The stupidity of the Greek bailout [View all]

[MadHound]

The deal with the devil that has been arranged between the Greek government and the EU is actually beyond stupid. It is going to consign the Greek people to a society that will not recover, much less prosper, for years, possibly decades to come.

The Greek government just agreed to huge cuts in government programs, throwing tens of thousands of public employees out of work. Social services are going to be slashed, and with there being no money for infrastructure, well, that will crumble as well. Furthermore, private sector wages are also going to be cut, and unemployment, already running quite high, will go even higher.

Nor will these measures bring about debt relief. With decreased income, and thus decreased consumption, tax revenue in Greece will also be in short supply. Which means that Greece is entering a vicious cycle of bailout, austerity, increased debt, leading back to bailout, austerity and more debt.

Let's take a look at what is in store for Greece, through the eyes of the "good" EU debtor nation, Portugal.
"The eurozone crisis has focused attention on debt-burdened Greece spiraling into decline. Meanwhile, Portugal is seen as the international creditors' poster-child for obediently slashing spending and welfare benefits.

Nevertheless, the Portuguese national debt continues to grow, and the country is mired in recession and soaring unemployment."
http://www.npr.org/2012/02/20/147158633/portugal-plays-by-the-rules-but-economy-slumps

Is this what's in store for the rest of Europe, or possibly even the US? Yes, debt is a bad thing for any country, but you don't wreck your country trying to repay that debt. Yet it looks like Portugal, and now Greece are going to be thrown on that sacrificial pyre. Sadly, we are heading in that direction, slowly but surely.