Washington Times
Editorial
May 16, 2012
The forces of big spending will have another shot at the polls next month in Greece. The Syriza party, which is strongly opposed to austerity programs, is expected to gain in the upcoming election. Unfortunately for the long-suffering Greek taxpayers, opposition to austerity means, in all probability, that Greece will remain stuck in the recessionary spiral that’s dizzied the nation for the last four years.
Though protesters scream about draconian cuts and enforced austerity, actual government spending in Greece has declined by a mere 3 percent. Such a small slice only counts as “draconian” in profligate places like Brussels, Athens and Washington. The Greek economy, on the other hand, has shrunk by 20 percent over the last four years.
The much-despised European Union (EU) and International Monetary Fund bailouts have continued to pour billions of dollars into Greece, keeping the bankrupt state afloat. That has allowed the government to maintain itself without any real austerity in practice. Private bondholders recently agreed to take a 70 percent “haircut,” further easing the public sector’s debt burden. These creditors aren’t happy, as the outgoing government made a $552 million payment to creditors who had refused to accept the swap - even though the government’s terms were that these debt-holders would not receive anything. Such action avoids an immediate default but will hold long-term consequences.
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