“An experiment of austerity” and “blackmailing” are just a few of the many fanciful epithets employed by the members of SYRIZA and socialists to create a “syrizophrenic” picture of what is going on. However, the true reasons of and solutions for the crisis have already been known for a long time.
Following the Greek tragedy, there is a search for ways to prevent crises of similar magnitude from happening. Different state representatives are coming up with different solutions on how best handle such situations. What the eurozone needs are more voices advocating for the benefits of competition.
The euro indeed plays a major role in the Greek drama, but the ultimate cause of the Greek economic turmoil lies somewhere else. The real problem is that the architects of the euro used it as a turbo that was meant to speed up the integration engine of the eurozone, while encouraging other European countries to do so as well.
In the last five years, Piraeus Bank has lost 97% of its value and Eurobank (indeed, an apt name) an astounding 99.8% of the value. Their market value is currently five times lower that the market value of the Uber company. However, the Stock Exchange has not reached the historic low of the year 2012.
If the hundreds of thousands of entrepreneurs, small and big businesses alike, took as long to deal with their daily existential crises, every last one of them would have already gone bankrupt. At the same time, politicians don’t have to worry about it.
Although Greece’s drama has left no people indifferent, neither those who stick to a tough position on Greece (Lithuanian government, for starters), nor newly declared Greece’s friends (European nationalists and socialists) would want the same scenario for their countries. However, becoming Greece is not so difficult. Here are a few guidelines.
The economic situation in Ukraine in 2015 and 2016 will depend on progress in externally supported reform program and on stabilization in the Eastern Ukraine. Fiscal consolidation, decline in real wages and unemployment will cause reduction of real private consumption. Weak hryvnia, despite dragging down consumption and investments, helps to increase fiscal revenues and narrow the current account deficit.
In March, Ukraine’s government adopted the Action plan for reforms in 2015 and 2016 while the IMF board approved four-year USD 17.5 bn extended arrangement under the Extended Fund Facility (EFF). The EFF supports ambitious program of Ukrainian authorities, which would in IMF words ‘put the economy on the path to recovery, restore external sustainability, strengthen public finances, and support economic growth by advancing structural and governance reforms, while protecting the most vulnerable’.
The look back at 2014 will include mainly good news. While comparing to traditional benchmark – the average performance of the European Union – the Czech GDP growth rate was significantly higher than the growth rate of the EU. The Czech economy has had a faster growth than the EU in five quarters in a row.
The new Greek government of the leftist party SYRIZA wanted to take back austerity reforms in order to, for example, “gradually restore salaries and pensions so as to increase consumption and demand”. But it seems that the only thing accepted by the European Commission and eurozone finance ministers is 4-month extension of the bailout in return for presenting a list of reforms that Greece had committed to undertake.
