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Give Greece a Break

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As Greece and its future in Europe hang in the balance, the bureaucrats in Brussels seem to lack the compassion necessary to reassure the Greek people. After an overwhelming “no” vote in the referendum, everyday Greek citizens have voted against more austerity, and the prime minister, Alex Tsipras, is being squeezed by the IMF, European Bank and Germany, as if the vote never happened.

As Greece and its future in Europe hang in the balance, the bureaucrats in Brussels seem to lack the compassion necessary to reassure the Greek people.

Caught between a rock and a hard place, Mr. Tsipras has been forced to agree to steps his people oppose, including additional cuts to his citizens’ pensions. I think he should tell them where to put their precious money. When he does so, and the European Union realizes the hit their currency will take as a result, he will have more leverage to negotiate something acceptable with more compassion for his predicament.

Perhaps, he can describe the breakup as a temporary exit from the Euro to minimize the overall effect and preserve his options. But his heartless creditors must realize they can either receive a negotiated payment of Greek’s debt or no payment at all. Despite its size, Greece is needed by the European Union to shore up their other weak economies such as Spain, Portugal and even France. When the European Union comes to its senses and realizes this, a real solution can be found.

Greece Stands Up to European Bullies

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In a historic vote last night, the Greek people stood up to European bullies who wanted to put them through another round of austerity measures as a price for staying in their club.

Economists such as Paul Krugman of The New York Times have repeatedly emphasized that a nation’s economy needs a stimulus to pull out of a recession, and austerity measures only work in the long run. In fact, nations such as Greece are only making matters worse by enacting austerity as the economy shrinks faster than the additional taxes or cuts in spending imposed.

It’s worth noting that macro-economics is totally different from sitting down in your kitchen to balance your household budget.

So the only thing gained by austerity in the short term is the infliction of pain on the population at large.

It’s worth noting that macro-economics is totally different from sitting down in your kitchen to balance your household budget. Economic activity carries a multiplicative effect when spending stimulates the business world, and the resulting increase in revenue and dynamism holds no parallel to the kitchen table analogy.

In other words, macro-economic theory predicts that austerity is exactly the wrong thing to do. As if we need more proof at this point, President Herbert Hoover attempted to heal the U.S. economy through austerity. And we all know how that turned out.