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Greece Passes Yet Another Round of Austerity

With all the talk of elections and realignments and the like, it’s good to know that there’s still some things out there you can depend on. Like Greek politicians ignoring the people as well as economic reality and cutting their budget once again.

Lawmakers in Greece have narrowly backed a fresh round of austerity measures, despite violent protests across the country.

The austerity package aimed at securing the next round of bailout funds was passed with the support of 153 MPs in the 300-member parliament.

The 13.5bn-euro ($17.3bn; £10.5bn) bill includes tax rises and pension cuts.

Earlier, riot police fired tear gas towards protesters when they were attacked with petrol bombs in Athens.

This is the fourth austerity package passed by Greek lawmakers in the last three years. The result of the first three has been depression and unemployment of over one-quarter of the citizenry.

Here’s what this one does. It raises the retirement age by two years, to 67. It cuts government pensions and salaries, by up to 15%. It reduces the minimum wage. It cuts benefits for holidays. It cuts severance pay for public employees by 35%. None of these things are in any way associated with economic prosperity. All of them take money out of the hands of workers who are already not spending.

Meanwhile, the latest economic report for the Eurozone shows an expected growth rate of just 0.1%, a flatline, in 2013. They’ll be lucky if they get that far, and not just remain mired in recession (many countries, like Spain and Italy, are expected to continue in recession throughout 2013). And the European Central Bank, in the midst of this economic crisis, failed to lower interest rates today. They left open the possibility in the future, but with respect to Greece, ECB chief Mario Draghi said, “The ECB is by and large done.”

Greece’s austerity measures have not improved Greek finances, which continue to show deficits. This is also true in Spain, whose public deficit in 2014, even after all the austerity, shows at 6.4% of GDP, despite the 3% target. The reason is simple: austerity destroys economies, and you can’t reduce a deficit amidst a destroyed economy.

This could all be avoided, but Germany, the leader of the pack in Europe, wants to basically consolidate all budget decisions under unelected bureaucrats that force their decisions on sovereign governments, even though those decisions have been utterly horrible for the European public.

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David Dayen

David Dayen

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