday, the vote is going to be very close, with at least two Pasok members saying they will definitely vote against it. Pasok is the left-center party. But what is left of "left" when the social-democratic party insisting on ruinous austerity measures that basically everyone knows will not solve Greece's debt problem and will actually make it worse, all to protect the owners of French and German banks.

Doomsday predictions are flying around, encouraged by the Troika, facilitated by weak reporting in much of the European media and - do I even need to add? - in the American press. Here's a painfully uninformative example from ITN via the PBS Newshour 06/28/2011:

Meanwhile, the IMF now has a new chief, Christine Lagarde. Whether that is good news for Greece or anyone else remains to be seen. But presumably we won't have long to wait. Krugman expresses a tad of optimism in The Mystery of Lagarde 06/28/2011:

It’s not as if she's especially enigmatic: in addition to being smart, by all accounts she's serious, responsible, and judicious. But that, of course, is what worries me.

For we're living in an era in which, for the time being, conventional prudence is folly, conventional virtue is vice. The things Very Serious People want to do — slash deficits right away, "normalize" interest rates, worry about inflation — are exactly the kind of things that could turn the slump of 2008-? into decades of stagnation.

Under Strauss-Kahn, the IMF was staking out a position as the least dogmatic, most open-minded of the major international organizations. That’s not saying too much, but it was much better than the madmen in authority at the OECD or the BIS.

So the question is, will the IMF become more sensible under Lagarde? For the sake of the world economy, let's hope not.
Supposedly, if the austerity measure doesn't pass on Wednesday or maybe Thursday, the Greek government will run out of money in two weeks. At this point, the sooner Greece rejects the Troika's demands and/or defaults, the less the overall damage would likely be, as near as I can tell. At least, the sooner all parties involved face the reality that Greece is going to default on some of its sovereign debt in the best of cases, the better it will be.

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