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Greece Question

  • #1
  • First Post: Feb 1, 2012 12:10am Feb 1, 2012 12:10am
Austerity measures – tax hikes, cuts in budget spending – dampen growth. That, in turn, makes it harder to meet deficit and debt targets, forcing governments to implement more austerity measures, which further hit growth, and so on and so on

the above is taken from an article
my question is below

may i know why would austerity measures make it harder to meet debt targets? since the measures itself reduces spending debt. Is it more of a austerity measures becoming a short term effect where as in the long term it dampens growth?
  • #2
  • Feb 1, 2012 3:24am Feb 1, 2012 3:24am
austerity measures hit government income through lower tax receipts and higher social security payments
  • #3
  • Feb 1, 2012 3:25am Feb 1, 2012 3:25am
This in turn creates added strains on public purse. Furthermore if they already have a high debt burden, interest payments may be harder to meet.

Quoting Bear_Bull
austerity measures hit government income through lower tax receipts and higher social security payments
  • #4
  • Feb 1, 2012 6:55am Feb 1, 2012 6:55am
Quoting Bear_Bull
austerity measures hit government income through lower tax receipts and higher social security payments
Wouldn't the austerity measures enable the government to collect more money from the public and pay back the loans hence shouldn't the debt be lowered in a sense?

I get the part where the public suffers and higher cost of standard of living though.
  • #5
  • Edited 7:31am Feb 1, 2012 7:28am | Edited 7:31am
Quoting Gdragon
Wouldn't the austerity measures enable the government to collect more money from the public and pay back the loans hence shouldn't the debt be lowered in a sense?

I get the part where the public suffers and higher cost of standard of living though.
OK you've spotted the global problem. Your interest payments are crippling you and you can't afford to pay back debt, so you HAVE to reduce spending.

And yet, you need growth to pay back that debt, and growth among many other things is the outcome of increasing spending and reducing taxation.

What to do? In any normal situation you spend your way out of trouble, because you've thought about this before, and in good times you run a budget surplus, so that in such bad times, you can ramp up the spending.

But not this time - govts overspent during a boom. Combine that with a financial crisis and you/Greece/world has limited options. So, need other avenues, interest rate cuts already done, foreign investment dried up, so onto plan c). Plan c) is a option of last resort - a currency war.
  • #6
  • Feb 1, 2012 7:38am Feb 1, 2012 7:38am
Quoting Gdragon
Wouldn't the austerity measures enable the government to collect more money from the public and pay back the loans hence shouldn't the debt be lowered in a sense?

I get the part where the public suffers and higher cost of standard of living though.
No, everything is being done to ensure that any productivity (that may survive) is funnelled toward servicing the debt ad infinitum. The troika showed their hand when they demanded PRIVATE sector wage reduction, that would not be so terrible if we werent talking about already artificially low wages (PRIVATE SECTOR) and what is possibly the highest cost of living in the Euro Zone. How are you supposed to collect more taxes from already dwindling incomes?!?!

The Public sector is a joke, if they slashed a couple of 100,000 jobs there from the start, 2 years ago, we would not be in half this mess, let alone actually prosecute politicians who took bribe money. If we also reneged to service debt incurred through crimes such as bribery that caused us to agree to over inflated infrastructure and defence contracts (these types of debts have been declared legally unserviceable internationally for many years now. We would be in a fine financial state.

So it has been 2 years, not of crisis, but of covering up criminal activity, and shackling the Greek citizenrys pockets. Why do I say coverup, because Greek and French and German politicians are responsible for this mess and they have all profited massively from it, they just left the tab with Greece.

Reforming the public sector is by far the most serious task in Greece and is has been payed lip service up until this point because due to the sheer size of it % of population wise, IT IS THE VOTING BASE for the two main political parties

That is how I see it from the last 6 years of living there. I mean seriously, is there any possible use for three separate social security divisions??? Remember what I said about the voting base working for the government, vote for me and your son or daughter will have a job for life, that is what the idiots have been doing for the last 30 years! So it is a total clusterfuck.
  • #7
  • Feb 1, 2012 8:59am Feb 1, 2012 8:59am
Quoting triphop
OK you've spotted the global problem. Your interest payments are crippling you and you can't afford to pay back debt, so you HAVE to reduce spending.

And yet, you need growth to pay back that debt, and growth among many other things is the outcome of increasing spending and reducing taxation.

What to do? In any normal situation you spend your way out of trouble, because you've thought about this before, and in good times you run a budget surplus, so that in such bad times, you can ramp up the spending.

But not this time - govts overspent during...
Ok thank you so much i get it now DDD
  • #8
  • Feb 1, 2012 9:00am Feb 1, 2012 9:00am
Quoting SerpentDove
No, everything is being done to ensure that any productivity (that may survive) is funnelled toward servicing the debt ad infinitum. The troika showed their hand when they demanded PRIVATE sector wage reduction, that would not be so terrible if we werent talking about already artificially low wages (PRIVATE SECTOR) and what is possibly the highest cost of living in the Euro Zone. How are you supposed to collect more taxes from already dwindling incomes?!?!

The Public sector is a joke, if they slashed a couple of 100,000 jobs there from the start,...
Wow.. I dont know what to say
  • #9
  • Last Post: Feb 1, 2012 3:33pm Feb 1, 2012 3:33pm
My bet is that Serpent Dove is Greek
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