Mark Blyth: The theatre of the absurd

A country that can’t pay back what it owes, and that has shrunk by nearly a third, is to be given more money on the condition that it shrinks its economy still further. On the other side, the creditors, those who are so concerned about getting their money back, are committed to giving that country another €86 billion to pay the debts they have already accrued, thereby adding massively to a debt pile that will never be repaid.

The IMF eventually declares what its own research arm has been saying for three years, that the whole thing is unsustainable, but refuses to do anything positive about it. Meanwhile, deprived of the ability to pass any legislation without the approval of ‘the institutions’, the Greek government sits in a five-month limbo while the economy shrinks. It is then roundly blamed for a decline that has been ongoing for five years. […]

Now, forget for a moment how utterly absurd all this is. […]

The end result of this deal is that the fifth-oldest economy in the world will end up with as much debt per capita as Japan, with almost none of it held domestically. As a result, on current assumptions this demand-shocked and credit-starved economy where almost 60% of its youth are unemployed will grow at 25% above its historical average for the next forty years while running a budget surplus of 3.5%, the proceeds of which will be handed over to foreigners and not go into investment.


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