Greece now has an anti-austerity government after “the radical leftist Syriza” achieved a majority (by reaching an agreement with a small right-wing party). The result is very much a rebellion against long-standing problems in the Greek economy and the austerity measures put in place after the “global financial crisis”. The Guardian:
Greece shows what can happen when the young revolt against corrupt elites
The rise of Syriza can’t just be explained by the crisis in the eurozone: a youthful generation of professionals has had enough of tax-evading oligarchs
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The IMF predicted Greece would grow as the result of its aid package in 2010. Instead, the economy has shrunk by 25%. Wages are down by the same amount. Youth unemployment stands at 60% – and that is among those who are still in the country.So the economic collapse – about which all Greeks, both right and leftwing, are bitter – is not just seen as a material collapse. It demonstrated complete myopia among the European policy elite. In all of drama and comedy there is no figure more laughable as a rich man who does not know what he is doing. For the past four years the troika – the European Commission, IMF and European Central Bank – has provided Greeks with just such a spectacle.
As for the Greek oligarchs, their misrule long predates the crisis. These are not only the famous shipping magnates, whose industry pays no tax, but the bosses of energy and construction groups and football clubs. As one eminent Greek economist told me last week: “These guys have avoided paying tax through the Metaxas dictatorship, the Nazi occupation, a civil war and a military junta.” They had no intention of paying taxes as the troika began demanding Greece balance the books after 2010, which is why the burden fell on those Greeks trapped in the PAYE system – a workforce of 3.5 million that fell during the crisis to just 2.5 million. …
It’s hard to argue with the reasoning of the Greek voters. They have been screwed by the austerity measures, they want their future back. The situation raises some interesting questions for Europe:
Greek elections: Syriza gives eurozone economic headache
Syriza’s election victory has renewed questions about the future of the eurozone and more precisely about whether Greece itself might leave – what has become known as Grexit.
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In the short term, eurozone mechanisms will prevent Greece from defaulting on its debt. But we do not know in advance the upper limits of all these new tools of European monetary integration and its long-term impact on a default crisis.
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The aim of the new government is to renegotiate some of the terms and conditions of the €240bn bailout agreed with the so-called troika (the European Commission, European Central Bank and International Monetary Fund) since 2010.
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A haircut would be the preferred solution. …
No doubt Greece will be looking to the Iceland precedent. In the wake of the crisis Iceland defaulted on its debts. There was short term pain, but in the longer term it is working out well for them (e.g. here here here here).
If Greece follows suit, perhaps voters in other debt=laden countries will start asking questions too…
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