Lot's Wife Edition 5 2015

POLITICS 13
This month’s issue:
Greek Bailout
Why Greece were
Right to Vote ‘No’
KOPELIS
BY GEORGE
The Greek referendum on Sunday sent a clear message to
European and international observers that Greece would no
longer tolerate the austerity measures implemented over the
last five years.
61% of Greeks voted ‘No’ to accepting the conditions of the
latest bailout offer, which included further cuts to pensions,
reduced spending on subsidies and defence, and other
reforms.
The ‘No’ vote justified the Greek government’s determined
stance against austerity. SYRIZA and its leader Alexis Tsipras
were elected in January 2015 based on their opposition to the
proposed bailout measures.
A ‘Yes’ vote would have made Tsipras’ position untenable
as it would have indicated majority opposition to his
government’s policies, leading to new elections and more
political instability.
Since the election, the ‘troika’ of the European
Commission, the European Central Bank and the
International Monetary Fund have restricted Greek banks’
access to credit as a response to the election of an antiausterity
campaign.
This essentially forced Tsipras to close all banks from
the 29th of June until at least Wednesday the 8th of July
to prevent a run on the banks. Greeks are limited to €60
withdrawals from cash machines as ATMs run dry across the
country.
The ‘No’ vote is not a rational economic decision, (it
frustrated the troika greatly) but instead it’s a social
decision motivated by the plight of the ordinary people. 25%
of Greeks were unemployed in March and half of all young
people don’t have work.
The Greek people are right to consider that if five years of
the rational economics of austerity have not delivered any
visible relief for the population, then a different solution
should be tried.
The most important consequence of the ‘No’ vote is that it
makes a Greek exit from the Eurozone a real possibility.
When the banks run out of money, which is extremely
likely if no deal can be reached in Brussels this week, the
"There would definitely be a
few months of high costs of
living but free of the Euro,
Greeks will have much more
of a say in the affairs of their
own country. That can only
be a good thing. "
Greek government will need to provide emergency funding.
The problem is the government has no money!
To solve this, the government could print its own currency.
This would run against Euro treaties, basically pushing
Greece out of the Eurozone. It would immediately lose most
of its worth, leading to high inflation for a short time.
This cheaper, more competitive new currency could
quickly lead to higher exports - especially in tourism (which
currently makes up about 20% of the economy).
A resolution to the crisis would also bring an end to much
of the instability on the global sharemarket in the last few
weeks.
There is little risk of Greece becoming the first of many
countries to leave the Euro. Other struggling economies such
as Italy and Spain are much larger countries with centralised
economies and larger industrial bases.
There would definitely be a few months of high costs of
living but free of the Euro, Greeks will have much more of
a say in the affairs of their own country. That can only be a
good thing.
Image Courtesy of : www.flickr.com/photos/124247024@N07/