Can someone reasonably explain how austerity will help the Greek people?
Because you can't overspend forever and have some kind of faith that "everything will work out in the end".
Greece has been overspending for so long that their economy has to grow at a much more sustainable pace without borrowing so much money.
Nobody is willing to pour money into greece to re-inflate their 2000's spending bubble.
What? Greece before the crisis had one of the flimsiest welfare states of any EU member and a low percentage of government spending as % of GDP. The countries in Europe with the biggest welfare states have been the ones least affected by the Great Recession.
They were overspending much more than what their tax revenues could pay for. Plus they lost so much revenue to tax evasion. A national sport in greece.
Other countries like in Scandinavia had a welfare state but the taxes and the trade surpluses to pay for their spending. Something greece didn't had which was the industries to have the revenue to pay for spending. Instead the greeks borrowed and borrowed.
Yes, Greece needed to crack down on tax evasion a while ago, and PASOK and ND were both essentially patronage vehicles. That doesn't provide rational or moral justification for throwing state assets to the vultures or discouraging consumption with a VAT increase.
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