Saturday, July 11, 2015

Greek Referendum Appears To Have Been A Dog And Pony Show

The Greek people, acting like wolves in control of their own destiny, were celebrating in the streets after a surprising majority No vote that rejected the EU's bailout terms and its painful austerity. Greeks reminded the world that they were not sheep to managed and slaughtered for the benefit of others. Less than a week later, this message appears to have been ignored as Greek leadership backs new reforms to retain the Euro based on, you guessed it, additional austerity measures. This rather predictable move has lot of Greeks asking whether last Sunday's vote was nothing more than dog and pony show designed to placate the masses in return for generally meaningless concessions.

Austerity, policies of rising taxes and balance budget, will not restore the Greek economy. The Hoover Administration's policy of balance budgets backed by a doctrine of rugged individualism learned this lesson the hard way in the early stages of the Great Depression

While many leftists in his own party were stunned by his acceptance of previously spurned austerity measures, Tsipras said he would now focus on securing a deal, apparently regardless of the consequences.

"The parliament today gave the government a strong mandate to complete the negotiations and reach an economically viable and socially fair agreement with its partners," said Tsipras. (see headline below)

This 'solution' only supports Greek's vicious downward economic spiral. Rising taxes, regardless of the spin, depresses economic activity. A further contraction of economic activity, in turn, depresses tax revenues. This leaves tax coffers flatlining or shrinking and leadership recommending additional tax increases to balance budgets that inexplicably won't 'balance'. That is, until the public says enough!

Headline: Euro lenders to pass bailout judgment as Greece backs reforms

BRUSSELS/ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras won backing from lawmakers on Saturday for painful reforms but it remained unclear it would be enough to secure a bailout from German and other euro zone ministers meeting in Brussels.

In parliament overnight, Tsipras had to rely on opposition votes from the right after some of his leftist allies opposed spending cuts, tax rises and other measures he proposed in order to unlock 54 billion euros in three-year credit and save Greece from a bankruptcy that would force it out of the euro zone.



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