Tuesday, January 31, 2017

Bill Black — When will the EU and the ECB Stop Torturing the Greeks?

The troika refers to the European Union (EU), European Central Bank (ECB), and the International Monetary Fund (IMF). The IMF, traditionally, was the greatest proponent of any international entity of inflicting extreme austerity on nations suffering economic crises. The IMF’s economists have increasingly reviewed the evidence and concluded that austerity reduces growth and that putting nations into inescapable debt traps is stupid and harmful. The EU and the ECB, however, have been impervious to these economic studies and intent on hammering the Greeks. The purported EU “bailout” of Greece is an exercise in EU propaganda. Overwhelmingly, EU aid involving Greece goes to Greek banks – and the bank bailout bails out the creditors of Greek banks. Those creditors, overwhelmingly, are EU banks.
The EU and the ECB have forbidden Greece to use stimulus and locked Greece into a debt trap that will crush the Greek economy for over a half-century....
The troika is the EC, the ECB and the IMF. Should be "European Commission" instead of EU?

New Economic Perspectives
When will the EU and the ECB Stop Torturing the Greeks?
William K. Black | Associate Professor of Economics and Law, UMKC

9 comments:

John said...

Never!

Bob said...

You can torture true believers all you want and they keep coming back for more.

John said...

Bob, exactly right. The EU may be sadistic, but the Greeks are choosing to be masochistic. There will be economic pain in leaving the EU, no question about it, but can it be any worse than a 30% fall in national output, 25% unemployment, 50% youth unemployment and that's only because so many have emigrated.

I used to believe the Varoufakis line of argument that it would lead to catastrophe. In fact my very first posts on a thread here at MNE were to defend Varoufakis and argue against what Mike, Matt, Tom, Neil and others were saying. But when you're wrong, you're wrong, and when others are right give them credit. In fact the Grexit people here at MNE have been remarkably prescient. They'd say there's no prescience in it, jut accounting identities!

Penguin pop said...

Stupidity will keep repeating itself. I have no sympathy at this point. Whatever money can be made will be made.

Noah Way said...

When? When there is no profit in it, of course. Until then they will keep doubling down.

Greece should have defaulted years ago. They could have reinstated the drachma, set it at some fraction of the euro, and watched tourism explode as they rebuilt their sovereign economy.

This is why Ukraine choose the Russian Federation over the EU. They saw the economic rape and pillage and didn't want to be next. Not that it made any difference in the end.

Kristjan said...

"I used to believe the Varoufakis line of argument that it would lead to catastrophe"

It already has led to catastrophe. EU and Varoufakis don't have an idea how to continue, yet they keep pushing it. I remember there was a lot of resentment among the left in internet forums when I said that Galbraith and Varoufakis are utopic dreamers. Galbraith said that simpletons are in power after Brexit. These guys are globalists 100% and globalism is the left's TINA. They really believe that democracy is when stupid have a say.

Matt Franko said...

The qualified people there all leave due to the cronyism and nepotism... for greener pastures... none left in Greece are qualified so it remains a hell hole....

Calgacus said...

John - In spite of his later & some earlier statements, one should remember that Varoufakis did opt for Grexit, as he had even earlier said he would in such conditions. It was Tsipras's decision to replace him & the other more or less sane members of his cabinet & to snatch defeat out of the jaws of victory. Varoufakis is a rare bird - someone who can walk the walk, but can't seem to talk the talk. :-) Something rather unfortunate for a professor, a teacher. The cognitive dissonance involved in reconciling Varoufakis's actions & words may have led many to have a view which is more consistent but less accurate.

Ignacio said...

The qualified people there all leave due to the cronyism and nepotism

On top, you have a worse positive feedback loop going: perennial high unemployment and youth unemployment and increasing poverty makes talented and young people migrate.