Friday, May 11, 2012

Greek austerity: Path to recovery, or path to violence?

Source: Russia Today

Greece is struggling to form a new government, as political parties are divided on austerity measures. RT spoke to economic analyst Michael Mross, who explains what it means for Greece and Europe as a whole.

RT:What would be the implications if Greece was to turn its back on austerity measures and reject the bailout plans?

Michael Mross: The days of the euro would be counted if this were to happen. And this is what many people here in Germany predicted at the beginning, when the euro was established. What we see is a programmed crisis. It’s very sad to see these things developing, but it was more or the less planned within the eurozone. Such different countries as Greece and Germany do not fit into one currency, so at the end of the day, Greece is not able to fulfill the austerity plans that are promised. No country is able to realize austerity measures. This means that people go to the streets; this means that there is more violence, more political insecurity and that the country also becomes impossible to govern.

RT:But how can a country boost its economic growth when it is in such a mess?

MM: This is a total economical contradiction. If you have to economize, to cut down, how can you spend money then? How can you create labor, for example? You have to spend more money, you have to make more debts in order to get some growth in your country. But under the euro system, this is never possible. We will also see a domino effect spread into Spain, into Portugal, also into Italy. And this will be the final nail in the euro's coffin.

RT: Will that be the end of the euro?

MM: Yes. The euro could never work. Everybody who looks at it from an economic perspective knows that the eurozone just was not right. We also have many difficulties with France. All these debt-stricken countries need devaluation in order to become competitive.

RT:Is there a danger that austerity advocate Angela Merkel could become isolated, when there’s an anti-austerity sentiment not only in Greece, but also in France with its new president?

MM: Angela Merkel doesn’t want to make the situation in Europe more unstable. At the end of the day the whole problem that we have in the eurozone cannot be solved by rescue packages or by more debts. It can only be solved by a breakup of the euro. That means that Germany pulls out and the rest of the countries within the eurozone will devaluate their money to become competitive again

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