Friday Jan 30, 2015 Search
Weather | Athens
16o C
13o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Why the American recipe won’t work here

By Alexis Papachelas

A considerable number of critics, including main left-wing opposition leader Alexis Tsipras, have argued that the best way to deal with Greece’s financial crisis would be to introduce a US-style stimulus package in order to boost growth and pull the anemic economy out of recession.

To be sure, every wise-headed person in this country would like to see good things like these happen. We all want to see growth, and we all want to see an end to the repeated waves of wage cuts and tax hikes hitting the population.

However, there are two serious issues with this “American recipe,” as it were. The first is that before you can make the central state help the economy, you first have to come up with the necessary money. But we now know we cannot borrow any money. Also, we are not in the position to print money. The prospect of handouts from Northern European Union member states to their suffering counterparts in the South, and particularly to Greece, is an extremely unlikely scenario given the current political environment.

This basic misunderstanding in the past led a number of established economists on the center-left to the erroneous – some would say disastrous – advice they gave to former Greek Prime Minister George Papandreou before Greece signed up to the bailout agreement with the European Union and the International Monetary Fund.

So one point is that there can be no neo-Keynesian policy if there is no one out there to lend or give you money to spend.

A second issue is that there can be no a la carte approach to the American recipe. Adopting a neo-Keynesian policy comes hand in hand with a brutally deregulated labor market, flexible working hours, universities that cooperate closely with the private sector and so on.

The banks and big companies in which the state stepped in as a main shareholder in the United States continued to operate as private enterprises, not as public utilities.

In the US, are particularly in the Barack Obama administration, Greece has found an important ally who is trying to convince German Chancellor Angela Merkel to give up her insistence on austerity.

The truth however is that Obama and Merkel do not stand that far apart on the issue of how a capitalist economy should run these days.

The American recipe has two sides that are inextricably linked: There is, of course, the fiscal side, but there is also the reality of a fully deregulated real economy.

ekathimerini.com , Tuesday Jan 22, 2013 (22:24)  
SYRIZA must come up with ‘pragmatic solutions,’ Schulz tells Kathimerini
Strange haste
Keep your allies close
Kotzias, Dugin and the EU
Ex premier Karamanlis said to reject SYRIZA offer for presidential candidacy
Former conservative premier Costas Karamanlis has rejected an overture from the SYRIZA-led government for him to be a candidate in another round of presidential elections next month, Kathime...
Greek cleaners show dichotomy of Tsipras as markets tumble
On a sunny Wednesday morning in Athens, two days after Alexis Tsipras became Greek prime minister, workmen dismantled the barricades that had protected the Parliament and its ceremonial guar...
Inside News
Berlin: Greek aid extension only makes sense if Athens upholds reforms
Discussion about a debt reduction for Greece is not in tune with reality and Greece can only get an extension of its aid program if it is prepared to uphold the promised reforms, a spokesman...
Pimco says Greek bonds illiquid, volatile until accord reached
Pricing in Greece’s bonds will be volatile and the market will be illiquid until the nation’s four-day old government reaches agreement with international creditors over its debt, according ...
Inside Business
SOCCER
Olympiakos draws AEK in Cup quarterfinals
The dream draw of Olympiakos vs AEK in the quarterfinal materialized on Friday, as two of the capital's three giants will face off in a two-leg tie for a place in the semifinals of the Greek...
BASKETBALL
Below-par Olympiakos succumbs to Efes
The winning streak of Olympiakos in the second group stage of the Euroleague ended on Thursday in Turkey, as Anadolu Efes outclassed the Reds in the second half to win 84-70. Olympiakos had ...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Ex premier Karamanlis said to reject SYRIZA offer for presidential candidacy
2. Berlin: Greek aid extension only makes sense if Athens upholds reforms
3. Pimco says Greek bonds illiquid, volatile until accord reached
4. Greek cleaners show dichotomy of Tsipras as markets tumble
5. Draghi deflation challenge underlined as prices plunge by record
6. Greek bonds rise a second day after debt negotiation assurances
more news
Today
This Week
1. SYRIZA must come up with ‘pragmatic solutions,’ Schulz tells Kathimerini
2. Why Greece went left while Europe turns to right
3. Greek government's signals very mixed, ECB's Jazbec says
4. EU's Schulz: Greece should follow EU line on Russia
5. Capital flees Greece at fastest pace since 2011
6. Monastiraki restaurant fire prompts panic, restricted before spread
Today
This Week
1. Greek Elections 2015 | LIVE
2. SYRIZA heads for historic victory but without majority
3. Greek Elections 2015 | LIVE
4. Greek Elections 2015: The day after | LIVE
5. Poll shows SYRIZA leading ND by 4 pct
6. SYRIZA's win will test institutions
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.