A classical or troika tragedy? It’s all set up for a lose-lose situation, as no sooner does the ECB and IMF pump in more cash, than the Greek people withdraw itHow long can something remain on the the brink before it becomes the status quo? The Greek economy has been on the brink of collapse for so long now that no one can quite remember a time when it wasn’t. Even before Greece joined the euro in 2001, the more hard-nosed economists from northern Europe regarded the drachma as a second-class currency as Greece was suffering from high unemployment and low growth.Following the introduction of the euro, the Greek government attracted a large amount of money from overseas investors confident their loans would be underwritten by the European Central Bank. Up until 2007, these were happy days for Greece: public spending soared, the economy grew and the government could continue to ignore the widespread corruption and tax avoidance that had been endemic in the country for decades. In the meantime, Greece continued to run some of the highest structural deficits and debt-to-GDP ratios as the world continued to delude itself that economic boom times were here to stay. Continue reading...
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