A did a double take when reading the above title from Ann Pettifor, someone not noted for her love of people like ratings agencies.
But then note what she says:
It might seem extraordinary, but in the midst of deficit-cutting mania it’s a rating agency, Standard and Poor’s, that is talking common sense about government debt.
Standard and Poor’s officials are quoted by the New York Times (28 April, 2010) as saying:
“The main reason for downgrading the debt of Greece and Portugal was the prospect that forced austerity packages would be an even bigger drag on economic growth.
It is the most vicious of circles: stagnating economies are forced to cut back more, which reduces their ability to generate revenue and thus pay off their debts.”
Amazing. Standard & Poors undertsand that the only way out of a recssion is to spend. If you don't - as Greece will not be allowed to do - then the recession deepens into depression - as Greece's surely will - debt becomes harder to repay - social crises follow - fascism is welcomed in after that - and hey presto, we have the 1920s and 30s all over again.
That's the likelihood in Greece.
And political contagion is as likely as economic contagion.
This is what is really so desperately mad about the German prescription for Greece. They of all people should understand what this means. But apparently they don't.
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Surely one big difference that applies to Greece compared to all other similar occasions in the past is that Greeks have a right to live and work anywhere in the EU. So if the Greek economy implodes, should we not expect millions of Greeks to turn up to do unskilled work in Germany?
And I suppose the quid pro quo will be lots of Germans buying up and developing property in unspoiled parts of Greece. Seems like the Germans get the better out of that deal!