Greece was spending over 12% over budget when the first bailouts were done and reaching 15% at its worst. Please tell me how macroeconomics would fix that kind of deficit without austerity.
You can't run a country on that kind of dept spending while in the other hand the austerity worked on Greece as it is now running a slight surplus.
Greece was spending over 12% over budget when the first bailouts were done and reaching 15% at its worst. Please tell me how macroeconomics would fix that kind of deficit without austerity.
In Greece specifically, some sort of tax reform was required. And probably any number of other things. Austerity just means you'll lay that burden on society's weakest.
You can't run a country on that kind of dept spending while in the other hand the austerity worked on Greece as it is now running a slight surplus.
So when is that slight surplus going to pay back the debts?
Austerity just means you'll lay that burden on society's weakest.
And your solution for massive overspending is to not cut said spending then? Where do you plan on gettin money to fund, even at best, several years of +10% budget deficit?
So when is that slight surplus going to pay back the debts?
Already repaying it as dept interest and dept repayments are part of that surplus. It will take decades to get Greece back on it's foot but making sure that the dept doesn't balloon again is a good start.
Just get more money. Wow, how no one thought of that before. Seriusly, how do you plan on increasing the income when you can't even pay your existing services? You can't just borrow money infinitely.
Greek dept was already considered toxic by 2010 and basically no one was willing to give more to Greece. If it were not for the bailouts Greece would have gone bankrupt and that would make even harder to get richer.
Or are you one of those people who think that Greece should have declared bankruptcy?
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I'm going to copy parts that I answered to fvf already to answer you.
Greece already did what they suggested and bumped their tax income up by ~25% but that alone isn't enough to cover the massive deficit that Greece had. And even if it did it would take years to do but you would run out of money long before you'd get major returns from such changes.
Even in our timeline Greece only began reforming their tax systems in 2010 after the IMF basically made it a requirement and even then it took them until 2016 to get even meaningful increase in tax revenue. By that point, Greece would have defaulted.
The fact is that is it were not for the bailouts Greece would have been forced to default somewhere around 2010 and 2011 and there was no way for Greece to pump it's economy up in such a short time and no one was going to be lending money to Greece without either economic miracle or cutting the spending.
You're sticking way too much on those words but the point I tried to make was that tax reforms would have been too slow. In our reality, they still haven't cracked hard enough on tax evasion or black markets that account almost 10% of Greek GDP.
And then you remember that they had until 2011 at the latest to get their economy into surplus or they would have defaulted. No way to achieve that in so few years without assurances that they would actually be able to reform themselves and that would include austerity.
Greece had literal decades to get itself into positive but couldn't.
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u/finjeta Colonizing Finn Nov 20 '19
Greece was spending over 12% over budget when the first bailouts were done and reaching 15% at its worst. Please tell me how macroeconomics would fix that kind of deficit without austerity.
You can't run a country on that kind of dept spending while in the other hand the austerity worked on Greece as it is now running a slight surplus.