IMF to Greece: Sorry. We Goofed.
June 6, 2013 - 4:16 pm
Somehow, I can’t quite work up much outrage against the International Monetary Fund who apologized to the Greek government and people for overestimating how much in tax increases and budget cuts the Greek economy could take.
The rest of Europe — especially Germany, France, and the richer northern tier of the EU — have been carrying Greece for years, funding their extravagant public spending and keeping the economy afloat. When asked to cut their budget and raise taxes to help bail themselves out of the mess they made, they balked — went into the streets and rioted like a bunch of two year olds who had their blanket taken away.
Anger was palpable on the streets of Athens, where the EU-IMF austerity recipe that the Washington-based fund says it sharply misjudged has left rows of shuttered stores and many scrounging for scraps of food in trash cans.
“Really? Thanks for letting us know but we can’t forgive you,” said Apostolos Trikalinos, a 59-year old garbage collector and a father of two.
“Let’s not fool ourselves. They’ll never give us anything back. I’m sorry for all the people who killed themselves because of austerity. How are we going to bring them back? How?”
The IMF acknowledged on Wednesday that it underestimated the damage done to Greece’s economy from spending cuts and tax hikes imposed in a bailout, which was accompanied by one of the worst economic collapses ever experienced by a country in peacetime.
A report looking back on the bailout said the Fund veered from its own standards to overestimate how much debt Greece could bear, and should have pushed harder and sooner for private lenders to take a “haircut” to reduce Greece’s debt burden.
Prime Minister Antonis Samaras told reporters the acknowledgment justified his positions. He had criticized from the outset “what the IMF has called mistakes”.
“And we have been correcting those mistakes over the past year,” Samaras told reporters during a visit to Helsinki.
Greeks have seen their incomes plunge by about a third since the debt crisis erupted in 2009 and prompted Greece to seek two bailouts from the EU and the IMF. The unemployment rate has hit nearly 27 percent and suicide rates have soared. Worst hit have been the youth, nearly 60 percent of whom are unemployed.
“The IMF admits to the crime,” the leftist Avgi newspaper declared on its front page. Top selling newspaper Ta Nea branded it an “admission of failure”.
The Greek Finance Minister was being insufferable:
“The IMF report confirms and records the positions that we have repeatedly presented in public, which formed the basis of our arguments during tough negotiations with the IMF and the other two parties of the troika,” former Finance Minister Evangelos Venizelos told Reuters.
“There are many choices that we would have never made on our own, but we were obliged to take in order to avoid the worst.”
If left on your own, you wouldn’t have cut squat and would have continued on as before, spending the rest of Europe’s money — and your children’s money, and your children’s children money. Who are you trying to kid?
I’ve been following this soap opera for 3 years and I know that the Greek people never accepted the idea that they had to endure any pain for their profligate ways. They screamed bloody murder when the government tried to cut the bloated government workforce — 20% of the country worked for the government at one time. Tax avoidance is an art form and not just for the rich. Everybody had an angle to try and wangle more and more from the government.
So yes, as the IMF admits, they miscalculated. But this is hardly vindication for a people and a government who have shamed themselves in this crisis by trying everything to avoid responsibility for their irresponsible spending that led them to the precipice. The rest of Europe didn’t “miscalculate” when they agreed to bail out Greek banks and the government after the national debt had reached 126% of its GDP in 2010. Nobody was forcing anything down their throat when they were spending wildly. In fact, with the help of Goldman Sachs, the Greek government knowingly fudged their deficit numbers, making it appear that they were in much better shape than they actually were.
And now we’re supposed to feel sorry for them?
After this kind of response by the people and government, the EU should refuse to disperse the remaining cash in the bail out and let the government swim home by themselves.