What? Is Greecovery not real?

Posted by in Economy

What? Is Greece’s recovery not real? Isn’t there any success story out there? Are the governments’ declarations not true? Do they throw smoke right in front of our eyes?   I have expressed my doubt since Samaras’ launched the famous “Greecovery campaign” a couple of weeks ago. Now, British The Guardian comes running and tells us:

Talk of recovery in Greece is premature – and all about justifying austerity

Bank bosses and politicians are trying to convince the world that Greece is on the mend – but this boosterism is all about justifying the shock therapy imposed on the eurozone.

Over the past few weeks, Athens’ top brass have been trying to convince the world that happy days are here again. Prime minister Antonis Samaras now talks of the Greek “success story”. The boss of the central bank and the finance minister say Greece has turned a corner. Editorialists in the national press and parts of the international financial press dutifully nod their assent. And those with Greek or European assets to sell clap along: “Forget Grexit – it could be Greecovery instead,” ran one particularly bone-headed “research” note I received on Friday.

What’s at stake here is a much bigger prize than whether an economy worth 2% of Europe’s annual GDP really is on the mend. It’s about justifying the shock therapy imposed on distressed members of the eurozone.

This was frankly put by Maria Paola Toschi, a market strategist at JP Morgan, in the FT last week. “If Greece can present itself as a recovering economy, having taken the medicine of fiscal austerity and supply-side reform, then the reform agenda of the European Central Bank and International Monetary Fund will be given a further boost.”

If the elites of Europe and Washington can claim to have “healed” Greece, then they can shrug off criticisms of eurozone austerity. And they can also defend an economic model that just three years ago looked as if it had crashed into a wall.

Yet the exhibits the boosters are using do not a case make. Athens shares doubled in the past year? Cheap money from central banks and investors desperate for returns can play funny tricks. Wages have fallen? Yes, but the business investment that was meant to follow on from that hasn’t materialised. The public finances are back in some kind of order? Taking an axe to the welfare state and public services will do that; still, few think Athens could go a day outside the sovereign version of debtor’s jail. (read full article here)