Saturday, 21 March 2015

Are the Greeks or the World (system) to blame for the Greek economic crisis? Why?

If a kid runs across a highway chasing a ball and gets hit by a car whose fault is it?

It's a stupid question, the kid shouldn't have chased the ball and the driver should have been more alert. There are so many little nuances that the question shouldn't be who do we blame, it should be how do we make sure this doesn't happen again.

The Greek government had been running a deficit for decades, and the conversion to the use of the euro didn't help their economic situation. The loss of the ability to control their monetary policy as well as inefficient government spending and many other factors quickly lead to a failing economy. The IMF rushed in to save them because the euro needed to maintain it's value, but the IMF wasn't worried about the well-being of the Greek population. All they wanted was their government to cut spending while loaning them massive amounts of money to "stimulate the economy".

For starters, you can't stimulate an economy without increasing spending, so the strategy was flawed right off the bat. Then of course, IMF money always comes with fine print and large amounts of money were spent on buying useless goods from the countries that were lending the money in the first place.

So who is to blame for the Greek crisis? Everyone! The Greek government was failing in the first place; the corruption and blatant ignorance of well-proven Keynesian economic principles seems to be its downfall. Then the conversion to the Euro sealed its fate and the "rescue party" that was the IMF only instituted policies that allow key members and corporations to profit while the people freeze and starve.

Does any of this really matter though? No.
Who cares about the blame game, we know how to fix the crisis. Forgive some debts, and increase government spending in the right places. Greece would be a thriving economy in a matter of months. Our focus should be reinventing IMF and WB policies as well as taking preventative actions against countries that are on the same road as Greece.

1 comment:

  1. Good... But it would need a change in the power structure...

    ReplyDelete