Germans warns Greece: no cuts, no aid

[ChangoLoa]

163. Many measures have been already applied and they know they'll have to accept more

After up to 30% cuts in the public servants' wages, the retirement benefits have been reduced by 20% (for pensions > 1,200 euros/month), the 0-tax threshold has been lowered from 12,000 to 5,000 euros/year of revenue, they have already fired or "put in reserve" tens of thousands of public servants, sold an important share of their portuary infrastructure, etc.

If we don't call it austerity, I really don't know which word we should use.

The Germans are treating Greece as if it were a company in bankruptcy and have effectively managed to radicalize the Greeks against a political class who has no voice in this process.

But don't get me wrong, a very deep reform is obviously necessary. The Greek are more conscious than anyone on this level. What I'm trying to point out is the incompatibility of a drastic structural reform and draconian macro adjustment policies when both are applied simultaneously. The Washington "Consensus" didn't work anywhere. In fact, it was 10 times more destructive than any of the structural problems that development economies had in those days. You can't ask a country to adapt its economy while you push ultra restrictive policies.

Once again, the capacity to adapt of an economy is conditioned by many factors which are antinomic to the kind of austerity the Germans are asking the Greek to apply. At the economical level, credits are needed to modernize private activity and public investment to create activities in sectors that are too big/long term for private investors alone to initiate themselves. A non-constantly shrinking market is also needed to create internal outlets. Last but not least, at the political level, the Greek need real consensus. Without it, no structural reform can be supported by a society.

The Germans should know. You can't ask a country to liquidate itself. If the Treaty of Versailles was wrong for asking the Germans to pay for what they had destroyed while invading France, hanging high and dry the Greek for living wastefully in the last decades is even worse.