Details are sparse at this point, but doesn't the latest bailout agreement with Greece just guarantee more austerity on into the indefinite future? There's a sale of 55 billion of Greek assets in the agreement, to be managed by an investment fund based in Athens, but it isn't clear whether those funds go to Greece to help keep their economy afloat or are targeted at debt repayment. The bailout package itself is 86 billion. This will keep the Greek economy going for a few years, but current Greek debt already totals 323 billion and the country is running a deficit that is 180% of GDP. With austerity grinding down Greek GDP year after year, just where does the Eurozone see Greek debt repayments coming from?
In 2009 total Greek debt was 300 billion. Six years later it is 323 billion. What in the world convinces Europe that more austerity is the answer?
The new agreement includes concessions by Greece that reform the tax and pension system, open up closed professions, relax Sunday trading laws, and deregulate many businesses, which sounds like same-old same-old to me. Nowhere have I seen mention of stimulus of the Greek economy. Again, what in the world convinces Europe that the same old bailout but "this time we're going to be really, really strict" is going to work this time?
Here's a nice graph of the GDP's of Eurozone countries through 2014. Without looking at the key, guess which line is Greece?
If the Eurozone technocrats truly believe this bailout deal means they're eventually going to see their money repaid then they are seriously deluded. They're just pushing the crisis off into the future because they just can't bear to admit to themselves that they're not going to see their money again, at least not all of it. And while they're taking their sweet time acknowledging reality Greece suffers under crushing austerity. Greek unemployment currently stands at 25%, and among young workers it is 60%. This is absurd.
I know I've used the debtor's prison analogy already in this thread, but it's still the most apt. These bailout plans have as much chance of resulting in full debt repayment as does throwing a debtor in prison.
--Percy