Bill Clinton: Economy Should Recover Before Deficit-Cutting Deal Takes Effect

We're going to be sold off, our shared resources, just as Greece is:

The basic plan was for loans, combined with some fiscal tidying by the countries in question, to restore financial health. But that was always a case of wishful thinking. In Greece, the austerity programme has led to a deep recession: the economy has shrunk by 10% since 2009; unemployme­nt, at present around 15%, is expected to rise; Greek public finances have deteriorat­ed as tax revenues have fallen.
Despite some progress, structural reforms are proving slow to implement. A plan to privatise �50billion (£44.9bill­ion) of assets looks optimistic - even �15billion would be difficult to achieve.

Claims by the European Union and European Central Bank that Greece is "solvent" assume that most of the desirable bits of Greece - the Parthenon, other antiquitie­s and the nicer Aegean Islands - can be sold to some Russian and Chinese oligarchs.

Ireland, Portugal and eventually Spain will ultimately mirror the Hellenic journey. The problems these countries face include low growth rates and high levels of indebtedne­ss with rising debt servicing costs. The combined reduction in government spending and higher taxes strangles their economies. The austerity programmes prescribed by the EU, ECB and Internatio­nal Monetary Fund as a condition of the bailouts reinforce this pernicious slide into economic oblivion.

The peripheral countries are trapped in a vicious cycle. A weak economy raises budget deficits which, in turn, drive government debt higher. This requires even more cuts in government spending and higher taxes, leading to further contractio­n in the economy. This drives a deteriorat­ing credit-rat­ing outlook, reduced access to commercial financing and higher funding costs, which contribute to further declines. As some of these countries are heavily dependent on external financing, a crisis becomes almost inevitable­.

Read the Article at HuffingtonPost