By John Ward
Papademos…possibly not entirely honest with Greeks
IMF blunder forces out the truth about post-election crackdown
Yesterday, the IMF released disastrous forecasts about the Greek economic outlook for 2012. Unwittingly or otherwise, this development set Athenian journalists and anti-Establishment groups on a hunt for the truth about post-election austerity. The details (revealed today in Ekathimereni and other newspapers) can only benefit the smaller anti-EU Parties. The revelations follow hot on the heels of Monday’s Slog exclusive about plans to install another unelected Prime Minister in the event of an electoral dead-heat.
The Greek deficit this year will be far greater than expected, the IMF announced yesterday. According to their new report, there will be a need for additional spending cuts of more than 15 billion euros between now and 2017. This would represent 7.7% of gdp.
The IMF expects the deficit to end the year at 7.2% of gdp – something of a leap from the 6.7% previously forecast.
The new government (if any) to emerge from the May 6 election will have to bite the bullet and cut a further 11.6 billion euros from 2013 and 2014 alone. But yesterday’s IMF update hints that spending cuts will continue well beyond 2014 – from 48.9% of GDP, spending will have to go down to 41.2% of GDP by the start of 2018 fiscal year.
The Troika team in Athens (so popular, their offices were bombed last week) are hard at work, as the election unfolds, finalising the new measures. But as discussed here on Monday, the implementation of these depends on a pro-EU Coalition being in power. The very fact of electors now knowing what’s in store is certain to affect the election against the EU’s interests. Maybe, once could hypothesise, that’s what the Sprouts want anyway.
Whether the new measures see the light of day or not, the account of themsplashed today by Ekathimerini makes for almost unbelievable reading:
1. Further cuts in social benefits.
2. Cutbacks in defence spending without regard the country’s defence capability. (But, I’d imagine, exempting German contracts)
3. Restructuring of the central government, which will operate with less staff, meaning that there will be more layoffs in the public sector.
4. Cuts in drug cost subsidies, and hospital expenses to be slashed, removal of some existing health benefits.
5. Wages and the pensions to be reduced by at least 15%.
According to Vima newspaper, Troika’s first target is social benefits given to larger families and single mothers. These benefits will be removed without exception.
As yet, nobody in Brussels, Berlin, Washington, or the IMF seems to have detected the likely link between severe cuts and falling output. As The Slog has posted endlessly, once debts get beyond a certain size – and cuts to control them are left too late – the maths simply don’t work: lots of noses get cut off to save lots of face, but it’s all pointless. This has been the major learning from the eurozone crisis…and at a lower (but equally serious) level, it represents the exact same dilemma as that facing George Osborne: far too much cloth was ordered, and cancellation came far too late. Not even a draper’s scissors can defy that logic: it is immutable.
Thus the Left v Right, Cuts v Stimulation debate is completely sterile throughout the West. Cutting output still further to chase uncatchable debt is sheer insanity. As I have said right from the start, debt forgiveness on a massive scale is the only answer: it is too late in the day now for anything else. There is no such thing as ‘austere simulation’: it is just another mad oxymoron invented by the Brussels morons.
Yesterday, The Slog told everyone that the necrophilia will continue until more sane voices are allowed to be heard. As usual, you read it here first.
From the Archives: Either forgive debt, or face disaster.
