De Grauwe, P. (2015) “The Greek Election 2015 – Revolt Of The Debtors“, Social Europe Journal, 05 Ιανουαρίου.
The Greek debt crisis that erupted in 2010 is back and again threatens the stability of the Eurozone. That crisis was the result of two factors. First, an unbridled spending drift of both the private and the public sectors in Greece during the boom years of 2000-2010, which led to unsustainable levels of debt. Second, reckless lending to Greece by Northern Eurozone banks. At no time the Northern bankers asked themselves the question of whether the Greeks would repay the loans.
The European Union chose to resolve the debt crisis by punishing the Greeks and by saving the Northern banks. A punitive austerity program was imposed on Greece, whose effects are now visible everywhere in this country. A decline in GDP of close to 25% since 2010, a rise in unemployment to a level we have not seen since the nineteen thirties, and impoverishment of large parts of the Greek population.
The banks went largely unpunished. True there was a restructuring of the Greek debt held by private investors. Some banks paid the price of excessive credit granted to Greece, but most banks escaped this fate by dumping their Greek claims onto the public sector. Those claims are now in the hands of national governments and the European Central Bank. And these want to have their money back whatever the consequences may be for the Greek people and the Greek political system.
The official narrative of this approach is that the intense austerity that was imposed on the Greek population is inevitable and in the end will bear fruit. Inevitable? Yes, of course, if the intention is to safeguard the interests of the creditors then there is indeed only one possibility: the Greeks have to pay the full price. Will it pay off in the end? Yes, of course if austerity is maintained long enough it will succeed in creating surpluses and transfers of resources from Greece towards the rich North of the Eurozone.
- Jakub Marian: Household debt in Europe by country (map), 09 Δεκεμβρίου.
- Ali Abbas, S. M., Blattner, L., De Broeck, M., El-Ganainy, A. & Hu, M. (2014) “A 100-year perspective on sovereign debt composition in 13 advanced economies“, VoxEU Organisation, 27 Οκτωβρίου.
- Durden, D. (2014) “The Scariest Number Revealed Today: $1.114 Trillion In Eurozone Bad Debt“, ΘZeroHedge, 26 Οκτωβρίου.