Tuesday, August 21, 2012

Austerity, marathons and high jumping

German and other commentators are now arguing that Greece has not shown enough progress.

On the other hand, stats from Jan-July 2012 have shown that the Greek budget has performed better than targets/expectations.

So is the claim of the commentators valid for the pre-2012 period?

Well, my view is the following:

Austerity is like (I usually don't like to treat for analysis purposes states or economies etc as persons but making an exception only for the purpose of demonstration of a point via an eloquent metaphor) starving someone, then making him/her run a marathon and accuse him/her when he/she faints at the 5th km from starvation and fatigue!

In my opinion, the goals set by the two Greek MoUs (MoU = Memorandum of Understanding) were too high/unrealistic/punitive. When this happens then even the achievement of lesser goals is hampered. To use another metaphor, from track and field. when the bar is set too high, this causes counter-productive "stress" to the athlete, thus can lead to very poor results! More realistic bailout terms/goals would have caused less "stress" thus could be reached if not at 100% at least near that.

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