Greece: 3rd bailout anniversary

Three years after troika imposed measures to overcome downturn Greece is still worse than before

On Tuesday 23th April of April, 2010 Greece asked its first bailout. This week Europe will commemorate the third anniversary of Greece’s first bailout. Three years after the intervention of the International Monetary Fund (IMF), European Union (EU) and European Central Bank (ECB), Greece is not a better place to live according to statistics. We cannot travel to Greece to know which the social situation is, but we can analyse what happened with macroeconomics variables.

European solutions don't work and this inability is causing a lot of protests in Greece. // The Telegraph

Since troika helped Greek accounts, economic health hasn’t done anything but worsen. The Mediterranean country asked rescue after one year of a downturn. But the worst was still coming. Since the bailout Greek economy has decreased almost every trimester above 6%, arriving to the thrilling number of 9% in the last trimester of 2010, according to the Hellenic Statistical Authority (EL.STAT). It seems that austerity measures didn’t reboot the economy, inside out it has only been useful to worsen and shrink the Greek economy.

As we know, the recession is not friend of employment, so it has experimented a fast worsening since 2010. When the first bailout was passed, only 12.5% of Greek workers didn’t have jobs. Nowadays, it has dramatically increased until 27%. Almost a quarter of Greeks don’t work, and what is worse, 65% of unemployed people are long term unemployed, according to government data. Moreover, youth unemployment (younger than 25 years-old) rises 59%, according to OECD.

At the beginning of the European debt downturn, some economists suggested that internal devaluation will be the solution to economic problems. They believed that income shrinking will be followed by deflation, it will do countries more productive and economy health will be restored. But it hasn’t been working in Greece (either Spain or Portugal). Since 2008, EL.STAT data suggest that salaries have decreased in almost every productive sector, especially in Arts (-69%), Public Administration (-48%) and Education (-29%). In opposition, prices experimented continued rising by an average of 1% a year. Internal devaluation is not occurring because the prices are shrinking but prices are increasing, in spite of decreasing.

The downturn has forced a lot of people to ask for meals in community kitchens. // EuroNews

Meanwhile troika solutions weren’t working, people at risk of poverty or social exclusion represents 31% of Greeks (EuroStats data for 2011) and 2 of every 3 children live at risk of poverty. Is it sane to insist on going on with austerity and budgetary cuts to solve crises? It seems it isn’t. Even the IMF has suggested that countries with economic problems shouldn’t be forced to make budgetary cuts as fast as it has been done since 2009.

Tweet