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No, Germany forced the Greeks into a program of austerity even though it has been shown, very clearly, that austerity simply doesn't work (see references). The

• fennecfoxen 12y ago
  I don't think we strictly disagree about the ineffectiveness of austerity. The core reason the economic growth didn't show up from austerity is all the stuff I was complaining about. And it's true, you don't get a stronger economy by having the government spend less: you get it when you tax less, more money stays in the economy and it gets reinvested effectively - which it won't do in a nasty regulatory environment with high taxes, not that Greece is taxing less to begin with. But what exactly would you have the Germans do? Say "no bailout" and oversee the exit of Greece from the Euro? Still the bad guys, and it wouldn't have made Greece any better off today. Try to demand substantial economic reforms to actually grow the economy? Sure, that's totally going to happen, never mind that pesky "sovereignty" business and upcoming elections (which are now past elections). And they're the bad guys again. Or maybe they should have just asked German citizens to sacrifice instead, and committed to throwing bad money after good for the next N decades, subsidizing things like a socialist healthcare system where you actually have to bribe the doctor to get an appointment.
  • glesica 12y ago
    After reading the book I mentioned in my last comment, I'm not convinced that the euro is really such a good idea, especially for countries like Greece. It means that the only tool available to the government is fiscal policy. It also means that Germany effectively makes monetary policy on behalf of the rest of Europe, and so you can only imagine who the monetary policies benefit. So yes, ushering Greece out of the eurozone might not have been a terrible idea. And I do think the Germans should be asked to help clean up the mess they were (partially) complicit in creating. There is plenty of blame to go around, no one is innocent. For every euro someone borrowed that they couldn't afford to pay back, someone lent a euro to someone who couldn't afford to pay it back. It was pretty clear we were in a terrible bubble years before it burst, but the market apparently assumed there would be a bailout, so things got much worse than they needed to. Also keep in mind that the reason Greece (and Ireland, and Spain...) had so much government debt is that they transferred private sector debt onto their balance sheets. So what I would really would have preferred is to just let the owners of all those underwater banks take the hit and keep the government out of it except for making sure no one ended up starving to death (the usual social safety net stuff). I guess you could put me in the "bail out Main Street, not Wall Street" camp. But Germany didn't want that, because ultimately the money came from German banks, so... While they were violating Greek sovereignty they could have asked for much more productive changes than they did (like the mis-regulation problems you mentioned, which I agree with). But they didn't. So who gets the blame? Germany, the ECB, the EC, and the IMF. The IMF has already admitted their terrible mistake (we'll see if they learn their lesson, doubtful), the others can apologize by working with the new Government to slash the debt so that the Greek people can at least start trying to fix the other problems we've identified.
  • JetSpiegel 12y ago
    Not when the public sector comprises most of the economy, like in southern European countries. Without public investment there will be no growth, even with 0 taxes.