Who lost Greece?

Article Highlights

  • Years of fiscal excess and living beyond its means (and cheating on budget reporting) led #Greece to its misfortunes.

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  • Greece has stubbornly refused to get serious about #tax collections.

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  • As #Greece threatens the very survival of the #euro in its present form, it’s not too early to ask: who lost Greece?

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A relatively insignificant southern European country threatens the very survival of the euro in its present form. How did we get here, and what lessons does Greece hold for the rest of the European periphery?

With Greece now literally in a state of economic and political collapse, and with the country on the cusp of an official debt default and an exit from the euro, it is not too early to pose some uncomfortable questions. Who lost Greece? How did we get to a situation in which a relatively insignificant southern European country threatens the very survival of the euro in its present form? And what lessons does Greece hold for the rest of the European periphery?

According to the narrative being spun in European capitals, the answer to these questions is both simple and unambiguous: It is all Greece’s fault. After many years of fiscal profligacy and living beyond its means, not to mention cheating on its budget reporting, Greece has brought its misfortunes upon itself. All that is now happening is that Greece’s day of reckoning has finally arrived and the Greeks are paying the price for their past sins.

To compound its difficulties, Greece has stubbornly resisted taking the strong corrective medicine that has been prescribed by those multilateral institutions charged with bailing it out—as Christine Lagarde, managing director of the International Monetary Fund, is wont to point out. In particular, Greece has stubbornly refused to get serious about tax collections and it has done everything within its power to avoid serious labor market reform.

Read the full article on American.com

Desmond Lachman is a resident fellow at AEI.

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About the Author

 

Desmond
Lachman
  • Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.
  • Phone: 202-862-5844
    Email: dlachman@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202.862.5862
    Email: emma.bennett@aei.org

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