Thursday November 27, 2014 Search
Weather | Athens
14o C
8o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Why the American recipe wont 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 Greeces 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)  
Scraping together the 180 MPs will not be enough
Taking back whats stolen
Beware of the fallen idols
The hard truth
EUs Juncker survives no-confidence vote over tax deals
The European Commission's new president, Jean-Claude Juncker, comfortably survived a no-confidence vote on Thursday brought over news that Luxembourg had lured multinational businesses with ...
Police arrest will forgery gang that netted property worth 1.3 mln euros
The Greek Police on Thursday said that it has arrested seven suspects - among them a former MP for New Democracy - believed to be members of a gang that has been forging wills in order to fa...
Inside News
Lower provisions and energy costs boost Greeces PPC Q3 profit
Greece's dominant power utility PPC on Thursday reported a 29.7 percent rise in third-quarter core profit, helped by lower provisions for past due electricity bills and softer energy costs. ...
Eurozone loans to private sector still contracting: ECB
Loans to the private sector in the euro area, a gauge of economic health, fell year-on-year in October, but by slightly less than in September, the European Central Bank said on Thursday. Th...
Inside Business
SOCCER
Atletico drubs Olympiakos 4-0, leaving Reds with slim chances of CL qualification
Atletico Madrid avenged its 3-2 defeat in Piraeus in September with a 4-0 win over Olympiakos on Wednesday, meaning the Greek champion only has mathematical hopes left for a spot in the next...
SOCCER
Atletico eyes last 16 berth against Olympiakos
Greek champion Olympiakos faces a tough task if it is to prevent last season's beaten finalist Atletico Madrid sealing its passage into the last 16 of the Champions League at the Vicente Cal...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. EUs Juncker survives no-confidence vote over tax deals
2. Police arrest will forgery gang that netted property worth 1.3 mln euros
3. Lower provisions and energy costs boost Greeces PPC Q3 profit
4. Eurozone loans to private sector still contracting: ECB
5. Eurozone economic sentiment rises slightly in November
6. Bank of Cyprus posts 76 million euro nine-month profit
more news
Today
This Week
1. Greece paralyzed by major strike, flights cancelled
2. Greek diplomat dies in fall under Thai train
3. Chief suspect in Piraeus bar shooting arrested
4. Troika talks to continue after failure to wrap up negotiations in Paris
5. Greece scrambles to find food, shelter for 700 migrants on crippled ship
6. Greek, German, Portuguese, Spanish debt to benefit most from ECB QE - ABN Amro
Today
This Week
1. Give Greece a chance
2. Biden heads to Istanbul amid tension over Cyprus EEZ violation
3. Scientists expand excavation of ancient Amphipolis
4. Extremism from a bygone era
5. Piraeus nightclub shooting leaves 3 seriously injured
6. Coscos Greek unit adds multinational rail-freight client
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.