Submitted by Taps Coogan on the 15th of May 2017 to The Sounding Line.
“The Greek economy is now 9% smaller than when Greece adopted the Euro in 2002″
You would hardly know it reading the mainstream media, but Greece has been in the midst of another critical bailout negotiation with the EU and the IMF. Given the extremely high stakes in the recent French election, it doesn’t take much imagination to understand why the EU and the mainstream media avoid covering the economic catastrophe in Greece like the plague. Greece is the body buried in the EU’s backyard, the embodiment of Euro “management” gone wrong. They are really hoping nobody notices.
Nonetheless, the economic crisis in Greece is of paramount importance to the EU and the global economy to a lesser degree. As we first noted here, with a debt of 350 billion euro, a Greek default could be the largest in history, two times bigger than the combined defaults of Russia, Pakistan, Ukraine, Venezuela (following the 1997 Asian currency crisis ~$73 billion), plus Argentina (in 2001 ~$82 billion). Many argue that the ‘re-profiling’ of Greek debt is already the largest default in history. With the Italian and Portuguese banks on the ropes, a Greek default could cause a cascade of other defaults.
As we have detailed many, many times, some form of Greek default is all but guaranteed. Despite hundreds of billions of euro in bailout funds and debt restructuring, Greek debts grow, the Greek economy worsens, and tax revenues shrink with every passing day.
With Prime Minister Alexis Tsipras now announcing plans for a referendum to make big changes to Greek electoral system amid his own plunging popularity, the possibility of a negative political shock (for the EU) in Greece is higher than ever. As the following chart shows, it is nearly impossible to make the case that Greece has benefited economically from membership in the Euro-zone. The Greek economy is now 9% smaller than when Greece adopted the Euro in 2002. By that fact alone, the Greek economy has experienced some of the worst long term economic ‘growth’ in the entire world.
As a reminder here is some of the other economic carnage we have discussed here at The Sounding Line: