In Athens, the Greek government had no choice but to seek an I.M.F. solution after its costs of borrowing skyrocketed, but that has not made the negotiations for aid any easier.
According to people who have been briefed on the talks, the aim is to secure from Greece a letter of intent for even deeper budget cuts than the tough measures imposed so far, like reductions in civil service pay, in exchange for emergency funds.
Steps being discussed include closing down parts of the little-used Greek railway system, which employs 7,000 people and is estimated to lose a few million euros a day; limiting unions’ ability to impose collective bargaining agreements, which lead to ever-higher public sector pay; cutting out the two months of pay that private-sector workers get on top of their annual pay packages; increasing the retirement age and cutting back on pensions; and opening up the country’s trucking market in an effort to lower extremely high transportation rates that have hindered the country’s competitiveness.
With Greece now shut out of the debt markets, it has little leverage to resist — especially in light of the 8 billion euros it needs to repay bondholders on May 19. Analysts expect a deal by next week at the latest.
I’ve always been a fan of the euro – not that I’ve given it the amount of thought that I’ve given, say, the style indirect libre and such matters. But it does occur to me today that one thing the common currency seems directly to prevent is the present or eventual adoption of the Kirchner method of handling such crises:
On 15 December 2005, following Brazil’s initiative, Kirchner announced the cancellation of Argentina’s debt to the IMF in full and offered a single payment, in a historical decision that generated controversy at the time (see Argentine debt restructuring). Some commentators, such as Mark Weisbrot of the Center for Economic and Policy Research, suggest that the Argentine experiment has thus far proven successful.Others, such as Michael Mussa, formerly on the staff of the International Monetary Fund and now with the Peterson Institute, question the longer-term sustainability of Pres. Kirchner’s approach.
In a meeting with executives of multinational corporations at Wall Street—after which he was the first Argentine president to ring the opening bell at the New York Stock Exchange—Kirchner defended his “heterodox economic policy, within the canon of classic economics” and criticized the IMF for its lack of collaboration with the Argentine recovery.
The Kirchner method, rather than starving labor and the state in service of debt repayment, imposes “austerity measures” on the international banks that made the loans (confident that they’ll be back when the situation improves – and they will) and allows leeway in the domestic effects of a financial crisis (i.e. Argentinians weren’t buying Japanese televisions for quite a bit of the decade…) But due to the eurozone arrangement, this way out, whatever the ideological predilections of those in power, is probably off the table now and for a time to come… As it turns out, the eurozone right now looks like an engine for stealing trains from the Greeks to keep Orlando vacations affordable for the Germans…
And of course, amidst all this, the NYT runs its inevitable ordinary Greeks admit that they are a nation of thieves, and therefore deserve the pain that awaits them piece….
“We did this to ourselves,” said Mr. Koptides, 37. “It is our problem. It’s not Germany or Europe’s fault. We did this to ourselves.”
Greeks seem to be engaged in national soul-searching these days, wondering whether traits they once found amusing might have led to many of their difficulties now.
Some say their country may have been unprepared to join the European Union in the first place. Some focus on how European Union funds sent to Greece were spent on wasteful projects. Greece’s last administration hid the extent of its debt.
“There has always been this way of thinking in Greece that the thieves are the clever ones and the ones who don’t steal are the patsies,” said Petros Anagnostou, 46, a book dealer. “We have to develop a conscience as a community, to see ourselves as a collective society. If it is a jungle out there, then we will eat each other and end up in a place like we are today.”
But of course the right path toward the reestablishment of “a community… a collective society” is by the elimination of the right to collective bargaining and the phasing out of public mass transit!