Thursday December 18, 2014 Search
Weather | Athens
17o C
10o 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)  
Europe´s drama in Greece needs final act to avoid tragedy
A pointless battle
Good sense must prevail
To keep Turkey democratic, tie it closer to EU
Tsipras wants agreed solution with eurozone, not unilateral moves
Greece's radical leftist Syriza party will cancel austerity and ask Europe to erase a big chunk of Greek debt to free the country from the dark spell it has fallen under, leader Alexis Tsipr...
Austerity curbed human rights in Greece, report says
Austerity measures adopted as a result of the economic crisis have adversely impacted human rights, including the rights to work and health, noted a report released on Thursday by the Intern...
Inside News
German parliament supports extending Greece bailout
The German parliament Thursday backed plans to extend a credit programme for Greece, with Finance Minister Wolfgang Schaeuble voicing hope for a «happy ending» to Athens' economic and politi...
Greek bond yields fall after ´friendly´ Schaeuble comments
Greek government bond yields fell sharply on Thursday after German Finance Minister Wolfgang Schaeuble said Athens was on the right track in terms of reforms. "If the reforms already under w...
Inside Business
BASKETBALL
Pappas helps Greens overcome Aris
An impressive Nikos Pappas averted an upset by Aris and ensured Panathinaikos retained its perfect record on Tuesday, one day after Olympiakos thrashed Panionios at Nea Smyrni for the Basket...
´Wee Jay´ and idol Georgios Samaras receive Greek sports journalists´ award at Athens gala
A 10-year-old Irish fan of Greek striker Georgios Samaras was in Athens on Monday at the invitation of the Greek Sports Journalists' Association, which honored outstanding achievements in sp...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Tsipras wants agreed solution with eurozone, not unilateral moves
2. German parliament supports extending Greece bailout
3. Greek bond yields fall after ´friendly´ Schaeuble comments
4. No risk of contagion from Greek vote, Italy´s FinMin says
5. Austerity curbed human rights in Greece, report says
6. German finmin says Greece in better shape than expected
more news
Today
This Week
1. Europe's drama in Greece needs final act to avoid tragedy
2. Election looms as Samaras fails to win vote for president
3. Kammenos maintains firm position, says general election is 'one-way street'
4. What SYRIZA says about Greece’s economy, its debt and the euro
5. Merkel says Russia sanctions to remain unless Putin yields; Greece's prospects 'better than two years ago'
6. Eurozone bond yields fall as 'patient' Fed pleases investors
Today
This Week
1. Juncker warns Greeks against voting 'extreme forces' into power
2. Romanos and the dilemma
3. Samaras summons bond vigilantes with euro exit talk
4. A friendly yet firm message from Pierre Moscovici
5. East Europe scrambles for energy after Putin kills South Stream
6. Anarchist Nikos Romanos ends hunger strike
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.