Lagging behind the markets

When it comes to economic strategy, George Papandreou’s government has constantly found itself a few steps behind the reactions of international markets. The reason for this delayed response to the financial crisis is that the government has yet to adopt a single unpopular measure that would prove its determination to do what it takes to improve the country’s reputation and reinstate its credibility. While every issue is on the table and under discussion, all we have seen are vague scenarios rather than real decisions. Greece’s flagging reputation abroad, however, is beginning to take a hit, both on the Greek state and, more recently, on Greek banks. Market skepticism of the government’s stability program and its ability to implement it coupled with a rise in public borrowing costs are threatening to choke the market, as both the state and banks are either finding it increasingly hard or increasingly expensive to borrow money. The government needs to realize it cannot keep time by its own watch alone. It needs to speed up the process of fiscal stabilization and prove its determination to do so.

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