The recent negative economic indicators regarding the Eurozone, “dismal,” according to New York Times columnist Paul Krugman, give rise to the following questions:
Is Greece really prepared for a prolonged economic crisis – one that might last at least ten years?
Does the Greek government have a well-developed plan, and will it share that plan with its people and get their consensus – or will it continue to humor the populace with half-lies and half-truths, ultimately leading to utter misery and chaos?
Until recently, there was a perception that Northern Europe – with Germany out in front – prospered, while Southern Europe, especially Greece, suffered. At least in that instance there was hope that the North, through a “haircut,” tourism, exports, etc. would help Greece overcome its crisis.
It was the classic theory of trickle-down economics: that some scraps would fall off the tables of the rich into the mouths of the poor.
But now that the economies of Germany, but also of France and Italy are stumbling, and economists like Krugman deem this “more or less a permanent recession” for Europe, the outlook for Greece grows even bleaker.
In other words, the recession arrived six years ago, remains at present, and likely will endure for years to come. And as should be obvious, sugarcoating does not help, simply because it does not correspond to reality.
A better way to change things might be to follow the lead of Rudy Giuliani, who as Mayor of New York City 20 years ago led the city out of economic hardship by implementing small, targeted steps, which upon completion of one after the other, created a collective momentum – an avalanche, in fact – that eventually led New York out of crisis and into prosperity.
There is already pressure on the European Central Bank for a more supportive monetary policy. And when actions are uncertain and are weighed down by political restrictions, the results will be relatively modest.
Krugman writes that the Eurozone will be lucky if it only loses a decade. In the case of Greece, which lost – up until now – the opportunity for much-needed structural reform, the situation is bound to be worse.
And in that case, how are the people going to react?