Germans warns Greece: no cuts, no aid

[ChangoLoa]

159. No fiscal reform can be efficient without growth

Any mesure that would keep hindering growth in Greece would be counter-productive. Fiscal reform's purpose is to help putting the economy in a more sustainable track... without killing it! The Greek don't need a therapy of shock which will end up inevitably as a shock without therapy. They need a deep, effective, long-term change of structure, which can only be obtained though gradual reform. This problem can't be solved in a year or two.

The Germans are reacting - not responding - to this problematic. What they're asking the Greek to do is NOT feasible. Highly restrictive budgetary and restrictive monetary policies are way too pro-cyclical to be applied the way the German govt is demanding. If the rest of Europe would have behaved the same way with Germany in 1989, they would have been forced to integrate East Germany in a 10-15 year period, and not immediately as they did. A credit line of 11.5 billion euros is NOTHING for the EU.

Moreover, the German are incredibly quick to forget that a very substantial part of their export-related growth is obtained thanks to the traditional fiscal-stimulus structure of its southern neighbors. If austerity was applied as they wish in those countries, their growth will strongly be affected.

In any case, it is now too late and pointless to look for responsibilities in this financial whirlpool. The important thing to do is to apply the best possible cooperative strategy - as a real country would do. Certainly, the fiscal reform must be applied in Greece (starting by the higher patrimonial class, economic conglomerates and the Church, which need to PAY taxes!), but the burden of this reform should be spread over a much longer period. Otherwise, it will merely be supported by consummers and public servants (the only tax payers in Greece), and will consequently be inefficient. In the meanwhile, European countries should support Greece as if it was a region of their own country.