The more the Greek government does to get bailout money, the more likely its citizens are to riot. The more they riot, the more its GDP suffers.
Greek Finance Minister Evangelos Venizelos told the IMF and governments that will have to financially support a bailout that he plans to cut the nation’s 2012 budget expenditures. The most likely way to accomplish these goals is to roll back pay increases given to public employees last year and perhaps lay off those who were hired in 2010 and 2011. Such a move could affect 20,000 people.
Greece is desperate, and that is obvious because it will again take actions sure to inflame many voters. Greeks have reacted to such measures in the recent past by riots and work stoppages. The riots happen in full view of the global media. Work stoppages shut down vital sectors, especially those that include services essential to the tourist trade. That gives vacationers the chance to see Turkey, or almost any other nation in southern Europe, instead.
The IMF and EU might as well decide that Greece is a lost cause because its citizens will never agree to or follow new austerity measures that will affect their incomes or their job security. That is not unusual. What else can people do when they lose their livelihoods? Walk away meekly?
The best measure of whether a Greek bailout is good money after bad is not the budget plans of the government. It is the extent to which Greeks are willing to shut down their own economy and increase the likelihood that the country will move from a deep recession into a full-blown depression.
Douglas A. McIntyre