Austerity measures in Greece are plunging the economy into ever deeper recession, making it apparent that austerity is not working. Poul Thomsen of the IMF has admitted that further fiscal hardship will not work.
As negotiations continue over the next tranche of bail out loans necessary to stave off a disorderly default in Greece, it is becoming increasingly apparent that austerity measures adopted thus far are not working. Instead they are stifling the economy, plunging it ever deeper into recession.
The major parties involved in the Troika are now clashing, as the International Monetary Fund (IMF), the EU, and the ECB are unable to find common ground. Last week the Guardian reported that Poul Thomsen of the IMF, an original architect of the the Greek austerity measures, admitted they aren't working. He emphasised the need for reforms over further fiscal hardship, a postion which contrasts with the German viewpoint.
Ekathimerini describes Gemany as leading "the pack in the imposition of tight fiscal rules and is demanding Greece’s punishment and guardianship." In contrast Thomsen said that "social tolerance and political support have their limitations – that we strike the right balance between fiscal consolidation and reforms." Christine Lagarde, chief of the IMF, reportedly favors a more flexible approach being adopted.
Professor Kostas Panayotakis explained to the Real News Network last year why austerity measures are not working as he said "the austerity measures throw the economy into a deep depression, of course revenues are going to collapse."
The Greek people are suffering under austerity measures whilst the politicians who govern fail to implement any real reforms which would encourage investment in the country. Millions of euros are beyond the reach of the corrupt Greek tax office, which instead is forced to dole out its tax collecting role to the state electricity company, ensuring ordinary Greeks pay the taxes which the rich have so skillfully avoided. The government consistently fails to implement any real reforms in the wasteful public sector which remains overburdened with neoptistically placed civil servants.
The IMF's Paul Thomsen has said the time has come to show more sensitivity to the situation which Greeks are in, again contrasting with the almost universally criticised approach Germany adopted when it proposed Greece hand over its budgetary sovereignty to unelected European technocrats. Thomson said "I think that officials – myself included – need perhaps to be more sensitive."
As yet more cost cutting measures are tabled for discussion on Monday a 24-hour strike has been called by two major unions for Tuesday in protest against austerity measures.