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Greece: crony capitalism « Previous | |Next »
June 22, 2012

In their The Greek financial crisis and a developmental path to recovery: Lessons and options in Real-World Economics Review, issue no. 60 Nikolaos Karagiannis and Alexander G. Kondeas argue that Greece has become a crony capitalist country with a disproportionately large state bureaucracy. The resulting governance system has encouraged corruption, discouraged wealth creation, and affected popular ideologies

RowsonMEurozonecrisis.jpg Martin Rowson

They say that one scenario is that EU leaders having failed to learn from their previous policy mistakes will insist on austerity, and other half measures which will prove to be grossly insufficient to stabilize the Greek economy. Greece will be in effect pushed out of the Euro- zone and forced to default on its debt.

Their other scenario is that the EU leaders, having learned from the policy mistakes of 2010- 2011, will aim to bring stability and growth back to the Greek economy. The Greek economy will be revived, the monetary union will be saved, and the dream of a political union will remain intact.

Update
According to Yanis Varoufakis the next step after the election is a Bailout Mk3 which will represent a “relaxation of the terms of conditions of Bailout Mk2-----the Bailout Mk2 ‘rules’ require Greece to cut public spending within a month by a further 11.5 billion. His judgement is that the loosening of bailout conditions--a Bailout Mk2-lite--- is just prolonging the slow water torture of watching the Greek economy and society go down the drain.

His argument is this:

The Greek economy is well and truly broken. The circuits of credit are so badly damaged that even efficient, profitable firms have been cut out of the capital markets but also out of the international markets (as their suppliers will no longer accept the Greek bank guarantees without which Greek firms cannot import raw materials). These credit circuits will remain broken even under new terms and conditions, as I described them above. Neither the extension of repayments of the new loans to the insolvent state (which everyone knows will be defaulting again – this time to official creditors) nor the new loans will change this. Moreover, the new spending cuts, even if they are less than what was envisaged under Mk2, will give the forces of recession another boost.

When in December, it becomes, yet again, clear that another, more relaxed, Greek bailout has failed, that realisation will add to the strains and tensions in Europe, accelerating further the centrifugal forces tearing the Eurozone apart.

| Posted by Gary Sauer-Thompson at 8:57 PM | | Comments (3)
Comments

Comments

A good companion for this would be the report by ANTARSYA on its narrow defeat on June 17; 22/6, at John Passant's blog, "En Passant".

Paul
I notice from the above post you linked to on En Passant that ANTARSYA, a coalition of left-wing anti-capitalist forces, say that:

In contrast to the rhetoric about a ‘return to growth’, the politics dictated under the terms of the loan agreements will only lead to a default and an even more acute crisis of Greek capitalism, in light of the global economic crisis and the crisis and reactionary mutation of the Eurozone and the EU in general.

They concur with Yanis Varoufakis.

A perpetual motion engine!
Just plant your apple tree and each year a new crop will turn up, completely oblivious to the one the year before.
We have the same system in place in Oz, but so far they've contented themselves with privatisations and gouging.
But if you challenge them, all sorts of funny things happen- friendships and confidences betrayed and strange press and media silences when events indicating corruption needs to be reported.
I would love a look at the inside of the festering mess, picking off the scabs, but the stench would turn my stomach were it opened out to daylight and the contents exposed.