The Greek government has
approved its 2013
budget by a vote of 167 to 128. The passing of the budget was
required in order for Greece to continue receiving bailouts from
international lenders. Thousands protested the budget outside the
Greek Parliament in Athens while inside left-leaning politicians
argued for the budget to be rejected. ;
The budget anticipates a contraction in the economy, a growth in
the national debt, and cuts worth 9.4 billion euros. A rather
important assumption made in the budget is that Greece will be
granted
two additional years to meet its deficit reduction goals,
something that has yet to be formally approved by international
lenders. A report from the International Monetary Fund, European
Commission, and the European Central Bank (collectively referred to
as the ‘troika’) on Greece’s reforms has not been completed.
The recent budget debates and the protests leading up to the
vote have highlighted tensions that have been growing in Greece.
Anti-bailout
left-leaning parties and the xenophobic nationalists
Golden Dawn ;are enjoying increased popularity. In the case
of Golden Dawn some see no reason to think that the surge in
popularity will diminish. From
Reuters:
Political analysts see no immediate halt to its meteoric ascent.
They warn that Golden Dawn, which denies being neo-Nazi despite
openly adopting similar ideology and symbols, may lure as many as
one in three Greek voters.
"As long as the political system doesn't change and doesn't put
an end to corruption, this phenomenon will not be stemmed," said
Costas Panagopoulos, chief of ALCO, another independent polling
company. "Golden Dawn can potentially tap up to 30 percent of
voters."
What is especially worrying about the situation in Greece, and
the eurozone more broadly, is that some ;Americans are claiming
to have learned all of the wrong lessons from the fiasco. From
Bloomberg: ;
When the housing bubble ;burst ;in 2006, U.S. policy makers looked to
Japan for clues about what to do -- and not do -- in response. Now
their attention is shifting to ;Europe ;as America
gets set to follow that region with a concerted attack on its
budget deficit.
Among the lessons being drawn: Don’t put off budget action until
the financial markets demand it. Big, immediate cuts aren’t always
the best way to reduce deficits. And central bankers should be
ready to try to offset the economic impact of any fiscal
contraction.
Elsewhere in Europe The Spanish Banking Association has put a
two-year freeze on
house evictions after a woman killed herself shortly before she
was to be evicted from her home.
Unsurprisingly, it looks like
Iceland, which was
hit hard by the financial crisis ;but enjoyed a relatively
speedy recovery, is not in a hurry to join the European Union.
Unfortunately, it is a little too late for Iceland’s lessons to be
learned by American policy makers who seem intent on sending the
U.S. on a path more familiar to the Greeks. ;
… Read More
↧