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Many questions with no answers… February 11, 2012

Posted by proeconomia in Fiscal policy, Main, On the crisis, Opinion.

Tomorrow a new pact of fiscal and other austerity measures, along with the agreement for the PSI on the Greek debt, is going to the Greek parliament for the MPs to vote on it. Many critical questions are in the air about the efficacy of the new measures. However, there is a gap in perspective between the practicality of having a plan, even suboptimal, with certain targets in mind and of not having one, resorting to convenient “no’s”, voiced in general and on political grounds. For us outside the decision making process it is imperative to listen if there is an alternative plan which is practical  and with clear targets. Is there a practical alternative right now? Here are some questions, whose alternative practical answer I have not yet seen:

How would those against the current plan do things differently? How would they re-structure the country if it defaults? Would they favor one productive sector over another and if so in what grounds? How would their economic actions influence the current distribution of income, taking into account the tax burden across the working population? From whom will they borrow funds for the operation of the whole economy? (it is a fact that we will need more external financing, whether we go with the measures or default and exit the eurozone etc. and be on our own) How will they remove the current economic and social injustices? Will they allow free markets to operate or they will impose market restrictions that will benefit those that have been tax evading all the previous years? Will they support the standard of living of the consumer? Will they agree on fighting price collusions and opening up the markets? How will they improve employment conditions? Will they implement structural reforms to improve the state’s performance? Will they fight tax evasion and make sure that all pay their fair share? Are they in favor or agaist for Greece staying in the EU? How will they treat savings deposits in the case of a bank-run? Will they protect these deposits? If Greece defaults and exits the eurozone at what exchange rate will they convert current euro deposits? Will they float a new currency or peg it?

Mind you that we are all aware of the underlying economic theories of doing things with or without the euro etc etc. But this is not the time for theorizing on opinion pieces, it’s a time for clear and decisive action with a plan that can be implemented and can deliver results that will improve the whole of the Greek economy.



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