Yes, Greek has a ton of debt. Yes, it has a woefully uncompetitive economy. Yes, it continues to avoid supply-side and government reform. But consider the macrosituation, as outlined by AEI’s Desmond Lachman:
Over the past six years, Greece has experienced an economic depression on the scale of that experienced by the United States in the 1930s. Its economy has contracted by around 25 percent, its unemployment rate has exceeded 25 percent, and its youth unemployment has risen to over 50 percent. At the same time, despite five years of budget austerity and a major write-down of its privately owned sovereign debt, Greece’s public debt to GDP ratio has risen to 180 percent.At the heart of Greece’s economic collapse has been the application of draconian budget austerity within a Euro straitjacket. That straitjacket has precluded exchange rate depreciation or the use of an independent monetary policy as a policy offset to the adverse impact of budget belt-tightening on aggregate demand. To its credit, the IMF has conceded that in designing its economic program for Greece it had grossly underestimated the size of the Greek fiscal multipliers.
If you are looking a newsier explainer, this from Mashable’s Heidi Moore is a good one.
from AEI » Latest Content http://ift.tt/1NpMDRd
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